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Upgrading IT not a one-time occurrence for payer success

Jim O'Neil

Insurers are competing in the post-reform healthcare marketplace and are looking for ways to retain members so they don't jump ship to another payer with superior customer service. Success in the new healthcare economy, including accountable care organizations (ACO), value-based programs, ICD-10 and consumer-based plans, hinders on IT. Therefore, upgrading information technology (IT) systems should be the number one priority.

"Ultimately, if you're not able to take on and address these new business models, then all of a sudden your competitors are going to be eating your lunch," Ray Desrochers, EVP of sales and marketing at software maker HealthEdge, told FierceHealthPayer.

The biggest problem for payers, however, is they haven't upgraded their IT systems in the last 30 or 40 years. That's because healthcare has been a "static, one-size-fits-all model"--where payers essentially offer the same benefits with slightly different copays, deductibles and out-of-pocket costs--that was supported by old technologies.

In fact, HealthEdge's recent survey shows that half of payers have a "strong desire" to participate in one or more of these new healthcare business models during the next three years, yet more than three-fourths of them can't achieve those goals from a technology business standpoint.

But there's a silver lining to these alarming survey results. "The needs of next-generation consumer-based healthcare, which allows people to pick and choose what they want for coverage and pay lower or higher fees, is causing payers to realize that if they want to compete in this new economy, stringing together more Band-Aids and Scotch tape on top of 30- to 35-year-old technology isn't going to help," Descrochers said. "They're quickly realizing that the internal infrastructure they have in place today isn't up to task," he added.

So what's a payer to do? Desrochers recommended taking these steps to start the IT revolution:
1. Get a basic understanding of what's coming down the line. Payers must know about new healthcare business models, regulatory requirements, standards changes and other issues impacting the industry.
2. Step back and determine what the changes mean to the specific organization. Based on their own needs and goals, payers should decide and prioritize which changes they will implement.
3. Assess how many of the company's internal systems and infrastructure are affected.

Desrochers cautioned payers not to think of upgrading their IT systems as a one-time occurrence, however. "If you think about these things only as one-offs, you really miss a lot," he said, because ICD-10, value-based healthcare and ACO models, for example, aren't stand-alone initiatives. Instead, he suggested that payers take a much larger view of their world, recognizing that every IT system upgrade or implementation is connected to other aspects of the business, including customer service.

"The early adopters will be the industry leaders with top customer service because they're making the investments now," Desrochers said. Essentially, an IT upgrade could mean not only complying with regulatory standards, but also gaining a competitive edge by using an improved customer service department to improve member retention.

While payers are deciding what IT systems to upgrade or incorporate into their organizations, they should "keep in mind that change is now a constant in the industry," Desrochers said. So they must ensure that they're addressing not only immediate needs such as ICD-10, but they're ready for the next level of changes. "Payers should build a base that gets them to today and also positions them to support tomorrow," he said.

Still don't think new IT systems are worth the investment? "There's the cost of transforming your technology, and there's the cost of not transforming your technology," Desrochers said. If payers opt to continue operating with their outdated IT infrastructure, they likely will face some grave consequences--failing to recruit new members and existing members, as well as failing to comply regulatory standards.

It sounds to me that payers need to get cracking on those IT upgrades. May they find the 21st century a lovely place to be. -Dina (@HealthPayer)

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