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Jul 18 2012   7:00AM GMT

Five steps to market reinvention: Supporting ACOs, exchanges and other reform initiatives

Posted by: Jenny Laurello
Accountable Care Organizations, ACO, health information exchange, health insurance exchanges, HIE, HIPAA, HIPAA 5010, HIX, ICD-10

Guest post by: Ray Desrochers, Executive Vice President, HealthEdge

The health care payor market is currently undergoing a period of unprecedented change, and payors are trying to navigate among the various market forces and government regulations as they adapt to the changing health insurance landscape. They are searching for new ways to reduce costs, engage their members and support next-generation health care business models such as accountable care organizations (ACOs), health insurance exchanges and value-based health care.

The goal is to create an efficient health care system, deliver more personalized, coordinated care, and improve outcomes, while saving all participants both time and money. Unfortunately, payors are finding that they are unable to take advantage of these new business opportunities due to the limitations of their current IT infrastructure. They are having trouble obtaining the data needed to make good business decisions. They are living in a world that involves significant manual processing due to:

  • Deficiencies in existing health care IT
  • Unique organizational requirements or customer needs
  • Data quality issues
  • The need for additional organizational visibility
  • The desire to push various types of information to people outside of the organization

Payors are also dealing with large numbers of satellite systems that are hard to use and costly to maintain, and in an age of increasing customer service demands, they are finding it difficult to quickly answer member and provider questions. As the pace of change is expected to accelerate while the crisis of health care costs continues to grow, payors need to ask themselves:

  • Are they ready to quickly take on any type of new business?
  • Can they respond in real-time to market changes and customer needs?
  • Will they be able to move faster than the competition?
  • Do they have the right technology partner to succeed?

It is apparent that the health care market has not yet leveraged the technology that has brought flexibility and transparency to virtually every other industry over the past several decades. Most payor organizations are still employing systems that have been in service for more than 20 years. While this technology was perfect for the static, one-size-fits-all health care models of old, it is no match for the innovative business models of the future.

With planning and the right partners, payors can enjoy the benefits of today’s technology innovations as they position their organizations to be successful in the new health care marketplace. The following five steps can be used as a roadmap as payors work to transform their health care IT platforms.

Step One: Evaluate New Health care Business Models

Payors need to become familiar with the new business models and options that the market is moving toward. These include ACOs, value-based health care, pay-for-performance and next-generation consumer-based health care. While these are the models getting attention today, payors must also be ready for other health care reform and payment initiativesthathave been proposed by various industry groups. They also must include regulatory and compliance changes in their research and analysis, including ICD-10 and HIPAA 5010.

Step Two: Create a Strategic Plan for Your Organization

Rather than look at each challenge as an individual problem to solve, we suggest payors conduct a SWAT analysis of their strengths, weaknesses, opportunities and threats. They should start by determining how they want to compete and be viewed in the market. Payors should begin by asking themselves:

  • Will they be leveraging one or more new health care business models?
  • Are they looking to expand into new markets, or take advantage of unique opportunities?
  • Will they be prepared to handle Medicaid market increases and individual market growth?
  • Is there a focus on leadership in areas like member and provider satisfaction?
  • Are they going to be delivering other new products or offerings that will allow them to differentiate from the competition?

Payors should use these questions to help build a strategic plan that details their business goals and objectives, identifies owners and lists desired completion dates. Socializing the plan within the organization — and to trusted partners and advisors — will also provide valuable feedback.

Step Three: Understand Existing Capabilities

Without understanding both where you are and where you need to be, payors will have a hard time competing in the new health care economy. A clear direction is needed to stay ahead of the competition. This begins by conducting a full evaluation of the capabilities of their existing core system(s), and garnering an understanding of all of the satellite systems, custom databases and stand-alone reporting solutions that are present in the organization. Once this is complete, payors should document and categorize all existing manual processes and compare existing capabilities against the new business models and compliance initiatives that they will want to support. Finally, they should build a “wish list” of capabilities and functionality that will allow the organization to achieve its long-term business goals.

Step Four: Build Your Technology Roadmap

Once there is a solid understanding of existing capabilities, payors should create a corporate technology plan that shows both the “current” and the proposed “future” IT capabilities, based upon their analysis of the market, of their existing systems and their list of identified business goals. They should then validate the roadmap using both internal resources and trusted external industry expertsto evaluate the systems and technology that will enable the organization to achieve its goals. They should be careful to include planning for additional market and regulatory changes that will likely occur throughout the transition.

Step Five: Implement Required Improvements

Now it’s time to execute and complete the transformation of the health care IT systems infrastructure, based upon the roadmap. This includes the implementation of required process improvements throughout the organization, in parallel with system changes. Progress should be measured on a regular basis so that the plan can be modified as needed, based upon success achieving individual deliverables and adjusted for any changes in market or customer needs.

By taking this approach, payors will be in a position to leverage a modern IT infrastructure that uses today’s industry standards to quickly take on any type of new business, respond in real-time to market changes and customer needs, immediately address new and emerging regulatory standards like ICD-10 and HIPAA 5010 and move faster than the competition .

Ray Desrochers is executive vice president at HealthEdge. He is also a frequent speaker at industry events and conferences around the world. For more information, please visit

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