Healthcare Musings November 2009

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Market Changes = Payor Challenges
by Ray Desrochers

The healthcare payor market is changing faster than ever before.  Healthcare reform initiatives, regulatory revisions, and the movement away from the static, one-size-fits-all healthcare options of the past are creating new challenges and opportunities for payors across the nation. Many find themselves facing a growing demand for financial accountability and responsibility, transparency, and true consumer choice.

Unfortunately, a significant number of the country’s healthcare payor organizations are currently not able to adapt to the rapidly evolving requirements of this new world.  The 20- and 30-year-old technology infrastructure that currently runs the nation’s payor industry was simply not built with 21st-century healthcare in mind.  As a result, payors often find themselves unable to quickly respond to new opportunities and market changes; forced to rely on costly and time consuming manual processes; and stuck supporting their outdated, legacy technology platforms.

Healthcare Reform Creates Major Issues for Many Organizations

Whichever direction healthcare reform ultimately takes, payors will need to adopt a new generation of healthcare technology that will enable them to realize an enhanced level of business agility, quickly support changes to regulations and standards, and improve their interactions with everyone involved in the healthcare delivery cycle. Tomorrow’s infrastructure must reflect a dynamic, member-centric view of benefits, as the healthcare paradigm moves from the rigidity of traditional plans toward a multitude of innovative, value-based plan designs and consumer-based options.

These changes, along with the integration of predictive modeling, care and disease management, pay-for-performance, and consumer-based compliance incentives are expected to drive improved healthcare outcomes, higher quality of life for patients and their families, and reduced overall costs.  To achieve the full range of these anticipated benefits, payors must be able to quickly and easily meet new market needs, reduce manual effort, increase transparency, and easily integrate with the rest of the world.

Customer Satisfaction Also a Key Concern

Customer satisfaction related to healthcare payors is in a steep decline. Finger-pointing aside, it is apparent that payors today cannot quickly and easily address the types of questions that are common given today’s complex healthcare claims. Consumer frustration is increasing, not only because it requires multiple phone contacts to get an answer, but also because each call can–and often does–result in a different answer to the same question. This is simply unacceptable.

Payors need a way to integrate the data that are currently contained in disparate systems to provide instantaneous, accurate information to everyone in the delivery of care cycle. This will help to significantly improve customer service and provider relations, and it will allow people to make better informed decisions based upon a true understanding of both the cost of care and the available options.  

Yesterday’s Technology Unable to Meet Today’s Healthcare Business Needs

Most existing healthcare payor systems are configured using arcane variables and cryptic codes.  As a result, these solutions can only be tailored in ways that were considered when they were originally designed and built.  Anything that can not be done via the available configuration options can only be addressed through programming changes.  Each of these modifications or enhancements often entails a 12- to 18-month process of analysis, design, coding, and testing, by hard-to-find software engineers.  This time consuming and expensive process can easily impair a health plan’s ability to quickly respond to customer needs, market opportunities, and regulatory changes.  

Yesterday’s payor systems were simply not designed to deal with the level of day-to-day change that is currently taking place in today’s healthcare marketplace.  As a result, changes to benefit plans or provider contracts, for example, particularly changes that are made retroactively, often generate a significant amount of costly, manual rework.  With current systems, reports are generated to help determine the impact of each retroactive change.  Then, people using these reports determine claim and member impact.  Another set of people actually implement the approved changes.  Finally, additional reports are generated to ensure that all of the adjustments are now properly reflected in the payor’s system.

Given the time and costs associated with manual work and rework, leveraging modern technology to automate processes should be a high priority for all health plans.  Changes in standards, and the ever increasing complexity of claims, are compounding many payors’ challenges in this area. The massive additional disruptions that most payors will face as a result of upcoming regulatory changes such as ICD-10 will mirror the challenges that were experienced during the Y2K remediation cycle. Many payors will be locked into months or years of expensive system and data conversions.  The next time the market is faced with a similar change, the cycle begins again.

To truly compete in the 21st century healthcare marketplace, payor organizations will need to employ modern technology platforms that allow them to address changes, regardless of complexity, in hours or days, not the weeks, months, or years that are required to adapt legacy systems.  At the same time, they must adopt solutions that can be easily integrated with other solutions to maximize IT investments. Modern healthcare platforms offer highly configurable, scalable and cost-effective solutions that are able to meet 21st-century healthcare business needs.

About the Author

Ray Desrochers is Chief Operating Officer at HealthEdge, an agile and innovative software company that offers the patented, award-winning HealthRules product suite.  Joining the organization just after its inception, Ray has played a key role in building the company, bringing its products to market, and establishing HealthEdge’s reputation as an industry leader and innovator that provides next-generation, enterprise-class software products that uniquely address 21st-century healthcare business needs.

Prior to HealthEdge, Ray served as Vice President of Development at Amicore, where he led the design and creation of a new suite of hosted electronic medical record and physician practice management solutions. Ray’s past experience also includes executive-level roles at organizations including Keyware Technologies, Anchorsilk, and at Webhire, a company that he helped lead through a successful IPO. Ray has also been a frequent speaker at technology events and conferences around the world.

To reach Ray Desrochers, you can email him at rdesrochers@healthedge.com or call (781) 285-1300.

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