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Nathan Golia
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Why Did Health Insurers Get a Head Start in Emulating Retail?

Blue Cross and Blue Shield of Florida opened retail stores three years ago, and several other health carriers told I&T about their admiration for the retail channel. What's driving this innovation in that line of business?

A blog entry by Sarah Kliff on the Washington Post yesterday talked about Blue Cross and Blue Shield of Florida's retail stores, which the health insurer opened three years ago. The company's CEO, Patrick Geraghty, said that incorporating this kind of environment would help it transition into a "more consumer-focused company."

That reasoning was echoed by a lot of health insurance executives when I asked them about emulating the retail experience for an article last month. Specifically, Shankar Ram, Humana VP of innovation, said that the company wants "to make a paradigm shift from a healthcare provider to a health company."

"Everything we do is to see how we can join a few dots to live that vision," Ram added. "We look at how we leverage technology and strategic partnerships that we can bring forward something that works for the consumer. Consumers are more indulgent and want more involvement, and that's where becoming a customer-centric organization comes in."

But what's driving this enthusiasm for retail among health insurers? Kliff's article suggests BCBS of Florida's move "responds to the health reform law: Come 2014, the health reform law will expand the individual health insurance market by an estimated 16 million new customers. Individuals will become increasingly involved with purchasing their own health care, putting a greater premium on customer service."

[Check out tips from Florida Blue Cross and Blue Shield's CTO and chief of staff on how to stay within budget and use metrics to evaluate IT's effectiveness.]

Later, however, she notes the company "was already on the way to retail stores before the Affordable Care Act." And Jeff Welch, divisional VP of emerging markets for Healthcare Service Corp., the parent company of several Blue Cross & Blue Shield plans, told me that its individual business has "been on a retail level for quite some time, whether it's direct-to-consumer marketing or call-center innovation."

"What's new about this is taking it to the group side of the house and replicating that at a group level," Welch says. "Part of it's due to the reform regulations, but part of it is how the market is emerging: more informed, better informed" consumers with access to more information.

[Read what Welch had to say about the need to innovate in health insurance regardless of regulation.]

It is true that the healthcare reform law, if upheld, will lead to an increase in individuals purchasing health insurance. For his part, Geraghty told the Post that the stores have BCBS of Florida "well positioned for that expansion … We know we have to advance retail capabilities. That’s what you’re seeing here.” Still, it seems that health insurers were well on their way to embracing retail strategies long before the ACA was passed.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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