Lessons from the Healthcare Industry on Communicating with High-Risk Customers
Healthcare providers typically approach high-risk patients differently than other industries, such as financial services and its approach to high-risk borrowers. In healthcare, companies like Staywell, ActiveHealth and Alere contract with payers (health insurers) as well as employers to identify patients at-risk for chronic diseases like diabetes, hypertension, cardiac problems and so forth, and work to educate and inform them about behaviors and lifestyle changes that positively impact their health. The objectives are to stabilize their health issues or even move them out of the risk group altogether. The healthcare industry has clearly recognized that there is a huge opportunity to reduce healthcare costs, improve quality of life, and make happier, healthier more productive consumers by taking the time to educate and inform high-risk patients.
On the flip side, the financial services industry faces risk in the form of lending money – be it a secured loan like auto or home or unsecured credit card debt – to someone who ultimately may not or cannot pay the money back in the manner agreed upon in the lending arrangement. How does the financial services industry deal with this risk? They put the person into a general collections process and rely on various means to resolve overdue debt.
The collections process is an important and necessary part of business. The problem is that it's treating the symptom, not the cause.
The cause is that a consumer in collections has made a series of decisions that led them to a place where they are unable to meet their financial obligations. Sometimes unavoidable circumstances occur, like a workplace injury or unexpected health problem that derails an otherwise prudent borrower. Regardless of the reason, people sometimes overextend themselves based on things like false optimism about how much they'll be making, inability to plan, or simply not budgeting well. But what if the financial services industry took the same approach as healthcare, identifying financially at-risk consumers and embarking on a financial management education program, rather than punishing them with high interest rates and painful lending terms? Many banks and lending institutions are already doing this and can see positive results.
Imagine if we could re-wind the clock to 2005 and we had a robust financial management program in the U.S. targeting high financial risk consumers. A program whereby high-risk consumers were programmatically educated around financial risk and counseled periodically by financial management experts, much like a wellness plan engages at-risk members using an engagement specialist or skilled nurse? What if 20% of the people who ultimately have or will default on their mortgages instead decided that no, with a $14,000 annual salary, I can’t buy the $720,000 home (which really happened in central California)? What if there were 20% fewer defaults? Would the economy today be 20% "better?" We don't know. But to me it's an intriguing idea worth considering.