Capability Mapping for Health Insurers

1. Capability Mapping The Health Insurance Enterprise www.capstera.com 1

2. Accelerate Transformation Through Capability-Driven Architecture In today's dynamic healthcare environment, health insurers ▪ are navigating unprecedented complexity—evolving regulations, value-based care models, consumerization, and digital transformation. These challenges demand a structured approach to understanding, evaluating, and transforming organizational capabilities. A Business Capability Map provides health insurers with a ▪ powerful lens through which they can view their organization as interconnected abilities rather than siloed functions or processes. By establishing this architectural foundation, insurers can align strategic initiatives, prioritize investments, and create the agility needed to thrive in an industry experiencing profound disruption. www.capstera.com 2 2

3. UNDERSTANDING BUSINESS CAPABILITIES 1 Business capabilities form the foundation of enterprise architecture, providing a stable framework for understanding what an organization does independent of how it operates. • Capability Definition: A business capability represents a particular ability or capacity that a business may possess or exchange to achieve a specific purpose or outcome. • Functional Abstraction: Capabilities describe what the organization does rather than how it performs activities, providing a stable view above processes, systems, and organizational structures. • Strategic Alignment: Well-defined capabilities create a bridge between abstract strategic objectives and concrete operational activities and investments. • Enterprise Currency: Capabilities serve as a common language that unifies business, technology, and operational stakeholders around shared enterprise concepts. • Transformation Foundation: Capabilities provide the baseline architecture needed to identify gaps, redundancies, and opportunities for operational and technical transformation. www.capstera.com 3

4. THE STRATEGIC VALUE OF CAPABILITY MAPPING 2 Capability mapping delivers significant strategic value by providing a comprehensive view of organizational abilities aligned to business objectives. • Portfolio Rationalization: A capability perspective reveals redundancies and gaps across the enterprise that remain hidden in traditional organizational or system views. • Investment Prioritization: Capability assessment creates an objective basis for allocating resources to areas with the greatest strategic impact and performance gaps. • M&A Integration: Capability maps provide a structured foundation for comparing organizations, identifying overlaps, and integrating operations during mergers and acquisitions. • Vendor Evaluation: Capability models create clear parameters for evaluating how vendor solutions and services align with organizational needs and strategic priorities. • Strategic Planning: Capability-based planning shifts strategic conversations from abstract goals to concrete organizational abilities that must be developed or enhanced. www.capstera.com 4

5. HEALTH INSURANCE CAPABILITY MODEL FRAMEWORK 3 A comprehensive health insurance capability map is typically organized into hierarchical layers that provide both executive and detailed operational perspectives. • Capability Layers: Most capability models are structured into 3-4 layers, from Level 1 (highest-level domains) to Level 3/4 (granular capabilities that support specific outcomes). • Domain Segmentation: Level 1 capabilities are typically categorized as Strategic, Core, or Supporting domains to align with their relationship to the value chain. • Capability Relationships: The model should capture dependencies between capabilities to understand how changes in one area impact others across the organization. • Measurement Framework: Each capability should include defined KPIs and maturity criteria to enable objective assessment and progress tracking. • Governance Model: A capability governance framework ensures ongoing maintenance, strategic alignment, and effective decision-making around capability investments. www.capstera.com 5

6. CORE INSURANCE CAPABILITIES 4 The core capabilities represent the primary insurance functions essential to delivering value to members and providers. • Product Management: Capabilities for designing, developing, pricing, and maintaining competitive health insurance products that meet market needs and regulatory requirements. • Sales & Distribution: Functions related to channel management, producer relationships, quoting, and enrollment processes across individual and group market segments. • Member Services: Capabilities spanning member onboarding, inquiry management, issue resolution, and ongoing engagement throughout the member lifecycle. • Provider Network Management: Abilities related to provider recruitment, credentialing, contracting, performance management, and network optimization. • Claims Management: Core capabilities for intake, validation, adjudication, payment, and recovery across the claims lifecycle. • Care Management: Functions supporting utilization management, case management, disease management, and clinical program administration. www.capstera.com 6

7. Did You Know Health insurers with mature capability-based planning ▪ approaches report 42% higher success rates for strategic transformation initiatives compared to organizations using traditional planning methods. (Gartner) www.capstera.com 7

8. STRATEGIC CAPABILITIES 5 Strategic capabilities guide organizational direction and enable the insurer to adapt to market changes and competitive pressures. • Enterprise Strategy: Capabilities for developing, communicating, and executing corporate vision, mission, and strategic objectives across the organization. • Market Intelligence: Functions for gathering, analyzing, and leveraging insights about competitors, market trends, and consumer preferences. • Innovation Management: Capabilities that foster, evaluate, and commercialize new ideas that create competitive advantage or business model evolution. • Enterprise Architecture: The ability to design, govern, and evolve business and technology architectures that enable strategic objectives. • Strategic Partnership Management: Capabilities for identifying, establishing, and managing relationships with external entities that extend organizational capabilities. www.capstera.com 8

