You can’t engineer yourself out of strategic gaps.
The healthcare industry faces transformational change, and the claims systems of the recent past cannot keep up with this pace of change. Insurance companies, integrated delivery systems and state governments all require new approaches to claims payment, benefit design, contract management, clinical intervention, member enrollment and fulfillment, and customer service. Additionally, ongoing changes to regulation, such as Medical Loss Ratios (MLRs) and ICD-10, the need for increased transparency and the ability to reduce manual processes require the deployment of a modern claims transaction system.
Granted, it’s a daunting task. Replacing a transaction system with this many critical parts can be an expensive, time consuming proposition. Medium sized health plans (100,000 to 250,000 insured members; or clinical delivery systems with 300,000 to 800,000 active patient charts) can spend three years and millions of dollars acquiring or replacing systems. How do I know? I’ve done it.
What I learned is that the investment of time and money can be optimized for a successful outcome by remembering and employing seven key lessons for change. In numerous transaction system projects over the past 35 years, strategic organizing principles and the discipline to maintain them are essential to successful scope, budget and schedule.
1 Change your frame of reference. Transaction system changes should energize business process improvements and measurable gains in product cycle time, claim accuracy, customer relationship management, and other key business model domains. Too often, the organization quickly dives to the technical level of configuration and database design, without examining the drivers in the new business model that required the claims system replacement project. The result can be expensive effort to reproduce obsolete results.
At one health plan this resulted in a $58 million project that could not go live because technical detail did not roll up to measurable business value. In contrast, a large state Medicaid transaction system I worked with was replaced with greatly improved functionality and lower cost per transaction largely due to key organizing principles that emphasized this change in frame of reference.
2 Business model strategy must be explicitly selected, clearly defined, and relentlessly communicated. First map IT to strategy, not functionality. Senior management will often spend significant time and energy selecting and validating a business strategy, yet fail to drive its implications into the daily operating processes. Middle management must receive explicit and continuing communication to manage change in business process and to develop the reports and indicators that will measure performance against the new business requirements.
During the merger period among HMOs in the mid-90s, more than one integration between health plans—which should be a smaller and less complex effort than total replacement—ran dramatically over budget and underdelivered because no clear consensus around IT functionality for business strategy drove decision making. The result was duplication of each feature in each system creating inefficiency and processing conflicts. We subsequently changed the approach to define IT capability in order to support specific business strategy. Everything else was optional.