A network of health centers serving the indigent in the Boston area faces some problems that usually go with the territory: plenty of extra expenses but hardly any extra money. Plus, the network is dependent on a paper-heavy, costly business operation that promises to perpetuate a hand-to-mouth existence.
The centers represent as much as a third of the patient base of a Medicaid HMO, Neighborhood Health Plan. The HMO is chipping away at wasteful paper-pushing and telephone tie-ups by developing targeted information systems to improve internal operations and the provider network. And with a big assist from Internet technology, the managed-care plan is doing it on a shoestring.
For less than $50,000 in first-year development costs, NHP and a technology partner built an automated referral processing system and got it up and running at eight health centers within a year, says Craig Johnson, the plan's chief information officer. With the Internet as the network, financially strapped health centers need to pay for only a computer connected to the World Wide Web.
Three sites began using the system, called CHCNet, last November, followed by five more sites a month later. The eight sites reduced the time spent on referral authorizations by two-thirds, to 10 minutes or less compared with the 30-minute average under the old process of shuffling forms and playing telephone tag with NHP, Johnson says.
The automated system also freed employees for duties more befitting their roles, says Marilyn Daly, director of clinical informatics. "There's no reason to have a highly paid referral coordinator doing data entry," she says. With the new system, a referral is "never touched by a human."
The savings cut both ways: NHP's processing time, which averaged 21 minutes for nonautomated referral requests, dropped to seven minutes, Johnson says. Telephone call volume fizzled to near zero, he adds.
None of the centers has used CHCNet long enough for NHP to quantify the impact, but the process has clearly reduced errors and improved data accuracy and consistency, Johnson says. By the end of March, NHP plans to have 25 to 30 health centers on the network, which amounts to 80% of the health center referral volume it can automate in eastern Massachusetts.
The first health center that pilot-tested the referral program, in Lawrence, Mass., will begin sending the first claims to NHP on the network later this month, Daly says. Johnson anticipates a recurring annual $50,000 development cost to add new services. A Web application development company, NaviMedix, is building the network functions and hosting them on its Web site.
A subscription fee to get the referrals application totaled about $20,000 in 1999, in addition to the $50,000 in development costs. When the network is rolled out to all 600 physicians in the health centers, the subscription costs are expected to be about $12,000 per month, says Johnson, who adds that the cost can be easily recovered through savings from the automated processes.
The Internet initiative dovetails with NHP's own effort to streamline its tracking of enrollee information and communication with providers, Daly says. If the HMO can't use its employees more productively, it won't be able to lower costs and manage the growth in enrollment it's seeking, she says. Call volume will increase as enrollment rises, forcing extra revenue to be spent on more workers to service the higher caseload.
As CHCNet adds functions and catches on at health centers, the provider sites will likely have to upgrade their connections and spring for additional computers, Johnson says. "You can't just have a low-speed dial-up connection to (America Online)," he says. The upgrade would involve paying for a dedicated Internet line that's always on during clinic hours, he says.
But that expense pales compared with the cost of piecing together a private network using costly PC technology. In fact, says Johnson, "our e-commerce strategy would fail without the Internet."