9. OPERATIONAL SUPPORT CAPABILITIES 6 Support capabilities enable efficient operations and provide the foundation for core business functions. • Human Capital Management: Functions related to workforce planning, recruitment, development, performance management, and talent retention. • Financial Management: Capabilities spanning budgeting, accounting, financial planning and analysis, and capital management. • Compliance & Risk Management: Abilities to identify, assess, and mitigate enterprise risks while ensuring regulatory compliance across all operations. • Legal Services: Functions providing legal guidance, contract management, dispute resolution, and litigation management. • Facilities Management: Capabilities for planning, maintaining, and optimizing physical infrastructure and workplace environments. www.capstera.com 9

10. DIGITAL & TECHNOLOGY CAPABILITIES 7 Technology capabilities enable operational efficiency and digital experiences while supporting innovation and competitive differentiation. • Digital Experience: Functions that enable seamless, personalized interactions across web, mobile, voice, and other digital channels for members and providers. • Data & Analytics: Capabilities for data governance, management, reporting, predictive modeling, and advanced analytics across the enterprise. • IT Service Management: Abilities related to technology service delivery, support, and operational management. • Application Portfolio Management: Functions for developing, maintaining, integrating, and optimizing the application landscape. • Infrastructure & Operations: Capabilities spanning network, computing, storage, and security infrastructure management. • Enterprise Integration: Functions enabling seamless data exchange and process integration across internal systems and external partners. www.capstera.com 10

11. CAPABILITY MAPPING METHODOLOGY 8 Creating an effective capability map requires a structured approach that balances industry standards with organizational uniqueness. • Reference Model Adoption: The process begins with selecting appropriate industry reference models that provide a baseline of relevant insurance capabilities. • Stakeholder Engagement: Cross-functional workshops engage business and technology leaders to validate, customize, and prioritize capabilities. • Capability Definition: Each capability must be clearly defined with scope boundaries, outcomes, performance metrics, and interdependencies. • Maturity Assessment: Objective evaluation of current capability performance against industry benchmarks and strategic requirements. • Gap Analysis: Identification of capability gaps, redundancies, and misalignments that require remediation to support strategic objectives. www.capstera.com 11

12. Did You Know Leading health insurers maintain business capability ▪ models with 30-50 Level 1 capabilities, 150-200 Level 2 capabilities, and up to 1,000 Level 3 capabilities to provide comprehensive enterprise coverage. (Forrester) www.capstera.com 12

13. ACCELERATING WITH PRE-BUILT CAPABILITY MAPS 9 Pre-built, customizable capability maps significantly reduce time-to-value while ensuring comprehensive coverage of industry-specific functions. • Time Compression: Industry-specific reference models can reduce capability mapping initiatives from months to weeks by providing a validated starting point. • Cost Efficiency: Pre-built maps eliminate hundreds of hours of research and workshop time, reducing consulting expenses and internal resource requirements. • Completeness Assurance: Industry-validated models ensure comprehensive coverage of capabilities, preventing critical omissions that could undermine architectural integrity. • Best Practice Integration: Leading reference models incorporate industry best practices, regulatory requirements, and emerging capabilities that individual organizations might overlook. • Customization Framework: Quality reference models provide structured customization approaches that preserve architectural integrity while addressing unique organizational needs. 13 www.capstera.com 13

14. CAPABILITY ASSESSMENT & PRIORITIZATION 10 Capability assessment creates the foundation for investment prioritization and transformation roadmaps. • Maturity Dimensions: Comprehensive assessment evaluates capabilities across dimensions including process efficiency, technology enablement, people expertise, and governance effectiveness. • Strategic Alignment: Each capability is evaluated based on its contribution to key strategic objectives and value drivers. • Performance Gap Analysis: Assessment identifies the gap between current performance and required future state based on strategic imperatives. • Interdependency Mapping: Analysis of capability relationships reveals how performance in one area impacts connected capabilities. • Investment Prioritization: The combination of strategic importance and performance gaps creates an objective basis for allocating transformation resources. www.capstera.com 14

15. TECHNOLOGY ALIGNMENT TO CAPABILITIES 11 Capability mapping drives technology rationalization and investment by creating clear linkages between business needs and technical solutions. • Application Portfolio Assessment: Mapping applications to capabilities reveals gaps, redundancies, and misalignments in technology coverage. • Technology Debt Identification: Capability assessment highlights areas where technical debt impedes performance of strategically important capabilities. • Investment Alignment: Technology roadmaps are prioritized based on their contribution to critical capability gaps and strategic priorities. • Build vs. Buy Decisions: Capability models provide the structure for evaluating whether to develop custom solutions or implement packaged applications. • Integration Requirements: Capability dependencies reveal integration needs that must be addressed to ensure seamless end-to-end operations. www.capstera.com 15

