Recently circulated speculation from a partner of Google has raised questions about the data giant’s intentions when it comes to the health insurance industry.
At the Harvard Business School Healthcare Conference in late January, Biogen’s vice president of corporate development and strategy Adam Koppel stated, “They want to become the payer.” In addition, “They want to take over CMS,” Koppel was quoted by MedCityNews. “And they will say that to you.”
However, Google is certainly not making such plans public, and even if they do, what exactly they could mean appears open to interpretation--particularly the bit about “taking over” the Centers for Medicare and Medicaid Services or, perhaps, seeking to take over some business on CMS’ behalf.
Sources close to matter suggested the comments were unfounded. However, a few experts weighed in with Healthcare Dive on whether anything like this would seem a smart or likely move for Google, and what it could mean for the rest of the health insurance industry.
The data giant would need actuaries
They suggest Google is unlikely to become a payer or to seek to play the role of CMS, and would certainly be unlikely to be able to do it quietly or quickly. However, that isn’t to say they couldn’t, and there are other roles they could serve in the health insurance industry that could make more obvious sense.
“Google on its own could not just say ‘I’m going to be a payer,’” suggests Marjorie Rosenberg, a professor in the Department of Actuarial Science, Risk Management, and Insurance at the Wisconsin School of Business.
While the company is a leader in big data, it would still have to develop industry expertise.
“You would need to have actuaries, which is why it intrigued me,” Rosenberg says. “It’s not just the data analysis; you need actuaries who have the business expertise. A good data scientist would need to be grounded in the application field,” she says. She adds that insurance is very different from other businesses and the data are very different from the data of other businesses, requiring knowledge in the area.
“At the same time, Google could buy an insurer and start to do things that way,” she adds, suggesting a merger or acquisition would seem the most likely route to becoming a payer.
The details could be in the data
However, there are other ways Google could position itself, Rosenberg muses, such as doing something for the government regarding the products on the exchange, or doing business with insurers to provide data analysis. That could range from contracting individually with organizations, or setting up relationships to collect and share data more broadly, and use it for multiple purposes to help inform other parts of the companies’ business sectors.
“That’s currently being done so there’s no reason Google couldn’t enter the market for that kind of work as well,” Rosenberg says. She suggests Google could also be in a position to set up data registries, such as the cancer registries some states provide, or to use its data expertise to target and reach out to people with tailored information and direct them to various health insurance products.
The impact of Google’s presence could vary depending whether it would set itself up as a competitor or make isolated agreements with insurers, vs. providing some form of data analytics or service that would serve the industry more broadly.
Justin Sydnor, an associate professor also at the Wisconsin School of Business, comes at the question from an economic perspective.
“It makes a lot of sense that Google would be interested in administering healthcare data,” he says. He suggests their expertise in data storage, data access and data analysis would allow them to provide value in a variety of ways, such as mining large data sets of medical records to find new treatment patterns.
Help (would still be) wanted
“However, it is less clear that becoming a health insurer is the best way for Google to gain access to these type of medical data,” he says. “It seems to me that it would make more sense for Google to find ways to partner with insurers and government entities like CMS.”
He notes to be an effective insurer, Google would have to develop expertise in areas such as negotiating prices with complex networks of healthcare providers and hospitals, as well as customer service and billing, which are far removed from Google's core competencies.
“While Google certainly has deep enough pockets to acquire health insurers with that type of expertise,” Sydnor suggests. “Managing a very large insurance company would seem like a stretch for Google.”