Tie-ups between health insurance companies and big retailers are dominating headlines as the healthcare sector reacts to incursions from Amazon. Not only is CVS on track to acquire Aetna, but Humana and Walmart are said to be growing closer together.
But throughout all these overtures is a harsh truth. The core insurance business—managing and pricing risk—isn't the big attraction for retailers. The acquiring companies are trying to bolster their pharmacy businesses as Amazon looms over the sector.
"The traditional health insurance piece isn't the most valuable piece to these transactions," says Matt Josefowicz of Novarica. "Pharmacy is already a big piece of a lot of retail companies, and controlling the logistics layer and the benefits management around it is a benefit to them."
However, it is very likely that retailers and insurers will find a number of beneficial synergies as they begin to integrate their technology assets. Retailers are highly adept at customer analytics, and insurers collect a lot of information that can feed analytical models (as long as HIPAA requirements around privacy are met, of course).
As health delivery and payment becomes more vertically integrated, an ecosystem leveraging the unique collection of data from shopping and health behavior can go a long way toward providing a much better customer experience—and heading off claims before they happen.
"Retail is the most advanced industry in customer data management and insight, with its high volume of small-value transactions," Josefowicz notes.
Already, some indications of how this could play out are bubbling to the surface. Humana has been developing a range of technologies to help keep seniors on track with medications. Those innovations, coupled with Walmart's massive real-estate portfolio, have the potential to "[develop] a bulwark in rural America with an ability to address inadequate access and medical services,” according to Bryan Komornik, a director in the healthcare practice at consultancy West Monroe.
Humana's RxMentor tool pulls from claims data in addition to medication and allergy information that members report themselves to help them maintain an up-to-date list of their medications. But those still have to be delivered.
“Walmart’s expertise in tracking and distribution of those items is a strong plus for Humana,” Komornik adds, noting that as Amazon looks to build an online pharmacy presence, Humana’s messaging and digital products for their membership provides Walmart with a more direct link to consumers.
It's unlikely these models could extend to other lines of insurance business, like home or auto, Josefowicz says. The retail sales component is too vital.
"Something comparable would be an auto repair chain buying an auto insurer or a home-improvement store buying a home insurer," he explains. "It's very unlikely."
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