Core system architecture should support data leveraging

February 1, 2005

Challenges that currently face plan executives will lead back to their data management proficiency.

The Healthcare Industry continues to evolve with innovations in all areas including care delivery, preventive care, patient education and benefits design. Much of a health plan's ability to keep pace with this acceleration depends upon the way it manages and leverages data. To succeed, today's health plan constituents must be able to access and easily distribute critical information to support both internal and external users.

YESTERDAY'S DISPARATE SYSTEM Many health plans struggle to proactively mine and distribute critical data primarily because they have inflexible legacy systems that are incapable of storing, sharing and producing dynamic, cross-functional information. Often they have turned to hard-coded system changes as an immediate fix to meet new business requirements for which the legacy system was not designed. Over time, however, this process left many payers with a multitude of disparate systems, limiting their flexibility, responsiveness and ultimately their competitiveness.

Many claims systems still in use today date back to the days of indemnity benefit structures. Over time these systems have been modified and customized extensively to support the demands of managed care. As these health plans look for new ways to proactively respond to current and future market needs, they are unable to do so because these legacy systems lack the inherent capability and flexibility needed to address ongoing requirements.

The Internet offered health plans the opportunity to increase customer and provider service levels while decreasing administrative costs. However, payers in general have been slow to implement fully functioning Web applications and continue to lag behind other industries because they were reluctant to face the prospect of integrating new technology with their current infrastructures.

TODAY'S PROGRESS A common misconception, as implied above, is that the majority of legacy systems are inadequate for today's processing and not capable of supporting the needs of the health plan.

Because of this perception, over the past several years many plans have converted to single-application platforms designed to support the business needs of the entire enterprise.

In actuality, many older systems are perfectly capable of completing the functions they were originally designed to fulfill. The issue is not how to replace legacy systems, but rather, how to achieve effective, economical integration of these systems with other applications in order to leverage flexible data management to drive strategic initiatives in a rapidly evolving industry.

With the emergence of newer integration technologies and because some of the older systems are well-equipped to support these integration architectures, health plan executives have the opportunity to implement new solutions today that will prepare them to quickly implement the strategic initiatives of tomorrow.

TOMORROW'S TRENDS With the new trend of consumerism looming, new challenges are facing health plan executives, which again will lead back to their data management proficiency. The consumerism trend is much larger than just the product and benefit designs for consumer-directed products that plans have begun to offer. The real impact of this new trend lies in the shift in attitude and awareness that individual members now have in the management of their healthcare and the role they will play in it.

The most interesting thing-and the diametric shift that will no doubt occur-is that health plans will have to reinvent themselves, perhaps in dramatic ways. With new competition such as financial services companies now entering the picture to administer components of these CDHPs, the industry will be forced to build more effective IT infrastructures to manage and process data. From this perspective, consumerism could prove to have a bigger impact for healthcare than the onset of the Internet.

Health plans have a tremendous amount of data that can be leveraged to support the trend toward consumerism and drive innovation; however, health plans are again challenged with the legacy of their current system architectures.

One solution is to begin to think of data management differently within the health plan. At the highest level, a health plan deals with two external constituents-members and providers. This is the core of their business.

To differentiate themselves and meet the growing and more complex information demands of these entities, leading health plans increasingly recognize the need to dedicate core systems to support these entities and the information needs of their enterprise.