DIGITAL COULD STOP YOUNG AUSTRALIANS WALKING AWAY FROM PRIVATE HEALTH INSURANCE

DIGITAL COULD STOP YOUNG AUSTRALIANS WALKING AWAY FROM PRIVATE HEALTH INSURANCE

Accenture research has highlighted seven Australian personas providing insight into attitudes and behaviours towards private health insurance. Ten percent of the Australian private healthcare insurance market, representing AUD$2b is churning annually. Seventy-seven percent of this churn comes from Hip Pip and Busy Lizzy two personas under 30 years of age with a constant attraction to digital services. Accenture primary research indicates a core determinant of switching behaviour (apart from policy costs), is the accessibility of digital offerings made available by competing healthcare insurance organisations. The Accenture Person-Centred Segmentation Study sought the views of over 2,000 Australian respondents. The study analysed demographic, population measures and confirmed that they were poor indicators of health insurance customer preferences. Through multivariate analysis, the attitudinal survey of Australian consumers enabled researchers to contrast different personas and their attitudes toward private health insurance. Australian health insurers seek to attract and retain younger members with lower health risks. Through the principles of community rating and risk equalisation, these younger members offset the risks of older and more comorbid members, so that actuarial models can be applied to the book of business to set fair premiums for health insurance products that protect members from health costs and support the health fund s financial sustainability. In a recent quarterly report analysing the private health insurance sector statistics, APRA, the Australian Prudential Regulatory Authority stated, with respect to private health insurance membership: the largest decrease is in people aged between 20-24 followed by 25-29 years of age. This ongoing decrease equates to 35,000 fewer in the insured population per quarter of which 27,500 were aged 20-29 (77 percent). Furthermore, other specialist service providers who have analysed health insurance statistics have confirmed conservatively that 10 percent of policyholders switch and that lapse rates are increasing with, an increasing propensity to lapse. 1 The Accenture attitudinal survey identified two personas of interest from the cluster analysis. Hip Pip and Busy Lizzy represent populations closely mapped to the Gen X and Gen Y groups and provide a series of clues informing how best to engage and retain them as members. 2

Ten drivers of digital health insurance behaviours Australian private health insurers face severe levels of customer churn. Thriving in such a market requires a close look at both member behaviour and retention strategy. Accenture primary research indicates that understanding how best to attract and retain private health insurance members is a function of insight into seven personas (clustered viewpoints). These personas are, in turn, driven by 10 fundamental behavioural drivers. 1. 2. 3. 4. Costs Primary health data-sharing Technology attitude and aptitude General privacy attitude and aptitude 5. 6. 7. 8. GP engagement Government spending Active involvement Politics and regulation 9. 10. Access to data Equality and openness to change Through multi-variate analysis, the attitudinal survey of Australian consumers enabled researchers to contrast different personas and their attitudes toward private health insurance. 3

How to retain Hip Pip and Busy Lizzy Hip Pip and Busy Lizzy have elevated expectations in all aspects of their lives. Social media, technology and digital offerings from banks and platforms (Netflix, Uber, Amazon etc.) have all created a mushrooming expectation of digital experiences which now extends to the realms of health insurance. Innovative health insurers that can meet and exceed the imagination of this segment will be strongly positioned to retain and attract new members. Person-centric care Disappointingly, 56 percent of Hip Pip and Busy Lizzy have the perception that their GPs don t want to hear their health questions as opposed to 22 percent in the other five personas. Similar concerns may exist with medical specialist appointments. Capabilities such as consumer reviews may help address this poor experience. Such an approach provides a more meaningful, valued service resulting in improved quality of care for these members, and ultimately decreases the likelihood and cost of seeking multiple medical opinions or getting sub-optimal treatments. 56% versus 22% Omni engagement channels Digital services offered by health insurance organisations could provide different models of care that would provide a competitive advantage to keep and entice Hip Pip and Busy Lizzy. With busy lives that are digitally integrated, digital healthcare services are integral to the expectations of Hip Pip and Busy Lizzy. For example, 71 percent of these two personas are willing to use text chat services with their doctors and private hospitals as opposed to 42 percent in the other five personas. 71% versus 42% 4

