The $600 billion self-insured market being ignored by service providers at their own peril

Self-insured enrollment passed the commercial fully insured (group plans) enrollment in 2020 becoming the largest segment of the healthcare market. The self-insured market is estimated to grow at about 2% CAGR until 2030 while the commercial fully insured market will decline at a CAGR of 2.5% during the same period.

• Maintaining status-quo: Service providers over the last several decades have invested in domain specific technology, expertise and health plan relationships. Service providers verticalized organizations have matured over time as segment level focus has deepened. Consequently, there is a bias in maintaining and building upon the legacy instead of exploring new adjacent market opportunities.
• Lack of a segmented GTM: Most service providers go-to-market (GTM) combining Healthcare (payer and provider) and Life Sciences. In the case of service providers who have split up healthcare and life sciences, there is still a macro GTM approach does not address the specific and nuanced needs of each market such as Medicare, Medicaid, TPA’s, self-insured etc., consistently. Consequently, opportunities in specific segments are being missed.
• Dead cat bounce: Service providers have seen significant growth post-pandemic in the commercial fully insured space, which has been the typical trajectory across markets due to the pent-up demand following two years of regressed needs. However, the key driver for the growth is acceleration of health plans transition from being insurers to becoming service providers themselves as they address their cost drivers and explore vertical integration to address their declining high-margin revenues. Over time service providers will find themselves executing low margin business that will constraint their growth and innovation bandwidth.

The Bottom Line: Service providers are ignoring a $600B new market opportunity.

Service providers must begin immediately to set goals that are two to three years out that will require reorganizing themselves, e.g., creating a healthcare horizontal structure to address self-insured employers, identifying the challenges they want to address, and they types of solutions they want to invest in. Time is of essence and the level of urgency to capture the opportunities in the new markets is unprecedented.

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