Editor’s note: In a three-part series, Morrison explores the consumerist-led disruption of conventional health care. The first part defined consumerism and showed how health plans are becoming more consumer friendly. This second part focuses on the case of Florida Blue, a plan that helps consumers understand their insurance and make informed choices.

Insurers, like others in the health sector, are trying hard to reach out to consumers in new ways to enhance the experience. Perhaps one of the most interesting examples comes from Florida Blue (the Blue Cross Blues Shield Plan of Florida), which has a strong consumer focus and, indeed, has built a significant retail presence over the last few years.

I reached out to Patrick Geraghty, Florida Blue CEO, who was kind enough to walk me through his perspectives on consumerism and disruption from a health insurance point of view.  By way of context, Florida Blue operates under the umbrella of GuideWell Mutual Holding company (which Geraghty also leads), whose combined businesses have a current run rate of $16 billion in revenue – with Florida Blue comprising almost 90 percent of that revenue base. They operate or joint venture in a number of related business entities in both the insurance space (such as Florida True Health, a joint-venture Medicaid managed care organization) as well as a portfolio of direct health care delivery operations, such as medical clinics and freestanding emergency services. 

Over the last decade, GuideWell built capabilities in consumer navigation and population health by acquiring a number of businesses that they seek to expand nationally. Indeed, despite their obvious focus on the Florida market with 5 million members (almost a third of all insured Floridians), many of their businesses operate nationwide or in multiple states. For example, their traditional Medicare business is the fee-for-service Medicare administrator for Medicare jurisdictions that account for 11 states, the District of Columbia, and the Indian Health Service at the VA, thereby being the back-office processor for millions of Medicare recipients. GuideWell is interacting with millions of consumers in a lot of different ways.  Geraghty came from Minnesota to lead Florida Blue and is an industry veteran with great experience and enthusiasm for the positive role consumerism can play in transforming health care. He was generous in sharing his insights about Florida Blues’ pioneering experience in opening retail outlets in support of the core health insurance function – and how it relates to the consumerism agenda.  In the last few years Florida Blue has opened 20 retail centers around the state (providing access to 80 percent of the population of Florida within a 30-mile radius of the centers). These retail centers are conceived much in the way that an Apple store supports Apple products – not just as a sales channel but also as a service center, brand presence and product support function. 

Geraghty told me: “Health care is a system, from coverage to care, and many consumers need support in navigating the system,” much in the way many of us Apple users struggle to get the most out of our seemingly simple devices. In some sense, the Florida Blue retail centers are the “Genius Bar of Health Insurance.” 

Achieving strategic objectives

In exploring the contribution that retail centers have made to Florida Blues’ strategy, Geraghty laid out the importance of complementing, not cannibalizing, existing distribution and service channels. “These retail centers are just one of many channels that support our products and services,” he said.

In particular, when the two pilot retail stores were opened some years ago, brokers reacted negatively to the potential of their cannibalizing or undercutting traditional distribution channels to individual and small-group purchasers. Since then, the retail centers were recast and repositioned to supplement and partner with brokers, rather than to supplant them.  When I asked Geraghty how Florida Blue got into the retail business, he pointed to their analysis of the Massachusetts market (the early pioneer of exchanges) as a harbinger of what might happen under the ACA. Florida Blue examined the experience with the Massachusetts Connector (the pioneering Romney Care Exchange), where consumers would go online to select insurance, but where many people needed support in making decisions and customizing their selections. Selecting health insurance is a complex choice: “It’s not like buying an appliance,” Geraghty said; “there’s a lot of complexity to the product, and it is highly personal.”

The Florida Blue retail centers were conceived as a place to help navigate health insurance and health care choices and answer customer questions. But increasingly, the retail centers integrate and co-locate other health services, such as physician groups and wellness. 

The retail concept has met with considerable positive feedback from consumers. In the past year, 300,000 unique customers have visited across the 20 retail sites – with customer satisfaction scores of 92 percent overall, and 97 percent where clinical services are co-located. 

The stereotypical user is not a confused, less well-educated, older, non-tech savvy customer as you might imagine. Florida Blue executives were pleasantly surprised to find that a wide cross section of consumers were using their retail facilities for sales, service and product support – such as Florida Blue’s “know before you go” tools that they provide to consumers who are embarking on significant interactions with the medical care system. Indeed, Geraghty told me that a significant segment of retail customers were younger couples just starting a family who were seriously engaging with health insurance for the first time. 

Florida is a particularly interesting state in terms of providing retail choice to individual health insurance consumers because it is home to the largest individual market in the country, as measured by exchange enrollment. Approximately 1.7 million Floridians have signed up for exchanges in 2018 according to CMS; and although final numbers aren’t yet verified for Florida Blue, a good estimate is that one million members will be enrolled with Florida Blue through the exchange. With this scale and good operational discipline, Geraghty told me with regard to the individual market: “We operate in the black.”

Helping to make informed choices

In the last year, the entire health insurance sector has experienced the roller coaster of withdrawal of Cost-Sharing Reduction (CSR) support – causing strategic chaos, impairing the finances of most insurers in the individual market, and accelerating exit from state markets by national players such as United and Anthem for 2018. 

Removing CSR funding late in 2017 resulted in a 15 to 30 percent increase in rates for 2018 in many states. This is ameliorated for those lower income exchange customers (some 87 percent of people buying on the exchanges) who are getting some form of subsidy that insulates them from these rate increases (but doesn’t insulate the government from paying even more in premium subsidies). Perversely, the withdrawal of CSR support in many states has led to bronze plans being even cheaper than 2017 for the lowest-income consumers. 

