By John A. Selby, Executive Consultant to health plans and related businesses
May 2022 – The growth of Medicare Advantage (MA), by almost every measure, is continuing at an explosive rate and the pace is not expected to slow any time soon. The ramifications of this growth are both broad and inviting. Any healthcare related business should already have MA on their strategic radar, if not already in their portfolio. Even businesses that are not directly involved in health care should be exploring how to capitalize on this opportunity.
Nearly 30 million Medicare beneficiaries are enrolled in MA plans nationwide, representing more than 46% of the Medicare-eligible population, according to Mark Farrah Associates. And there are more MA plan options than ever available to beneficiaries. The impact touches all corners of our business.
Providers and health care delivery systems are more heavily relying on MA plans for revenue, working more actively to convert their Medicare fee-for-service (FFS) patients to MA, and in some cases responding by creating their own MA plan. (While this makes strategic sense, misalignment of delivery system and plan goals can sometimes compromise the plan’s success.) Service providers of all stripes are engaging with MA plans, providing strategic and operational capabilities. While this is an almost infinite opportunity, improving member experience (and Star ratings as a result) is gaining traction as a good place to start. Medical device manufacturers are asking big questions about how they can create businesses around this growth as well, and finding answers in sometimes surprising places. For example, can your product have a positive impact on risk adjustment? (More to come on that below.)
Distributors – publicly-traded telesales brokers, Private Equity (PE) funded aggregators who are building empires through acquisition, local agencies who must choose between remaining independent or aligning with one of the acquisition behemoths, or the independent agent who is trying to manage a growing book of business, more plan and product options – are on the front lines. They are working with customers and directly influencing customer experience and satisfaction (and Stars ratings), for better or worse. Their success trajectory should align directly with enrollment growth, but distributors must manage renewed CMS scrutiny, Wall Street pushback, intense competition, and customer MA marketing fatigue.
The most intriguing examples are those that are not obvious and require curiosity, an understanding of what drives plan growth and success (hint: follow the money), and a partner with vision. Here’s an example: a medical device manufacturer with a tool that quantifies a difficult to diagnose condition was targeting providers, with limited success. They turned their attention instead to health plans. They looked to MA because of its growth and demographic alignment and discovered their device could help plans improve member risk adjustment scores and provide a strong ROI. This was a win for the plan, the provider (who received the device free of charge from the plan), and ultimately the patient who was able to get a more precise diagnosis and treatment. And the manufacturer had created a new revenue stream.
No doubt that the infusion of capital into this market has expanded product and service offerings. Those who invest understand that the growth trajectory should continue even past 2029, when the last Baby Boomers turn 65. These “late boomers” will behave differently than their predecessors, however. For example, while it is often overplayed, there is no doubt that those turning 65 over the next 5 years will be more digitally inclined than older Medicare beneficiaries. Is that a risk or an opportunity? Yes would probably be the best answer to both, because those who cannot adapt will be left behind. Those with creativity and vision can be successful.
Opportunities are abundant for businesses that can innovate within the MA environment. Can you truly improve the customer experience or member satisfaction, or help plans better manage care or quantify risk? Can you streamline the byzantine complexities that are the result of the regulation, legacy systems, and insular decision-making that haunt most health plans? Can you help solve bigger problems that cut across the many disciplines of an MA plan, such as member engagement?
In other words: how will you capitalize on the growth of Medicare Advantage?
About the Author
John A. Selby is an Executive Advisor to investors, health plans, providers, technical and operational services vendors, and device manufacturers who are looking to capitalize on the growth of Medicare Advantage and ancillary health services.
John has 35 years of healthcare experience, including more than 17 years in Medicare Advantage and Government Programs. John spent 20 years with a large Blue Cross Blue Shield plan, where he held P&L responsibilities for the company’s Medicare and Dental businesses.
He also held an executive leadership position at a regional health plan with responsibility for Medicare and ACA P&L, strategic planning, revenue growth, and overall program performance. John began consulting in 2020 after spending four years at a large, regional general agency where he was responsible for meeting all revenue goals. There he grew a Medicare book of business to nearly $1 million in revenue in less than three years.
John’s focus as a consultant is largely on strategy, product, sales, and marketing.
John graduated from Seton Hall University and completed executive education programs at the University of North Carolina at Chapel Hill, Babson College, the Kellogg School of Management at Northwestern University, the Center for Creative Leadership, and Disney University. He can be reached at email@example.com.