BY JEREMY M. DAVIS
As the American public waits for health care reform's other shoe
to drop, insurers are either making their exit now, because they lack the facility to
acquire an essential share of the market, or they are moving ahead on the assumption that
managed care is here to stay.
With the realization that some type of national health reform
proposal could make it through Congress this year, there is general consensus that no
matter which reforms ultimately pass, organizations with the most efficient delivery
systems will be the big winners.
Those insurers committed to staying in the game realize they
have to re-evaluate the kind of information systems their customers will require under new
legislation.
Indeed, the only way they can compete in the managed care market
of the future is by streamlining administration, and providing the data that make
cost-effective, quality health care decisions possible.
As a growing number of insurance
executives take a good hard look at existing systems, their
decisions are driven by the following factors:
- Expected increased competition and smaller profit
margins
- Growing complexities of managed care, both in
product design and reimbursement systems.
- Rapid pace of change in technology and the marketplace.
- Compressed life span and uncertain course of
new technology.
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- Reduced systems budgets and staffing.
- Limitations of mainframe technology
and concomitant move to computer networks.
*Imminent changes in health care
financing and delivery.
At Erisco's customer conference
in late May of this year, we observed two fundamental strategies
being pursued by insurers and managed care organizations
that plan to stay in the business.
The first is a highly aggressive
approach that in some cases amounts to a re-engineering
of operations.
In this scenario, executives are
investing heavily in new services, new systems and new strategic
relationships to create a strong competitive position in
the managed care arena of the future.
For example, over the past several
years HMOs have added point-of-service plans, while PPOs
have started offering exclusive provider arrangements.
What's more, both HMOs and PPOs
have added third party administration, utilization management,
mental health and other ancillary services to their service
rosters.
Rather than develop these services
in-house, many are forming alliances or sub-contracting
relationships with established providers.
Still, whether the service is
home grown or not, the information must flow through the
primaray managed care organization, and that takes highly
sophisticated administrative and clinical systems.
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Jeremy M. Davis
Several of our clients typify this aggressive
stance. Highly responsive to customer demands for product
and service enhancements, they are planning
to move to client/server technology.
Client/server architecture bridges
the processing power of the main-frame with the flexibility
of the PC.
Not suprisingly, client/server
is fast becoming the preferred platform for companies that
need to integrate managed care applications with clinical
data, and to make the information accessible to the personnel
who deliver managed care.
A second approach we're observing
is more evolutionary in nature. These companies are not
as sanguine about the industry's role after health care
reform.
But even if managed care were
here to stay, They're not prepared to totally re-engineer
their systems just to maintain market position.
Consequently, these "evolutionaries"
are supplementing their systems as needed to support new
managed care products. They are making judicious investments
in technology to comple-
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