Artificial Intelligence and automation Sixty-seven percent of Hip Pip and Busy Lizzy feel positive about technology replacing traditional healthcare services compared to 30 percent in the other five personas. Furthermore, 69 percent of Hip Pip and Busy Lizzy would use an AI virtual health assistant for personalised advice based on their own medical record information contrasting sharply with 35 percent for the other personas. This means insurers could provide services such as virtual customer service agents that respond to member enquiries and direct members to specific health services based on their previous interactions and claims history. 67% versus 30% Virtual health checks Finally, 73 percent of Hip Pip and Busy Lizzy would have more frequent health checks if they had the time as opposed to 31 percent for the other personas. More than any other groups, millennials are living a fast-paced life. This could be an opportunity for health funds to incorporate virtual health consultations (e.g. telehealth, virtual reality and vital signs monitoring) through digital channels to ensure members are accessing the care they need proactively before health and wellness problems develop. Insurers could champion this offering to attract and retain Hip Pip and Busy Lizzy members in the knowledge that they are decreasing the risk of their members health concerns while making better use of GP and medical specialist services that are funded by Medicare and out of pocket fees. 73% versus 31% So what? Health funds are already using advanced analytic techniques to gather member insights. A person-centric approach to member segmentation coupled with compelling digital services could be the key to unlock competitive differentiation and grow membership. The decline in younger members, such as Hip Pip and Busy Lizzy, has constrained health funds ability to maintain a sustainable book of business while increasing the proportion of members that are more likely to make claims. Regulatory changes to encourage younger members to pay for private health insurance confirm the size and seriousness of the problem. Private health insurers need to adopt an innovative approach to target the Gen X and Y segments by moving beyond products and tailoring member experiences that hold appeal, even with rapidly changing expectations. By weaving in advanced analytics, omni-channel engagement platforms, technologically innovative services and a service co-design approach, insurers can provide truly differentiated offerings from their competitors. Digitally savvy funds are likely to stay competitive in an increasingly consolidated market. 5

Seven Australian personas Busy Lizzy GROUP 1: Age and gender: Younger; gender neutral Signature trait: Most are workers or full-time parents/carers Summary: Open to change and technology, but more reluctant to share data; for the majority, treatment and service choices are driven by financial costs OK Joe GROUP 2: Age and gender: Average age; more male Signature trait: Most are socially conservative, not supportive of healthcare change Summary: Disengaged over privacy issues; no financial/payment model concerns; little interest in consumer-directed care Fit Fu GROUP 3: Age and gender: Older; more male Signature trait: Most are healthy seniors moving with the times Summary: Highly confident with technology, open to change and alert to privacy issues but relatively relaxed about sharing information Struggling Sam GROUP 4: Age and gender: Older; gender neutral Signature trait: Most are less healthy and have more financial issues Summary: Traditionalist; less open to technology; concerned about privacy and reluctant to share information; financial concerns drive many choices 6

Hip Pip GROUP 5: Age and gender: Younger; more female Signature trait: Most are busy, healthy and quick to try new things Summary: Open to technology and change; relaxed about data-sharing; strong desire for more consumer-directed care; financially constrained Wary Mary GROUP 6: Age and gender: Average age; more female Signature trait: Most are very anxious about privacy but are still open to change Summary: Confident with technology but not positive about technological substitutes; highly concerned about privacy; reluctant to share information Vintage Viv GROUP 7: Age and gender: Older; gender neutral Signature trait: Most do not like technology, self-service or anything new Summary: Generally resistant to change, but relaxed about data-sharing and privacy; not interested in consumer-directed care; not financially driven 7

REFERENCES Ian Manovel Innovation Principal Director ian.manovel@accenture.com @ManovelInnovate Henry Ma Technology Strategy Manager henry.a.ma@accenture.com Kevin Cho Business Strategy Consultant k.cho@accenture.com 1. Accenture Australia, Re-imagining Australian Digital Healthcare 2. Australian Prudential Regulatory Authority (APRA), Private Health Insurance Quarterly Statistics 3. Morgan Stanley, Private Health Insurance Report 4. Energesse, Future Solutions in Customer Experience for Health Insurers ABOUT ACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions underpinned by the world s largest delivery network Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 425,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. ABOUT ACCENTURE INSIGHT DRIVEN HEALTH Insight-driven health is the foundation of more effective, efficient and affordable healthcare. That s why the world s leading healthcare payers, providers, and public health entities choose Accenture for a wide range of insightdriven health services that help them use knowledge in new ways from the back office to the doctor s office. Our committed professionals combine realworld experience, business and clinical insights and innovative technologies to deliver the power of insight driven health. Visit us at www.accenture.com/health Copyright 2018 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. 173910