For nonsubsidy consumers (those over 400 percent of the federal poverty level), rates have increased on average by 30 percent in Florida, as in many states – as the elimination of CSRs are priced in for 2018, and similar effects will be likely in 2019 as the repeal of the individual mandate takes effect. 

The gap between the subsidy population and non-subsidy consumers will continue to widen in terms of what consumers actually pay. Younger, lower-income consumers will be getting plans that are almost free to them, while upper and middle-income older consumers in the nonsubsidized individual market will be paying more than $1,500 per month, as I was going to do this year in California before getting on full-blown, fee-for-service Medicare at about a third of the cost. (Yay! Another column for another time.) 

The rules of engagement in the individual market must be resolved one way or another, politically and economically, in the next 24 months, preferably to the benefit of all consumers and taxpayers. The lack of clarity is frustrating health insurance industry leaders and making the lives of actuaries increasingly difficult. As one CEO of a major national insurer told me recently: “This industry can change dramatically with just one stroke of a pen in Washington.” The ultimate disruption.

No matter what the political and policy rollercoaster, part of the success Florida Blue has experienced in enrollment is the ability for these retail outlets to provide consumers of all types with an opportunity to truly understand the product and engage with confidence in their choices. 

Sparked by the ACA and the rise of individual market, Florida Blue deems their retail initiative a success and a key part all of an overall strategy of assisting all consumers in making informed choices. Recently, these retail centers have been expanded to include other services, such as health risk appraisals and on-site clinical services co-located with partners, and are even providing consumers access to “test drives” and advice on selection of “wellness wearables” such as Fit Bits and smart watches. Florida Blue continues the path of integrating complementary clinical services as their consumer-facing strategy develops.

While this column focuses on Florida Blue’s retail strategy in the individual market, members in other lines of business such as the small group market also make use of these retail centers – even though they may have a relationship with agents and brokers, but use the retail center to complement the advice. (Most of their self-insured employer members have access to employee benefit tools and navigation aids provided by their employers.)

Geraghty also told me of a recent acquisition, PopHealthcare, a Nashville-based company with presence in multiple states. Geraghty sees this new asset as an exciting opportunity to expand the retail platform to help identify chronically patients in need of clinical services who could potentially have them delivered and managed through a combination of retail clinical offerings and home-based services. This is not dissimilar to the vision that CVS and Aetna’s merger hopes to yield by combining a physical retail presence locally with a sophisticated set of relationships and data analytics tools to identify high-cost populations that may be better treated with chronic care services in the retail and home-based setting.

It is important to point out that retail strategy is by no means the only method of communication with consumers. Florida Blue (like most insurers) has extremely sophisticated in-bound and outbound call center operations, web-based solutions and digital outreach using multiple technology platforms – all supported by data analytics to help engage with consumers in all of their lines of business, from Medicare to the individual market.

Dealing with disruption

When I asked Geraghty about what keeps him up at night in terms of disruption and where that disruption may come from, whether it be Silicon Valley, retail giants like CVS or Amazon or some other weird new upstarts, he adroitly pointed out: “Anyone who isn’t paranoid isn’t paying attention.”

“Our goal is to try and disrupt ourselves,” he said, which I think is wise advice. I wrote a book, The Second Curve, more than 20 years ago about change in business generally (the first curve being the incumbent, the second curve being the disruptor). Great companies that endure like IBM have been successful in disrupting themselves, but it is not an easy thing to do. Certainly other leaders in health care such as Providence-St Joseph and Kaiser are pursuing a strategy of self-disruption as a motivation for their teams to continuously innovate. (See my previous column in this space on 2 May 2016.)

As Geraghty told me, while health care seems ripe for disruption, it is not necessarily true that everyone wants to be an insurance company. I’ve described before what I call the mutual disrespect problem within health care: everybody thinks everybody else’s job is easy and anyone can do what an insurance company does. It turns out it’s not that easy to be an insurer, as provider-sponsored health plans and venture capital–backed insurance upstarts alike are finding out.

The real growth and potential disruption is in adjacent services. A good example is the rapid growth of the Optum division of United Health. Optum now has annual revenues in excess of $80 billion, much of it related to pharmacy benefit manager (PBM) activity. Similarly, at the core of the CVS-Aetna deal is a massive PBM operation. Incumbents such as Optum, Anthem, Aetna, Cambia and other insurers have significant service and technology businesses and population health offerings. At the same time, there are a myriad of health 2.0. offerings being developed to compete in these adjacent services. Geraghty argues that the more intense disruptive activity will occur among these related service offerings beyond traditional insurance.

It makes sense to anticipate that the core health insurance functions of claims processing, network development, customer service and support, and so forth, will see continue consolidation – with more horizontal rather than vertical integration to the degree that regulators allow it. At the same time, we will see increased competition and disruption, and a great sorting out of all of the peripheral service businesses to health insurance. But no matter what, as we have argued in these columns before, innovation by itself is not enough: Innovation at scale is required.

Next: How hospitals and systems can become more consumer friendly.

Previous: Consumerism and Disruption: Lessons from Florida Blue, Part 1

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to AHA Today. The opinions expressed by the author do not necessarily reflect the policy of the American Hospital Association.