Capturing Healthcare Reform's New Customers: The Newly Insured

Understanding the differences between the newly insured and currently insured populations will help providers plan services for reform's new customers and design approaches to capture market share.

Much has been written about organizational strategies to prepare healthcare providers for healthcare reform. However, very little has been written about reform's new customers, the newly insured, and how providers can position themselves to become their provider of choice.

Drawing on the findings of the California Health Interview Study (Brown et al. 2009), this article discusses the characteristics of the newly insured market and what differentiates this market segment from the insured segments providers are accustomed to seeing. Understanding the demographic, behavioral, and access characteristics of the newly insured market will help providers understand the newly insured's need for healthcare services and how to capture market share.

Who Are the Uninsured?

By 2014, healthcare reform will extend coverage to an estimated 32 million uninsured Americans and will require most legal residents to carry health insurance. If unemployment remains high, this early estimate may be significantly larger. According to recent information from the Census Bureau, the number of uninsured Americans rose by 4.4 million to 50.7 million in 2009, the largest annual jump since the government began collecting comparable data in 1987, in large part because of the recession (Johnson 2010). As the number of uninsured continues to escalate, what do we know about them, their need for healthcare services, and how to reach them?

From the most recent data available for the state of California, we learn that 6.4 million adults and children were uninsured at some point in 2007 (Brown et al. 2009). By 2009, the number of Californians without health insurance for all or part of the year had grown to an estimated 8.35 million, or 24.3 percent of the population (Lavarreda et al. 2010). To get some idea of the characteristics of the uninsured and their healthcare needs, Table 1 compares California's uninsured with Californians covered by Medicaid or their employer.

As indicated in Table 1, the uninsured are overwhelmingly a working population, with mainly low and moderate incomes. When compared with people insured through their employer or Medicaid, the uninsured are ethnically more diverse, younger, disproportionately male, smoke more, and view their health status less favorably. In the past year, they are less likely to have seen a doctor, visited an emergency department, or had an inpatient stay. Notably, 20 percent said they did not seek medical care when needed or delayed seeking care.

The data in Table 1 clearly indicate the existence of differences between the uninsured and the insured populations. Although this study focuses on the California market, the data offer insights into the potential size and characteristics of a new and attractive source of "paying" patients. Understanding the differences between the characteristics of the newly insured and those of the currently insured will help providers plan services for reform's new customers and design approaches to capture market share.

Table 1 - Characteristics of Uninsured Californians Compared with Californians Insured through Medicaid or Their Employer

Market Demand Implications

It is imperative for healthcare professionals to understand the characteristics of the newly insured population in their service area. Careful planning will help them gauge the likely demand for health services. On the basis of the California data, providers may expect a disproportionate number of young males whose health status may be complicated by the fact that a relatively high percentage of them smoke or have delayed or not gotten needed medical care. This suggests an initial escalation in patient volume due to pent-up demand for healthcare once coverage begins. However, demand may be expected to taper off once care has been provided.

By drilling into discharge data, providers may explore specific MS-DRGs and ICD-10 codes to pinpoint healthcare consumption patterns by the uninsured "young male" segment. Consumption patterns can then be tied to resource requirements, such as the number of tests, procedures, visits, admissions, and staff needed to support them. In addition, the association between health consumption patterns and disease can be linked to potential disease prevention and health improvement initiatives.

Although the data discussed in this article are for the California market, providers in other states may find similar data for the uninsured in their service areas in a variety of ways. For example, data may be available from state planning agencies, the local health department, the United Way, community clinics and health centers, school districts, and related community-based organizations. If data are not readily available, providers may opt for doing primary research. If funds are available, providers should conduct quantitative surveys, qualitative focus groups, or both to understand the characteristics and needs of the uninsured. If funds are limited, providers should consider mining internal data sources, such as inpatient and outpatient data reservoirs.

Market Share Implications

Extrapolating from the California data, most of the uninsured market segment does not appear to have established relationships with healthcare providers. This suggests a huge market opportunity for providers seeking to become the newly insured's provider of choice. To capture healthcare reform's new customers, providers may wish to pursue the three courses of action discussed below.

Have an Enticing Brand and a Retail Mentality. The newly insured will have multiple choices when it comes to selecting a healthcare provider. Many will be establishing relationships for the first time. To capture these new customers, providers will need to sharpen and effectively manage their brand and brand messages. Specifically, providers should consider the following activities:
- Conduct focus groups with newly insured prospects to fully understand what your organization's brand conveys to them in terms of perceived capability, skill level, and approachability. Test the uninsured's experience using health facilities, including yours, and investigate any perceived shortcomings, such as gaps in service, long waiting times, knowledgeability of staff, and accessibility of facility.
- Validate that all brand communications, both print and electronic, carry a consistent message in language the newly insured can understand.
- Ensure that all the touch points are engaged, and strive to avoid mismatches between your organization's brand promise and the newly insured's actual experiences. Hold town hall meetings with staff to discuss the potential impact of the newly insured on provider operations, such as scheduling, registration, reception, treatment, discharge, and postdischarge support capabilities. Explain what you know about the new market and the importance of capitalizing on every opportunity to engage the newly insured as patients and visitors.
- Include the uninsured segment in advertising strategies now, in advance of their eligibility for coverage, by targeting placements in media relevant to the uninsured.
Maximize the Use of Information Technology. The younger population that predominates in the newly insured will be comfortable with information technology and willing to be active participants in their care. These attributes suggest opportunities for providers who seek to differentiate themselves.

For example, providers should embrace technology that allows hospitalized patients to have electronic access to personalized medical information as soon as they arrive in their rooms. Providers should emphasize patient education and communication that encourages patients to learn about their diagnosis, treatment plan, and any upcoming medical procedures.

Finally, providers should develop a social media plan that maximizes the use of social media tools like Facebook, YouTube, and Twitter to promote wellness and improve health status. Being first to reach out to the newly insured will help create and sustain a leadership position in that market space.
Collaborate with Community-Based Organizations. Finally, providers should pursue collaborative relationships with community-based organizations (CBOs). CBOs are not only a source of information about the uninsured but can also be viable partners in caring for the newly insured.

With increased funding for community health centers and training programs for primary care physicians earmarked in the new reform law, it behooves providers, especially hospitals and medical groups, to collaborate and avoid unnecessary duplication of effort. Collaborative activities may include the following:
- Form a community advisory council with the uninsured as members to ensure broad input into your organization's planning.
- Participate on boards of community care clinics that provide services to the uninsured, and encourage hospital employees and physicians to volunteer as caregivers.
- Start collaborating today with public organizations like the health department by supporting initiatives that serve the uninsured. By showing up early, providers will be in a better position to understand the needs of the uninsured.

In short, cost-cutting efforts alone will not be enough to generate strong margins under healthcare reform. For healthcare leaders seeking to break from the pack, the best sustainable solutions to healthcare reform may rest with the people who await its benefit. By understanding the characteristics and needs of the currently uninsured, healthcare providers can prepare resources and relationships accordingly, design innovative strategies to align with healthcare reform's new customers, and grow revenue.

Ronald P. Nowosad, Associate Partner, Creative Healthcare (www.creative-healthcare.com).