• Health solutions companies refer to health plans that are diversifying to provide services or generate revenue outside of core health insurance responsibilities, traditional lines of business, or legacy geographic markets.
• Diversifying assets alone doesn’t turn health insurers into health solutions companies. Health solutions companies integrate diversified assets into existing business strategies to solve specific problems or meet a specific need.
• Not every health plan needs or wants to become a health solutions company, but even without complete integration, diversification can improve health plans’ stability and competitiveness in the market.

Health solutions companies refer to health plans that want to become more than just health insurers to purchasers and partners. While the investment goals of health solutions companies vary, most are defined by some degree of diversification — providing services or generating revenue outside of core health insurance responsibilities, traditional lines of business, or legacy geographic markets. Health plans looking to diversify have invested in specialty pharmacy and PBMs; digital and data services like data analytics or telehealth; care delivery assets; and a variety of opportunities outside healthcare, such as venture capital and real estate. The options for diversification are nearly limitless. 

But health solutions companies aren’t simply diversified insurers. They find synergies across complementary assets and integrate those products into their larger business strategy, which allows them to solve specific problems or meet purchaser or member needs. By doing so, health solutions companies become integral to the healthcare ecosystem — involved in many aspects of consumers’ lives, via different services, under a cohesive brand. 

Even if a health plan doesn’t want to become a health solutions company, the diversification modeled by health solutions companies may help health plans move away from being perceived as “only” a health insurer — and toward being seen as a long-term “trusted partner in health.” 

Health solutions companies demonstrate how health plans might diversify their assets, even if some health plans seek to do so on a smaller scale. Health plans are diversifying for similar reasons to those of other industries, such as generating revenue or earnings, increasing stability in a changing market, or achieving vertical integration. But there are also drivers specific to the healthcare industry pushing health plans to diversify. For example, because health insurance is a highly regulated industry, diversification can be an attractive pathway to provide financial stability when policy changes impact the insurance business. 

Regardless of whether or why health plans choose to diversify, health solutions companies are becoming one of the most disruptive competitors in the healthcare industry. Health plans are no longer just competing with other traditional insurers with similar offerings. They're now in competition with health solutions companies and non-traditional healthcare companies with immense resources, like Amazon or CVS. Going forward, it will be essential for health plans to be aware of and respond to these changing market dynamics with their own diversification playbook.

Even health plans without ambitions to become the next CVS or the capital to make large-scale acquisitions should think about smaller steps they can take to stay competitive. The following strategies represent steps toward diversification that are accessible for health plans of all sizes, as well as relevant to plans that are already diversifying with the goal of becoming a health solutions company. 

1. Partner to create synthetic scale to compete with large national plans or break into a new industry. Health plans create synthetic scale by partnering with like-minded stakeholders to acquire or build out diverse assets that they lack the capital or resources to manage alone. Creating synthetic scale can be incremental, and the level and intensity of partnerships will depend on health plans’ goals and the amount of time and resources they can invest. For example, in 1998 BCBS Minnesota and BCBS Nebraska partnered to create Prime Therapeutics, a drug cost management company. By 2022, Prime Therapeutics had grown from a two-plan partnership to a partnership with 23 Blues plans, which allowed the organization to achieve scale and provide local pharmacy solutions like home delivery.

2. Invest in diversification to support current strategic goals and organizational strengths, rather than retrofitting an approach based on already-acquired assets. Diversification can support a variety of goals, which will be different for each organization. Examples of goals include: 

• Growing new customers.
• Strengthening internal capabilities to save money, rather than pay an outside vendor.
• Pursuing vertical integration to manage the total cost of care.
• Capitalizing on untapped markets, such as home health care.

Health plans can achieve multiple goals through just a single investment. But being thoughtful about desired goals will help guide how plans invest, as well as ease the integration of key services later. For example, if a health plan’s goal is to better support a senior population, they could consider investing in home health or care delivery services.

3. Integrate complementary assets to create synergistic solutions. A strategic, synergistic portfolio of healthcare solutions has the potential to reduce the total cost of care for members, improve care coordination, create seamless access to providers, and improve health outcomes. For example, a health plan that employs primary care physicians can align payment methodology to lower total cost of care and drive high-value services. But choosing and leveraging assets that will work together to drive holistic health solutions is easier said than done. Creating synergy via complementary assets will mean addressing a range of organizational challenges, such as: 
 

• Restructuring so that data sharing, communication, and quality measurement arms of business aren’t siloed.
• Realigning financial incentives among different business segments.
• Addressing the lack of trust, resistance to downsizing, and territorial behavior that can show up in workplace culture after acquisition.