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Healthcare Reform Technology Tips for Payers, Providers

By Scott Kornhauser, for HealthLeaders Media  
   January 24, 2011

The entire U.S. healthcare system is focused on building a new technology foundation upon which a new performance based delivery system can be architected over the next decade. There are a number of critical success factors including an efficient administration of healthcare benefits and adaptation of a wide range of new market business models.

While no one can predict the specific technology feature/function set that will be required by healthcare payers in 2015, there are some technology mandates of the future market that are predictable given what we know today.

These mandates include, first and foremost, the realtime integrated processing of all healthcare business transactions, similar to the point-of-sale (POS) processing enjoyed in the pharmacy line of business for more than 25 years. The healthcare market is aimed at lowering costs through improved care and outcomes. To accomplish this, an electronic, interoperable, integrated delivery system is necessary in order to achieve optimal performance. 

From the federal government to the commercial payers and providers, the whole market is focused on building a new technology foundation upon which a new performance based delivery system can be architected over the next decade. Real time information exchange and processing will be at the core of this new delivery system.

Catalyst for Change

Today, a number of factors are driving many payer organizations to finally address the long delayed decision to update their core administration systems:

  • National healthcare reform calling for tens of millions of new individual members to insure
  • Increasing market focus on performance-based delivery of care
  • The promise of continued and accelerated change amid the increasing politicization of healthcare
  • New industry standard requirements (e.g., HIPAA 5010 and ICD-10)
  • Increasing competition in key markets

Amid all these changes, many payer organizations find themselves saddled with an inflexible and inefficient tangle of disparate administrative systems and related software. Acquired through merger and acquisition activity or as point-solutions over the years, many of these systems are at the edge of their useful life, and are highly inefficient, extremely costly to maintain, largely batch processing oriented, and are poorly integrated.

System-wide changes like ICD-10 require updating and reconfiguring numerous systems in a variety of locations that the task is virtually impossible for many. Consolidating these disparate systems onto a central system represents the clear path to a successful future. 

Future-Proofing Technology

As payers seek to consolidate systems in order to survive, they are also looking to what the future may hold. That means seeking the best tools—those that “future-proof” their core technologies, so today’s investments can sustain a competitive advantage for decades to come.

How do organizations determine where to go from here? Though the payment path is uncertain in healthcare at the moment, there are a number of critical success factors to consider for the future. The system must:

  • Enable the efficient administration of healthcare benefits in a new and innovative performance-based delivery system.
  • Efficiently interoperate with the entire healthcare delivery system, and do so in real-time at the point of sale, care, and decision.

  • Be comprehensive across all lines of business which they can efficiently consolidate and integrate, including the processing of real-time clinical and financial algorithms across multiple lines of business and funding sources.
  • Be web architected for optimal interoperability, flexibility, efficiency through extensive self-service capabilities for all participants.
  • Be flexible enough to enable payers to rapidly innovate, prototype, and ultimately adapt to a wide range of new market business models through configuration by business users verses software development by engineers.
  • Allow payers to efficiently sell, enroll, and support individual business versus group business.
  • Auto-adjudicate not only claims, but complex business processes as well.
  • Support the ability not just to add new functionality, but also to easily locate and apply cost-effective human resources with the knowledge to do the work.

For over 20 years, payers have been locked into systems with fixed sets of capabilities from vendor(s) that have poorly managed their enhancement demand. They have been stuck with very limited abilities to innovate and prototype, a glacial evolution of capabilities, and the need to append all kinds of peripheral systems and custom adaptations to these aging systems. Future-proofingis about handling today’s needs within a technology framework that will efficiently handle the needs of tomorrow. Over the next decade payers will be innovating their way to success through prototyping in a market that will be changing at amplitudes far greater than at any other previous time in our history.

Payer systems of the future will need to be architected upon new enabling and efficient technology that is:

·         Rules-based and object-oriented. Rules-based, object-oriented architecture is the most flexible, efficient, and high performance way to build complex transactional systems, especially claims processing systems. Re-usable objects defined and configured by business users deliver innovation on the fly with minimum maintenance overhead and optimal system performance.

·         Scalable and Non-Proprietary. New systems must scale not only from a transaction volume perspective, but from an ongoing engineering perspective as well. Payer organizations will need to contain IT costs while expanding functional depth and breadth. This will require low cost, readily available technical resources that can be economically acquired and trained just in time.

·         Collaborative Software Development. Vendors will open their source code to their clients, taking advantage of the client’s subject matter expertise and skilled workforce. In collaboration, the vendor and the client will accelerate each client’s innovation agenda while minimizing associated engineering costs.

Real time, Web architected, workflow automated, across all lines of business and delivered through a collaborative open source code model, core payer administration systems for the future will enable rapid and efficient innovation. Speed to market with new products and services are the mandate for the next decade.


Scott Kornhauser is the CEO of Healthation, a leading provider of payer administration systems. He may be reached at: skornhauser@healthation.com

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