Wednesday, February 12, 2014

The Future of Healthcare: A Roadmap to Overcoming IT Challenges in a Changing Regulatory Landscape

Executive Summary:
Business organizations in a variety of industries face hardships and pain points when faced with a change. It’s especially hard when it’s a forced change through government regulations. The Affordable Care Act (ACA) presents one such challenge to organizations in the healthcare sector. This blog entry sheds light on some of the key challenges faced by healthcare payers while trying to conform to the ACA regulations and a few effective ways of dealing with them.

Affordable Care Act (ACA) - The ACA or the healthcare reform act introduces a few regulations that impact the healthcare providers (health insurers) such as:
  • Ability to accept group and individual enrollment information from a state or a federal insurance exchange website (without the insurers having the authority to reject any of these groups or individuals)
  • Cap on the percentage of premium amount that can be spent on advertising and administrative tasks
  • Expanded Medicaid eligibility – more consumers (up to 133% of poverty level) eligible for Medicaid
  • Reduced deductibility caps and new tax on healthcare payers depending on their market share

Challenges to Healthcare Payers - These regulations present quite a few challenges to the healthcare payers:
  • Need to define health plans for the state or federal exchange that can reduce costs to an optimum level, since the payers can no longer pre-screen the enrollees
  • Need to reduce turnaround time for setting up customer accounts
  • Ability to deal with increased volume of individual and small business customers
  • Keep their product networks flexible to deal with competition and sudden increase in costs
  • Continuously update their business rules related to enrollment, benefits packing, provider contracts, provider networks, provider demographics, reimbursement

Pain Points in Facing These Challenges - Clients face significant pain points in facing these challenges:
  • A combination of manual and system processes that present a lack of visibility & control
  • Legacy systems that are not flexible to adopt to the new changes
  • Many business rules that are currently enforced manually or distributed across multiple systems
  • Lack of coordination among the different functions within an enterprise

Impact of Failure to Deal with Challenges - If the healthcare payers fail in their attempt to effectively deal with these challenges they could face a few consequences:
  • Loss of market share due to long turnaround time for insurance and contract enrollment
  • Loss of revenue due to cost ineffective networks
  • Government fines imposed due to failure to meet the regulations

Effectively Dealing with Challenges – The healthcare payers can follow a few steps proactively to be better prepared to deal with current as well as future regulatory changes:
  • Identify process owners, map their current end-to-end processes across the enterprise, clearly map functional hand offs within processes, collect Key Performance Metrics (KPI), defineroles and responsibilities
  • Harvest existing business rules that are manually enforced and those that are embedded across systems
  • Analyze current state processes to identify - redundant activities, scope for automation, patterns across process and consolidate them into a single process
  • Create future state processes that are optimized by consolidating roles, eliminating bottlenecks
  • Establish clear expectations on the process hand off between functional units across enterprise
  • Identify and implement technology such as IBM BPM (Business Process Manager) to automate “non-value” adding manual activities, integrate source systems with process via web services, manage the workflows and gain visibility into the process (e.g.: Supervisor having the ability to view the status of workflow tasks assigned to their team)
  • Consolidate and centralize business rules into a single system by utilizing a technology such as IBM ODM (Operational Decision Management) and automate the interaction between BPM enabled process and ODM business rules
  • Empower the business users to directly maintain business rules in ODM and hence reducing the downtime due to IT maintenance
  • Introduce data analytics software such as IBM Cognos to collect customer impacting data such as claims settlement time, customer issue resolution, time to market for new plans etc., and measure the ROI from process improvements in terms of data 
  • Continuously monitor the process metrics and update the automated process. A BPM and ODM enabled business process provides the flexibility needed to continuously deal with changes

By proactively adopting an automated process and rules driven approach, Healthcare payers can build flexibility into their business critical processes. Achieving visibility and control of their processes will provide them the ability to deal with the pain points resulting from change effectively.

N.R. Vijay is a Solution Architect in the Business Process Management division of Prolifics. He has over 10 years of consulting experience across domains such as Retail, Healthcare and Banking. Specializing in technology, management concepts and enterprise strategy, he is focused on change management and process improvement initiatives. He co-authored a whitepaper titled "Improving Customer Loyalty through Business Process Optimization and Advanced Business Analytics" -