Realizing Investment Return Through Business Transformation Prioritization

A key variable in optimizing IT investment is the willingness and capacity to transform complex business processes and organizational structure. In short, the thoughtful identification of transformation objectives (and inclusion of well-defined measures from which to assess the transformation “progress”) is essential in measuring complex project success.

Accenture recently conducted a global survey of nearly 6,500 business and IT executives worldwide to gain insights into key business goals and priorities for technology investments. As Accenture’s top technology trends for 2021 report stated, “Big changes today require bold leadership—and prioritizing tech. And it’s not just about fixing the business but upending convention and creating a new vision for the future.”

An enterprise application, like a well-architected core system, for example, offers an enabling force for health plan transformation. In most cases, the opportunities are almost infinite – the real challenge is quantifying (and then prioritizing) which activities will net the most effective outcomes.

While health plan organization structure and its business process can many times be challenging, some basic building block measures can help to reduce (what is many times) self-inflicted complexity.

Prior to the actual procurement and implementation of a new core application, these steps include:

  1. Setting quantifiable success expectations and goals to be realized from the investment
  2. Confirming that business requirements align with those goals
  3. Identifying transformation opportunities to leverage investment
    •  Foundational transformation (e.g., overall organizational structure, normalized contractual arrangements)
    • Transactional transformation (more efficient process flow, e.g., claims, enrollment, billing)
  4. Configuring and integrating the investment that supports the transformed environment
  5. Educating/training all key stakeholders

Competitive market forces and compliance and regulatory demands will continue unabated. The opportunity to effectively address these market challenges through enabling technical architecture and leveraged transformation is there for the taking.

Patient or Member? How About Calling Them Customers?

What are individuals called in a health plan? Members. What are people called when they meet with a provider? Patients. What is an individual person referred to in any other industry that uses end-to-end solutions? Customers.

The “unique” needs of a member vs. a patient in the healthcare or health insurance setting aren’t really unique at all. At the end of the day, these needs are customer needs.

Not surprisingly, with the growth of government-based healthcare programs like Medicare, Medicaid, and Individual/Exchange lines of business, the migration from a dominant employer-based “customer” Business-to-Business (B2B) relationship has transformed and become more of a consumer-driven Business-to-Consumer (B2C) environment.  Health plans must find ways to treat members as customers and look at how to provide an end-to-end solution that best serves their needs.

How can different types of health plans cope with the consumer-driven B2C growth?

There are different paths to get there as plans can use their inherent strengths to meet this changing demand.

For larger plans, their respective budget capacity (and subsequent ability to invest in scalable solutions) have enabled them to heavily invest in front-end “consumer-experience” technology. While mid-sized (generally regional) type plans, the closer relationships between payer and provider and the willingness or, in some cases, equity structure (health plans that are owned or closely affiliated) provide a mechanism to more readily share data and collaborate on end-to-end processes, allowing members to enjoy a combined experience from a single entity.

Regardless of the means to “get more consumer-driven,” the common foundational technical requirement investment are back-office applications that are interoperable, data-integrity true, and secure. To move to the next generation of where healthcare is going, health plans must modernize their core system.

A Possible Survival Guide for Regional Health Plan Expansion?

Regional health plans have generally flourished in the respective local markets that they have served. However, regional health plans only “extended” as far as the affiliated providers employed by the delivery system in a staff model or contracted in a group model.

Today, competitive pressures from larger plans offering statewide (or beyond) employer group networks that meet their overall needs have put regional plans at a disadvantage and forced them to look at new ways to grow their business to remain competitive.

How do regional plans respond? Regional plans should continue to leverage the collaborative payer/provider relationships that exist in the original service area. With these relationships they can maintain ongoing optimization of collaboratively developed value-based care, enhance use of integrated payer/provider data integration, and further develop complementary business processes that can help to improve the customer experience.

Regional health plans should also focus on transforming business practices and underlying technology that can easily configure to better position and police relationships beyond the original service area. Where strategic business objectives might be slightly or significantly different between payer and provider, functions that were historically collaborative in a shared regional market are potentially competitive in an expanded one.

Some of these functions include:

  • Overall provider network management
  • Enhanced provider reimbursement / contracting
  • Customer-facing call center and self-help support to an increasingly disparate customer base
  • More policing of care/utilization management capabilities

The transformation curve is significant. The time required for planning, general design, eventual investment, and execution requires buy-in from all stakeholders. The risks are high for not positioning for growth. The risks (and poor results) are exponentially higher for organizations that fail to fully account for the overall investment required from underlying/foundational core systems integrated with other value-added applications/utilities.

