What is a Private Healthcare Exchange?

The Healthcare industry loves talking about “exchanges” these days. We love talking about these new marketplaces that will work flawlessly and be part of the holy grail solution of quality care at an affordable price. However, many are skeptical about the ability of exchanges to influence either quality or price. In fact, we have many reasons to believe that the first few iterations of “public” State-based exchanges will actually increase price due to startup costs involved with establishing the very complex exchanges.

However, there is growing evidence that “private” healthcare exchanges will play a major role in the coming years. For simplicity, I am defining a “private” exchange as anything that is not a “public” exchange. Examples of a private exchange include Medicare online exchanges (ExtendHealth), small group purchasing exchanges (HealthPass New York), large group exchanges (AonHewitt) or even an individual exchange (eHealth).

The role of these exchanges will be to facilitate the ultimate “retailization” of healthcare. The retail customer will be the actual individual (not an employer) buying health insurance directly from the insurer via an exchange. The U.S. citizen himself will have a much more ‘retail’ experience, shop and compare; he will seek value as he defines it.

We have been talking to the people who are opening up this new private exchange world. There are new technology companies with nice “shop and compare” tools. There are benefits consultant types that really understand products. And there are the more traditional TPA companies that do transactions really well. Each type of company will launch their own flavor of private exchange solution.

Picking a partner takes careful consideration of the needs of your organization and how it will play in the private healthcare exchange world.

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