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Spotlight on the rising health-wealth marketplace
Thomas Coyle
11 September 2006
Seven factors critical to success in the emerging health-wealth HSA market. The emergence of the health savings account, or HSA, is spurring the creation of a new breed of health-wealth service that brings financial-service providers and healthcare-industry players into new relationships, both collaborative and competitive.
With assets in health savings accounts (HSAs) set to grow almost 140% over the next five years, $37 billion in total revenues will be in play in the emerging health-wealth market. Who captures that revenue -- financial services firms, health plans or niche service providers -- will depend on seven strategic factors, according to Diamond Management & Technology Consultants.
Lines blur
"We're seeing a blurring of the traditional lines separating financial services and healthcare as companies try to stake out their position in a new value chain," says Aamer Baig, co-managing partner of Diamond's financial services practice. "Billions of dollars in revenue are at stake, and there's a scramble to own long-term, profitable customer relationships."
Diamond expects HSAs - tax-advantaged accounts in which customers accumulate savings for medical needs - to grow 140% to 10 million to 20 million accounts with hold than $75 billion in assets by 2010.
"We project that the new market could generate $37B in revenue over the next five years," says Baig. "While players of all sizes can still enter the health-wealth market, leading firms are moving past the exploration phase of the HAS evolutionary cycle" and introducing new products that test the market. "The leaders are now focusing more on product integration and inter-operability, and driving cost-quality transparency to capture long-term market share."
Regardless of where a company stands relative to the HSA evolutionary cycle, Diamond says there are seven factors critical to success in the emerging health-wealth market. Business 1. ModelHow do we make money in this business today and in the future? How much investment do we need to make? When?2. Strategy - How will HSAs align with and advance corporate objectives? - What role will our company play in the value chain? Who will we compete with? - How big is the opportunity for us? - Who is our target audience? Business Model- How do we make money in this business today and in the future? - How much investment do we need to make? When?3. Partnerships- Why should we partner? For market access or new capabilities? - Which partners should we work with? - How should we integrate and manage partnerships? 4. Customer Experience- Which customer touch points warrant the most investment and attention? - What will the experience look like from the customer's perspective? - What are market expectations and how are they evolving? 5. Organization- How is the organization enabling the health-wealth business? - How will HSA-related initiatives interact with existing functions? 6. Operations- What is the impact on key operational areas (e.g. service, technology, new product development)? - What new processes and metrics will be required? 7. Technology- What is the impact of health-wealth on existing technology? - What should be the future-state architecture and organization? - What is the strategic technology roadmap?
"Many have already invested in consumer-directed products and initiatives, but financial-service firms still control and best serve the financial interests of consumers," says Andrew Rocklin, a principal in Diamond's healthcare practice. "An ability to collaborate appropriately while still owning relationships with consumers and employers will ultimately determine health plans' long-term ability to succeed in this market." -FWR
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