16. ORGANIZATIONAL ALIGNMENT TO CAPABILITIES 12 Capability models drive organizational design by clarifying accountability and ensuring appropriate resource allocation. • Capability Ownership: Clear accountability is established for each capability with defined roles for governance, execution, and performance management. • Organizational Structure Assessment: Capability mapping reveals organizational silos, fragmentation, and suboptimal resource distribution. • Skill Gap Analysis: Capability assessment identifies areas where workforce skills do not match the requirements for target capability performance. • Cross-Functional Collaboration: Capability dependencies highlight where improved collaboration mechanisms are needed across organizational boundaries. • Center of Excellence Design: High-priority capabilities may require dedicated centers of excellence to drive performance improvement and innovation. www.capstera.com 16

17. Did You Know Organizations that leverage industry-specific reference ▪ models reduce capability mapping timelines by an average of 65% while achieving 40% higher model completeness compared to those developing models from scratch. (The Open Group) www.capstera.com 17

18. CAPABILITY-DRIVEN TRANSFORMATION 13 Capability models provide the architectural foundation for driving enterprise transformation with greater clarity and alignment. • Transformation Roadmapping: Capability assessment creates a structured foundation for sequencing transformation initiatives based on strategic impact and interdependencies. • Business Case Development: Capability gaps provide concrete justification for investment requests tied directly to strategic imperatives. • Project Scoping: Capability models enable precise scoping of transformation initiatives to ensure comprehensive but focused change efforts. • Change Impact Analysis: Capability dependencies allow organizations to anticipate and address ripple effects of changes across the enterprise. • Value Realization Tracking: Capability metrics provide a framework for measuring the business impact of transformation investments. www.capstera.com 18

19. EVOLVING THE CAPABILITY MODEL 14 Capability models must evolve as the organization and industry landscape change to maintain strategic relevance. • Governance Framework: Establishing formal governance ensures ongoing maintenance, validation, and enhancement of the capability model. • Strategic Alignment Reviews: Regular assessment of the model against strategic priorities ensures capabilities remain relevant to organizational direction. • Emerging Capability Integration: The model should incorporate new capabilities that emerge from technological innovation and business model evolution. • Industry Trend Alignment: Ongoing scanning of industry trends ensures the capability model reflects changing market requirements and competitive differentiators. • Maturity Target Adjustments: Performance targets for critical capabilities should evolve as market expectations and competitive benchmarks advance. www.capstera.com 19

20. HEALTH INSURANCE CAPABILITY EVOLUTION 15 The health insurance capability landscape is evolving rapidly in response to industry disruption and new business models. • Value-Based Care Enablement: New capabilities are emerging to support risk-sharing partnerships, quality measurement, and provider performance management. • Consumer Engagement: Advanced digital capabilities are developing around personalization, self-service, transparency, and omnichannel experience delivery. • Healthcare Ecosystem Integration: Capabilities for participating in broader healthcare ecosystems spanning providers, pharma, retail, and digital health. • Intelligent Automation: New capabilities leveraging AI, machine learning, and robotic process automation to transform core insurance operations. • Alternative Care Models: Capabilities supporting telehealth, hospital-at-home, and other emerging care delivery models that require new payment and management approaches. www.capstera.com 20

21. Takeaway A comprehensive Business Capability Map provides health insurers with the essential architectural foundation for strategic planning, investment prioritization, and enterprise transformation. By creating a structured view of organizational abilities independent of how they are performed, capability models bridge the gap between strategy and execution while providing a common language across business and technology domains. In an industry experiencing unprecedented disruption, capability-based planning enables health insurers to identify performance gaps, rationalize redundancies, and focus investments on the areas that will deliver the greatest strategic impact. While developing a capability model requires significant effort, leveraging pre-built reference models dramatically accelerates time-to-value while ensuring comprehensive industry coverage and best practice alignment. 21 www.capstera.com 21

22. Next Steps 1. Establish your capability mapping approach by defining methodology, governance, stakeholder engagement, and deliverable expectations before beginning the mapping process. 2. Evaluate industry reference models to determine whether leveraging pre-built capability maps would accelerate your initiative and ensure comprehensive coverage of health insurance functions. 3. Engage cross-functional leadership to build awareness and commitment to capability-based planning as the foundation for strategic alignment and investment prioritization. 4. Conduct an initial capability assessment focused on a strategic domain to demonstrate value and refine your approach before expanding to the full enterprise. 5. Develop integration points with strategic planning, project portfolio management, and technology governance to ensure capability insights directly influence key decisions. 22 www.capstera.com 22

23. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 23 www.capstera.com 23

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