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The Convergence of Health and Risk – Research Overview

16 August 2022 Michele Jennings, Managing Executive, Group Risk: Sanlam Corporate and Gary Allen, Chief Executive: Sanlam Health Solutions
Michele Jennings, Managing Executive, Group Risk: Sanlam Corporate

Michele Jennings, Managing Executive, Group Risk: Sanlam Corporate

Gary Allen, Chief Executive: Sanlam Health Solutions

Gary Allen, Chief Executive: Sanlam Health Solutions

In our Benchmark Survey, 31% of stand-alone funds, and 21% of umbrella fund Benchmark respondents indicated that they had looked at ways to limit risk premium increases. However, affordability challenges, together with technological advancements, mean that now is the time to focus on preventing claims rather than pricing for higher claims.

For example, 51% of the Benchmark respondents indicated that they believed a holistic health and financial wellness programme delivered higher productivity and staff happiness, yet only 12% used integrated programmes - reflecting a clear gap in the current services offered.

New smartphone technology and frictionless health data aggregators are enabling health providers and life insurance to converge. This technology supports a meaningful relationship with members regarding their health, wellness lifestyle, mental well-being and even adherence to chronic disease management. This can improve member health outcomes, and in turn, prevent or reduce claims for the health insurer as well as the life insurer.

Condition

Growth 2020 – 2030

Growth 2020 – 2040

Comorbidities (more than one co-existing non-communicable disease (NCD) in an individual)

27%

56%

Depression

15%

30%

Diabetes

27%

55%

Heart Disease

32%

69%

Hypertension

24%

47%

Source: Hidden in Plain Sight, Projecting the Burden of NCD's by Percept Actuaries and Consultants, 5 October 2021

The impact of lifestyle changes and disease management
The non-communicable disease (NCD) burden will almost double for most conditions between 2030 and 2040. NCDs are a good indicator of the needs for healthcare services given their chronic nature and reliance on regular medication.

The rise in NCDs reflects a lack of awareness of the impact of lifestyle on diseases. Often the impact of lifestyle-related diseases is detected too late to prevent the grave consequences that follow.
Lifestyle also impacts mental illness, with financial stress being one of the largest contributors. This can lead to coping mechanisms like substance abuse.

It is possible one positive lifestyle intervention can improve the outcomes across multiple disease types. Afrocentric, a Sanlam Health Associate within the Sanlam Group, data shows how lifestyle choices drive diseases. In the medical scheme environment, poor lifestyle choices have driven 65% of healthcare expenditure. This excludes the impact of alcohol and drugs on trauma-driven hospitalisation. This is also reflected in group risk claims and increased group risk premiums. The WHO estimates that as much as 90% of the incidence of Type 2 Diabetes, 80% of coronary artery diseases and 33% of cancers can be avoided through successful lifestyle interventions.

The good news is that lifestyle changes can reduce, avoiding many of these medical- and group risk claim events. Evidence from Afrocentric and Medscheme shows effective disease management leads to reduced hospital admissions and shorter in-hospital stays. There is unambiguous evidence showing that managed diabetes programmes can improve the HbA1c score in about 62% of the beneficiaries. Additionally, early management of back and neck pain – a major cause of claims – can help avoid hospitalisations altogether.

The steps we need to take
With the knowledge that managed healthcare can lead to healthier lives, the scalability of these principles across an insurer’s entire client base will undoubtably lead to improved outcomes.

The concept is not new; however, previous attempts have not managed to gain traction. Through trial and error, a couple of key success factors to holistic integrated health and financial wellness have been identified:

- An advanced, affordable, and proven technology platform is required to enable frictionless, real-time member data collection, together with analytical and engagement tools that will enable well-being insights and management.
- Data is critical, but requires effort, so incentives help to motivate members and stakeholders to provide and respond to data requests are required.
- Scalable managed healthcare protocols, delivered through engaging technology, are needed.
- The most challenging success factor to resolve has been the funding mechanism for this complex and costly infrastructure. It is not financially feasible for only one stakeholder to bear the costs.

Through our partnership with Afrocentric, we now have a solution that can deliver on all these success factors.

The role of data integration
Frictionless health data aggregators like HealthCloud have developed an IT platform that integrates real-world data. This integration of data includes disparate healthcare records (even some from the SA Department of Health) and enhances it with additional data that can be sourced from almost any touchpoint.

Current explorations include exciting technology – like Vertica Health – which enables members to use their smartphones, and ‘selfies’, to complete personal health statements in under 12 minutes, providing information previously only available through physical exams and blood tests.

The Benchmark research reflects that over 40% of employers take a holistic view of their employees and want to offer a wide range of financial and healthcare benefits, so health data aggregation can be used to proactively identify risk factors and trends that enable appropriate workforce interventions such as fitness, nutrition, or mental wellness.

Insurers, employers, and members are connected through a member’s financial, mental, and physical well-being. The convergence of scalable health and life insurance it is not only possible and relevant but is certain also to lead to meaningful and engaging relationship with members, as well as gains for all stakeholders.

- Members and dependants are presented with better health outcomes and quality of life.
- Employers can reduce absenteeism, staff turnover, and improve presenteeism, thereby saving costs and increasing productivity.
- Health and life insurers experience lower claim payouts, which results in lower insurance premiums for members and employers.

Given that all stakeholders benefit, a co-funded solution is the best mechanism to ensure that the solution is socially inclusive, and not reserved only for the elite and wealthy.

Aligning incentives with the targeted outcomes, for example sharing in claims experience improvements, really makes this a rare win-win-win for everybody.

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