As Medicare Advantage Grows in Popularity, Health Plans Must Meet Market Demands

According to Medpac, the country’s baby-boom generation (born between mid-1946 and 1964) began aging into Medicare in 2011 at a rate of about 10,000 people per day, a rate that will continue until 2030.

Over the next 15 years, Medicare’s enrollment is projected to increase by almost 50 percent— rising from 54 million beneficiaries today to more than 80 million beneficiaries in 2030!

Accordingly, the impacts of this enormous demographic shift will drive the evolution of market demand and the corresponding effective responses from providers and health plans alike.

Some of the key market driver questions include:

  • How will the incoming baby boomers affect the age structure of the Medicare population? Will the Medicare population be more racially and ethnically diverse, given the growing racial and ethnic diversity of the total U.S. population?
  • Given the improvements in life expectancies, will the next generation of Medicare beneficiaries live longer and healthier lives than previous generations? Or will the longer life expectancies increase the oldest age groups in Medicare, thereby increasing the rates of disease and chronic conditions?
  • Have baby boomers and especially the oldest baby boomers had time to recover from the 2007 to 2009 recession before entering retirement?
  • What is the outlook for the Medicare program’s financial health as the number of taxpaying workers per beneficiary declines?  
  • What is the projected growth in the share of enrollment in private plans, and what do health plans do to be best positioned to address these unique needs?

With sufficient input from market demand, public policy, and the adoption of best practices in other industries, healthcare, and health insurance technology suppliers can offer scalable, data-driven solutions.

There are key areas of focus to address these business challenges, including value-based benefit plans and contract reimbursement development and administration. Customer service is also crucial, including enrollee navigation tools that help older members shop and choose the right health benefit for them and access to expert knowledge-based analysis and provider channeling. In addition, easy-to-use and highly-integrated “traditional” customer service support (e.g., call centers) and increasingly popular self-help tools (e.g., portals, “enhanced CRM,” handhelds). There is also increased use of customer-focused artificial intelligence (AI), particularly utilizing integrated payer/provider data that spans the full continuum of both “member” (health plan view) and “patient” (provider view).

While crystal balls are “foggy,” enrollment in Medicare Advantage and or Advantage-like plans is anticipated to increase at a healthy rate. In turn, the demand for seamless support will continue to evolve. Whether a health plan is regionally owned/provider affiliated or spans the country in a traditional insurance setting, the demand for integrating this population will require significant technical and organizational transformation investment. To do anything less risks missing the next frontier.

Measuring IT Investment From A Risk Mitigation Approach (Rather Than ROI)

Most buyers of healthcare/health insurance IT are, by nature, risk-averse. There are very legitimate reasons for concern: IT infrastructure is expensive, complex organizations are structurally resistant to change, system implementations are prone to unforeseen challenges, and benefit expectations are difficult to realize.

In summary, a daunting situation!

How do I create a stand-alone ROI from all of that!?

There is a more critical measure than ROI. It is a question of risk mitigation.

The risk of inertia can be many times greater than the risk of embracing change. Competitive market forces and the ever-expanding role of government guidance/oversight are constant. Failure to keep up (by investing in people and infrastructure) is unforgiving, and the price to be paid is steep and sometimes fatal.

Key market-drivers that if not sufficiently addressed (and thus high-risk items) include:

  • The underlying foundation migration of B2B business that is becoming more C2C member-centric
  • The data and process challenges associated with payer/provider integration
  • Overall transparency demands while adhering to privacy requirements
  • Constant growth and change of regulations and compliance

At some point in time, the amount of road remaining for “investment modernization” of existing organizational structure, use of data/business intelligence, and legacy technology is depleted. Ultimately the risk of minimal maintenance, or worse, doing nothing, is by far greater than “taking the big transformational jump.”

How do I minimize the risk of “Transformation Supported Through Big IT Investment?”

First, there must be a recognition that this is not just an IT initiative. Forward-looking, well-defined, and measurable strategic business objectives must be clearly articulated.

Second, the rollout of an operations transformation plan that includes people, process support (and yes, underlying technology) MUST be developed and aligned with strategic objectives.

Third, while the effort is large, segmenting into integrated, bite-sized chunks is essential for buy-in and monitoring activities that all constituents won’t necessarily embrace.  Some of these bite-sized chunks might include:

  • A listing and prioritization of key foundation-based (versus transaction-driven) transformation goals
  • An agile/collaborative model that acknowledges all key stakeholders and does not let perfection get in the way of progress
  • The development of a new company approach, where the benefits of the transformed environment can be both realized (due to fewer legacy barriers) and identified by wary stakeholders

In summary, acknowledging and developing the framework to measure both the tangible and abstract rewards associated with risk mitigation (versus a singular focus on the “supposed hard numbers of ROI”) will provide a much better mechanism for developing and recognizing the benefits of the investment value proposition.