Jim Adams

We are frequently reminded of both the importance of IT in health care and the extent to which the healthcare industry trails other information-intensive industries in its use of IT.

When it comes to care delivery, we see the data indicating the low adoption of electronic medical records or electronic health records by providers and personal health records for consumers-and we still can't agree on the definition of these terms. Over the past few years, we've heard frequent hype regarding the potential benefits of regional health information organizations, a nationwide health information network, and health information exchanges. However, our understanding of the need for a robust healthcare IT infrastructure has far outpaced adoption of applications and components of that infrastructure.

What's the Holdup?

Why hasn't IT been adopted to a greater extent in health care? Factors such as the complexity of the technology, perceived high total costs for implementation and operation, and reluctance to change are key inhibitors. These factors exist in other industries, yet those industries have far outpaced the healthcare industry in their adoption and use of IT.

So what's different about health care? Many healthcare organizations can still survive and possibly even prosper without robust IT-enabled capabilities, despite major safety, cost, clinical quality, service quality, and access issues in the industry. Simply put, the U.S. healthcare industry still rewards volumes rather than value and fragmented care delivery rather than evidence-based, coordinated care focused on prediction, prevention, early detection, and treatment. Nonetheless, considerable pressure continues to build to move from volumes to value.

All key segments of the healthcare industry such as care delivery organizations, private health plans, life sciences, and medical device manufacturers are feeling the pressure. Many health plans are leaders in recognizing the need for change and the importance of IT in enabling that change. The reason is simple: Health plans are witnessing fundamental changes to the purchasing, consumption, and delivery of health care that is redefining the way health plans compete and operate.

The Importance of Healthcare IT to Health Plans

There are three factors that are driving the adoption of healthcare IT by health plans.

The shift from employer-based coverage to government-based coverage and individual coverage. The combination of the push for universal coverage, the erosion of employer-based insurance, and the aging population is expected to drive this continued shift toward individual coverage and government-based coverage.

Even employers, the traditional purchasers for many health plans, can no longer afford to passively permit premium increases that far outpace general inflation and company revenues. Employers are increasingly including new provisions such as a "wellness ROI" in the request for price quotes from health plans.

The increased responsibility and accountability of consumers for their healthcare treatment. Consumers are increasingly being required to make more sound health and wellness choices, realize greater value from the healthcare system, and make more astute financial plans for future healthcare needs. Health plans must assist consumers in meeting these demands or risk losing market share.

New requirements, delivery models, and reimbursement for care delivery. The emphasis of the healthcare system will continue to expand from episodic acute care services to include prevention and chronic condition management and better care coordination, all of which will prompt new reimbursement approaches. Health plans and providers must align incentives and collaboratively innovate to help change consumer behaviors, anticipate care needs for health plan members, provide high-value care, and streamline administrative functions, such as claims management and payments.

Competition among private health plans will increasingly be driven by product or service design attributes and quality of the provider network, combined with less tangible-but equally important-factors such as trust and perceived product or service quality, rather than simply cost. Health plans must deliver a more personalized experience by providing practical information to improve members' health and healthcare experiences, while becoming valued business partners to healthcare providers and other stakeholders. To meet the changing market and consumer preferences, many health plans will need to change their leadership, culture, competencies, business models, organizational structures, sourcing strategies, processes, and IT capabilities.

IT Initiatives by Leading Health Plans

Leading health plans are migrating to models-driven, services-oriented architectures (SOA) to help enable their transition toward more integrated, member-centric enterprises. These organizations are initially focusing on key initiatives such as:

  • Modernizing and integrating applications, infrastructure, and processes to deliver world-class customer service, resulting in greater satisfaction among members, sponsors, providers, and brokers; personalized service; and cohesive multichannel access and contact
  • Modernizing, consolidating, migrating, or maintaining core administrative systems and processes such as membership enrollment, benefits eligibility, claims, quoting, and billing. These efforts are designed to increase flexibility and lower administrative costs.
  • Integrating, analyzing, and presenting operational, medical, and financial data across multiple internal departments and external partners to enhance transparency, medical quality, and outcomes, fraud detection, and business and clinical insight. For example, these efforts will allow health plans to develop and deliver a "single version of truth" about a member.

These initiatives will not be easy from a technological, business, and cultural perspective. Transaction systems that have evolved over time and are currently inflexible and "siloed" must be migrated to an SOA to improve reuse and flexibility. Data that are scattered across multiple systems must be aggregated and standardized in order to achieve business goals such as having the aforementioned "single version of truth" about a member. Systems that were designed to support internal uses must now be "opened up" to facilitate sharing of information with members, customers, providers, and brokers. Robust analytics capabilities must be expanded beyond uses such as actuarial and fraudulent claims detection into areas such as risk management in order to provide early interventions for high-risk members.

A Competitive Differentiator for Health Plans-and Health Systems

As we move from a volume-based, fragmented healthcare system to a value-based system, a robust IT and information infrastructure will become a necessity. The ability to manage and use knowledge and information may well be a key competitive differentiator. Although a robust IT infrastructure is not the "silver bullet" to solving the problems of the healthcare system, we will not be able to successfully transform to a value-based, affordable, sustainable healthcare system without it.


Jim Adams is executive director, IBM Center for Healthcare Management, Broomfield, Colo. (jim.adams@us.ibm.com).

Publication Date: Saturday, March 01, 2008

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