Healthcare payers have navigated many difficult challenges over the past few years, including rapid digital transformation, rising customer demands and an ongoing talent shortage. Weathering these challenges required you to become more agile than ever before because, frankly, you had to.
What prevents an organization from embracing agility as an operational approach?
An article titled “Your Company Is Too Risk-Averse,” published in the Harvard Business Review, explains:
“Executives are reluctant to propose and advocate for risky projects. They quash new ideas in favor of marginal improvements, cost-cutting and ‘safe’ investments.”
So, how does loss aversion show up in healthcare payer organizations?
What loss aversion looks like for payers
Imagine that your team is working hard to process appeals and grievances, but regardless of how hard they work, you never fully catch up. You know there’s room for improvement, but when you pitch a new technology solution that helps automate tasks to your manager, you get turned down. You might hear responses such as:
The system we have works fine, and we don’t have a budget for new investments now.
We’ll just solve the problem by hiring more people.
We’ll make enhancements to our existing database and that will get the job done for less money.
These objections are rooted in staying in the status quo and stem from a loss-aversion mindset. Technology is an important tool that helps organizations keep up with a constantly shifting market. Yet investing in technology often feels risky, even if by doing so you’re recapturing lost dollars and saving money. As a result, when you pitch new technologies to your manager, you might get turned down, which is where many stay stuck.
Presenting your case differently allows you to break down the true cost of not doing anything and helps management see how spending money supports both agility and future growth.
Breaking out of the status quo
Payers are dealing with changes in all parts of the market, more recently in the retail clinic space. In 2020, there were over 3,000 retail clinics in the United States, a number that is only expected to grow. If you want to keep ahead of market changes, you need to continue strengthening your competitive advantage.
It’s a little like the old adage about the frog in boiling water. Turn up the temperature too quickly and the frog jumps out. He knows there’s a problem. But if you gradually turn up the temperature, the frog doesn’t realize there’s a problem until it’s too late. Like the frog, payers might not realize the size of the problem, so they stay in the status quo.
They take actions to “fix” the problem in the short term, such as hiring more people or altering existing solutions. But these temporary fixes just buy more time without fixing the deeper problems that interfere with agility and growth.
What to do instead
Instead of presenting your case for new technology in the context of the cost of the solution, present it in terms of the cost of doing nothing and what you’ll save over the long-term with the new technology. Let’s say that it takes an hour for an employee to create an incoming case. If you adopt an automated solution, that time might be cut to 10 minutes.
That may not produce much savings on a single case but apply that savings to 15,000 cases per year and the time savings add up fast. Multiply that time savings by the hourly wage of the employee doing the work, and now you have something compelling to present to your manager.
Breaking free from loss aversion
Loss aversion is hard-wired into people. It’s natural to want to avoid risk. But, doing nothing eventually becomes far riskier and more expensive than forging ahead with a new solution. Adopting technologies helps make you more agile, so you can quickly shift to support market changes and continue growing in the future.
Want some help creating your proposal? Download our cheat sheet here.