Health care, we've got a problem
"It's impossible to keep up with all the health care news these days. We're being bombarded by information about how broken our health care system is: the premiums, the legislation, the cost, the politics, the personal stories.
Like any reasonably aware American, I knew the health care industry was broken. But it wasn’t until I began to research the viability of starting a company that would unify the health insurance ecosystem on a digital platform that I realized how big of a problem it truly was.
As a whole, health care currently (that is, in 2016) is 17.8 percent of the gross domestic product (GDP.) More than 12 million people work in the health care industry. There are 5,564 registered hospitals in the U.S. and, in 2015, 35,061,292 people were admitted to those hospitals to the tune of $936,531,524,400 in total hospital expenses.
At the center of the political debate and private health care in general (as opposed to military or Medicare-supported care) are the 35 private, U.S., health insurance companies, each with multiple divisions that are state-specific.
Behind the numbers, of course, are people. Those people are where the problems become personal. With surprisingly little effort, it’s pretty easy to find a health care horror story. The company I founded, Benefix, is literally working to solve some of the inefficiencies and problems in the health benefits industry. Yet even we have our own collection of horror stories.
A few weeks ago, we hired a great guy. He did everything he needed to do to sign up for health insurance – reviewed the options, filled out forms, submitted them to the broker who double checked the details and then fired them off to the provider. Time passes, all seems fine, except: his family wasn’t enrolled.
Now, this wasn’t his error. The forms were correct. Somewhere along the winding road and human chain of getting his insurance up and running someone made a mistake.
It happens, a lot, and illustrates an important insight: The industry is far too manual and there are many hands touching each piece of the industry-puzzle. Laws are enacted at the federal, state, and local levels. Creating the plans takes lawyers, actuaries and underwriters.
Distribution is handled by brokers, human resources staff and sales reps for the carriers. Then, when a company signs up for a plan, the paperwork (which, often, is actually paper) goes through even more people.
At this point, there is no single, unifying, digital platform out there that houses the data about the insurance products and the enrollees, or easily integrates all the information available. This is a problem not just because of the human impact but because of the cost.
In 2016, national health expenditure in the U.S. was $3.3 trillion. While attending an industry seminar I had the pleasure of hearing Chris Handley of Savoy, a benefits consulting firm, present on the cost of health care. He showed one particular slide with dramatic numbers. Like, the estimated $191 billion dollars that is wasted on excessive administrative costs in our health care system.
The fragmented, manual, information distribution and collection processes simply don’t work in today’s digital world – and it costs all of us far too much money.
This isn’t a new problem and it’s not unique to the relationship between the insurers, brokers, businesses and those covered. It permeates the entire ecosystem that is the health care industry, from patient to provider to payer.
In 2015 an article in Vox highlighted the inefficiencies from the medical provider’s viewpoint.
"Much of the waste in our system has to do with the fact that we run an inefficient health-care system, in which hundreds of health insurance plans all charge different prices for the same surgeries and scans. That requires lots of billing staff: For every three doctors in the United States, there are two administrative staffers to handle all the paperwork. That's unique to the U.S. system."
The complex pricing systems don’t help any of the stakeholders: not the carriers, the brokers, or the small business trying to find decent insurance plans. Despite often being labeled the “bad guy,” because it’s assumed that health insurance companies make big bucks, insurers actually have a lower profit margin than many companies. In a 2014 Forbes article, the numbers from 2013 show a profit margin of less than four percent.
The headaches are painful, for all of us, and it’s why I dove into this industry – to solve problems we all have when dealing with health care.
Because of my technical background and as an entrepreneur, I’m able to see digital solutions when others haven’t yet defined the problem. Huge organizations have a hard time being innovative. It’s partly a "can’t see the forest for the trees" issue, that is, from inside the company it can be difficult to get the big-picture view needed to solve a systemic problem. There’s also legitimate concerns about disrupting the business and affecting revenue. After all, these aren’t tech companies built from day one as platforms.
But while fixing inefficiencies is one of the best ways for companies to improve profits, few of the stakeholders in the health care industry have created or embraced game-changing platforms. I absolutely believe it’s time, past time, for the culture to shift away from manual, paper-driven, old-school information distribution and service delivery.
But, this doesn’t mean the human side of the health industry needs to disappear into some science-fiction future. We absolutely need brokers who can work with companies to find the best benefits for their employees. The carriers will need to keep people in place to deal with complex explanations that aren’t part of an everyday FAQ.
The best way to make sure that the people who need insurance get the best benefits, and therefore the best health care, available is to implement the programs and packages using the best digital technology available.
The solution, then, to much of the health care problem in our country is to unify this fragmented ecosystem with modern platform technology. Brokers, carriers and the businesses that need benefits will all save time, money and, in the end, lives.
Matt Ranauro is an entrepreneur and founder of Benefix, a software company based in Lancaster that focuses on products for the health care industry."