Stitching together a $17 billion managed-care behemoth and a $10 billion managed-care behemoth might seem almost unmanageable.
If United HealthCare Corp. and Humana are to become one company, their pervasive but incompatible information networks have to be integrated without jeopardizing day-to-day operations for a combined work force of 50,000 employees in 50 states.
The widely publicized internal collapse of Oxford Health Plans, blamed in large part on the inability of core information systems to keep up with rapid enrollment growth, has made computer capability a key consideration for publicly traded HMOs.
But information systems and network integration specialists at Minneapolis-based United say they are looking at the proposed acquisition of the smaller Humana as more of what they've done before.
"United, from a technology standpoint, has a lot of respect in the industry," said Woody Taylor, partner in the healthcare consulting practice of KPMG Peat Marwick. "That bodes well for how they're going to combine with Humana."
In a significant tuneup for the chore to come, United's information specialists took on the integration of MetraHealth Cos., a privately held joint venture between Metropolitan Life Insurance Co. and Travelers Insurance Co. The venture had been in business just under a year when it was acquired by United in 1995.
That meant the two venture partners were still integrating their information services when they became part of United, said Steve Curd, senior vice president and chief information officer of United's strategic business services group.
The strategic staff started by developing a common vocabulary with the acquired company and instituting ways to measure business performance indicators, such as average time to pay a claim, average time to create and deliver a bill, claims backlogs and number of days in accounts receivable.
The measurements, or metrics, were monitored before, during and after the information system conversion, Curd said. Monitoring led to preliminary changes in business practices before the systems specialists started, he said.
The assessment also revealed that MetraHealth's core information systems supported better processes than United's for serving large employers whose operations span wide expanses of the country, such as Fortune 500 companies.
Core systems include those for handling membership and enrollment, claims management, treatment eligibil-ity, benefits management and such financial essentials as contract management, rate analysis and expense forecasts.
United's internally developed core administrative and financial systems were tailored to best serve the dozens of statewide or regional health plans it operates, mainly for customers operating in only one market, Curd said.
But MetraHealth had the best practices for dealing with employers who wanted uniform administration across multiple regions of operation, he said. So United adapted that system to parallel its own.
United worked hard to take the best of both companies' practices and inventories, said Jeffrey Margolis, president of the Trizetto Group, a Newport Beach, Calif.-based healthcare information technology company. "It's a tribute to the United management team that they haven't significantly tripped on their financial performance during this period."
Assuming the Humana acquisition is completed, United likely will use the same deliberate approach in combining computer systems, said KPMG's Taylor.
United representatives declined to discuss specifics on the Humana merger. Humana representatives could not be reached for an interview despite repeated attempts to contact them.
But in an April 20 interview in MODERN HEALTHCARE, Humana President Gregory Wolf talked about the importance of carefully integrating acquisitions into the computer network, even if it requires hiring more staff, before moving the new business onto the computers.
As Humana contemplates how to combine with United, the sizable incoming volume and the risks of disruption "really create the need for a conservative approach," Taylor said. "God forbid you dump a whole book of business into one company's computer at one time."
Managed correctly, the two managed-care giants can maintain separate systems for a long time while they iron out high-priority business issues and build a unified brand, Taylor said. Two well-oiled information networks are better than one straining under a growth load.
That's the lesson learned from the Oxford situation, Taylor said.