Global healthcare costs — due in part to aging populations, increasing prevalence of chronic conditions and rising obesity levels — are at an all-time high, growing faster than inflation and increasing at an unsustainable pace. As a result, governments, taxpayers and subsidizing employers are experiencing extreme strain in their budgets. Properly deployed, health plans have the power to be a major force for managing the cost of care and bending the cost curve.
L.E.K. has extensive experience advising both private- and public-sector payer organizations on product and sales strategy, operations effectiveness, healthcare and G&A cost management, revenue growth and realization improvement, and M&A support. We help empower payers drive change by providing thoughtful research, clearly articulating and refining the value propositions, and adopting a practical approach to integrating new solutions into the value chain.
In the U.S., we help managed commercial, Medicare, and Medicaid health plans and other payers develop and implement innovative strategies to respond to rapidly changing competitive and regulatory dynamics in areas such as care management and care models; health insurance exchanges; healthcare quality; and the development and implementation of new programs, products and markets. We offer unparalleled expertise in addressing the requirements of high-need populations, including dual-eligible beneficiaries. With managed-care Medicaid/dual eligibles market expansion approaching $300 billion in revenue, and with Medicare Advantage enrollment growing approximately 8% per year, there are tremendous but challenging opportunities to capture.
Europe and Asia-Pacific Market
In Europe and Asia-Pacific, we advise private-sector organizations that contract with the public sector to deliver superior healthcare services, helping ensure services are cost-effective and results-oriented, with an increasing focus on outcomes. We also advise in occupational health markets and mixed healthcare economies where private medical insurance or private health insurance features strongly.
Within these markets, we support clients in developing mixed funding models that increase exposure to self-pay and PMI models as public funding constraints force patients to contribute to the cost of care, while the development of new financial product propositions targeted at value-based patient cohorts can help increase PMI penetration. We also support PMI providers in evolving their current business models to attract younger policyholders in order to balance the currently aging book.
Key questions and challenges
In this highly dynamic environment, health plans and private payer organizations are asking us to help them address key strategic issues such as the following:
- What is our role in a future with more government control over margins? How should we optimize the spread strategically and operationally?
- What contracting and payment models should we deploy to improve alignment and change provider behavior? What has been proven to work, and what are providers ready to take on?
- As government-funded programs continue to increase their share, how can we participate and win in these high-growth segments?
- Can we afford to integrate into care provision? Can we afford not to?
- How can we effectively integrate into care coordination in order to ensure quality outcomes are delivered when the existing provider network is not fully capable?
- How should we migrate from a business-to-business sales model to one that is becoming increasingly consumer-centric and intimate with the member?
- In the face of a reoriented space, what critical capabilities and points of leverage must we acquire and develop?
- How does the PMI business model, in Europe and in the U.K. in particular, need to evolve to attract a cohort of younger policyholders?
- How can we leverage digital platforms to improve member experience, drive engagement, improve health outcomes and promote loyalty?
- Where we don’t have the necessary skills, how should we activate our strategy for the future?
Examples of our work
To learn more about how we help clients create value, please refer to these case examples:
- Served as the principal strategic advisor and implementation architect for a leading managed care plan’s development of its government programs business. The client profitably grew its managed Medicare and Medicaid enrollment from approximately 25,000 members in a single region to more than 700,000 members across multiple regions.
- Developed a strategic plan and investment plan and provided implementation support for a national, multi-line managed care organization to substantially grow its Medicare Advantage membership over five years (and enhance distribution) via new county expansion, improved member retention, targeted outreach to plan switchers, Medicare fee-for-service beneficiaries and age-ins. The client approved the plan and financial investment that we recommended and pursued implementation with our assistance.
- Codified, documented and quantified the value contribution for each component of an integrated payer-provider’s innovative, frail-and-elderly, Medicare healthcare delivery model to facilitate market expansion. Our work led to substantial profitable growth and eventual acquisition by a national MCO at record-breaking valuation multiples.
- Developed a migration strategy and plan to implement an integrated delivery system (“virtual Kaiser”) in response to the changing market environment for a multiregional Medicare Advantage plan. The client continued to pursue key initiatives despite being acquired shortly after project completion.
- Developed a comprehensive go-to-market strategy and provided implementation support for an MCO to become a cutting-edge provider of integrated social support services to improve overall health and well-being among a low-income population while also reducing medical services utilization. Led the strategy development across initial idea generation, opportunity vetting, business model definition, plan scaling, implementation planning and strategy activation. The client launched what it anticipates to become a multibillion-dollar business with the potential to fundamentally transform a broken welfare system, deliver better results at a lower taxpayer cost and improve the lives of millions of underprivileged people.
- Developed a comprehensive long-term services and supports growth strategy and product offering, by completing comprehensive, state-by-state review of long-term care and LTSS managed care programs in all 50 U.S. states; synthesizing key themes and areas of consistency between state Medicaid programs; and codifying best-practice models, strategies, operational and capability requirements, and tactics in an “operations playbook.”
- Developed a comprehensive turnaround plan and supported implementation of priority strategic initiatives (e.g., enhance medical management and care management capabilities, revamp concurrent review and prior authorization processes) for a Medicaid long-term care and Medicare Advantage plan. The client presented the turnaround plan to the board of directors and initiated implementation instead of closing the business.
- Collaborated with a leading private hospital to assess the long-term future and sustainability of private medical insurance, health plans and private pay flows in the U.K. — funding sources that underpinned the vast majority of the hospital’s patient volume. Our conclusions informed the client’s insurance strategies and drove the decision to establish its own insurance offering.