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Amid these headwinds, the old paradigm of deploying strategies designed to simply sustain the business is no longer a viable option for payers, impeding their ability to maintain financial sustainability and drive long-term growth. To succeed in this environment, companies must embrace a transformation mindset with intention and foresight. This proactive approach will enable payer organizations to not only survive in the present but also thrive for the long term.
The imperative for business transformation
Historically, payers have largely operated with a mindset focused on simply sustaining their siloed business functions. This stay-the-course approach has allowed established business units, which are often siloed, to make unilateral capability decisions and mature processes within their respective domain. In today’s environment, this course of action can significantly hinder companies’ ability to transform intentionally and build value. For instance, payers often launch well-intentioned but unstructured initiatives that are not clearly aligned to a broader organizational strategy. Examples of these misguided efforts include the following:
- Consolidating technologies across the organization without also rationalizing related business operations
- Developing strategies to address business needs and regulatory requirements but failing to assess their impact on the company’s current operations and tech infrastructure
- Duplicating capabilities across business units instead of streamlining how they are sourced and shared across the organization
Based on EY experience, as much as 40% to 60% of payers’ pipeline initiatives lack strategic alignment or a clear value proposition, thereby siphoning off resources from programs with higher potential. In the wake of these missteps, companies are seeing significant challenges around weeding their portfolios effectively, allocating capital strategically and optimizing the most promising opportunities quickly. This stagnation leaves many payers ill-equipped to invest in the very capabilities that drive strategic business growth.
Transformation challenges: understanding the why
As payers seek to understand whether their organization is equipped to transform with confidence, there are several key questions company leaders should be asking:
- Do we regularly leverage a standardized way to determine where to allocate limited resources across the organization?
- Do we regularly demonstrate the ability to quickly identify requirements and optimal solutions to achieve business needs, develop a business case and clear value proposition for these solutions, and create a roadmap to drive approvals and activation?
- Does our organization regularly collaborate with ease across functional areas to mitigate redundant and overly complex tech infrastructure and operations?
- Do we regularly demonstrate the ability to effectively anticipate the change management and operational readiness impact of initiatives so that we implement efficiently and maximize benefit realization?
For payer organizations that didn’t respond to these questions with a confident “yes,” understanding the root causes as early as possible in the portfolio management or project lifecycle (and before making any major investments in technology and other business expenditures) will be key (see Figure 2).