There's a boomlet underway in health information technology buying, triggered by provider organizations considering or launching their own Medicare Advantage or commercial health plans.
Provider-run plans without long experience in the insurance business face a challenge in shopping for and setting up an IT system that will meet their needs. Hospitals, health systems and medical groups already are in the market for data analytics and care-management software. Those tools augment their electronic health-record systems, aiding in population health risk assessments and managing high-cost patients with chronic conditions. But they need even more technology tools to operate as an insurer.
“The EHR is a very different technology than what's needed for managing a health plan,” said Cathy Eddy, president of the Health Plan Alliance, a 50-member trade association for provider-sponsored plans that has been growing recently at a rate of three to four plans a year.
For many providers wanting to start their own health plans, the likely path is a “best-of-breed” strategy involving shopping for component parts of a complete IT system. “One's head starts to spin” when looking at a shopping list of IT systems or services a provider needs to become a plan, said Mike Nugent, managing director of the healthcare practice at Navigant, a Chicago-based consultancy that advises provider-sponsored health plans on their technology needs.
Serving provider-sponsored plans is a growing business for health IT vendors. “It's rapidly developing,” added Kevin Weinstein, chief growth officer for Chicago-based Valence Health, a developer and seller of core technologies used by health plans. “You have 150 to 200 provider-sponsored entities and you're probably seeing 10 to 20 added a year.”
Provider-owned plans cover less than 10% of the private insurance market, but their membership is growing, according to a February analysis by A.M. Best Co. of 150 provider-owned plans. Enrollment increased to 19.1 million in 2013, up 4% from 2012.
Total premium dollars collected for provider-owned plans rose 11% from 2011 to 2013, more that 2 points higher than the 8.9% growth for all in the industry, A.M. Best reported. In 2013, Medicare Advantage membership in provider-owned plans grew 8.2%, while Medicaid membership grew 15.3%.
Experts say many health systems are considering small-scale plan startups to avoid conflict with traditional health insurance companies, and are particularly eyeing the Medicare Advantage business because they feel they know how to manage seniors' care.
Nugent said providers starting health plans need to consider the three “offices” in which health plan IT will be used. One is front-office technology, which includes a customer-relationship-management system to monitor sales and marketing. The front-office tool kit also may have portals for brokers, providers and plan members. Then there are middle-office systems for pharmacy management, medical management, data analytics and reporting, and provider contract management. The third office consists of back-office tools—the core database systems for member enrollment, billing and claims processing, and adjudication.
In each of these three areas, “you can pretty much buy commercial off-the-shelf products to build the health plan,” said Daniel Knies, chief technology officer and co-founder of Chicago-based Aldera. His firm sells many of the parts, including portals, data analytics and a core back-office system in partnership with Valence Health.
As an alternative to buying off-the-shelf products, provider-owned plans can contract out for almost all of these plan functions on a service basis. That means providers don't need to own the software or hardware or employ the people to run them. That reduces IT capital costs and procurement time.
This month, Crystal Run Healthcare, a 300-physician multispecialty medical group in Middletown, N.Y., jumped into the commercial health insurance market, offering health plans to employers in its three-county, Hudson River Valley service area. It hired Francis Cheung, a veteran health IT executive with experience at the health plan and provider system levels, as its chief information officer.
Crystal Run is a long-term customer of EHR developer NextGen Healthcare Information Systems and also uses interoperability software from Mirth, both owned by Quality Systems, Irvine, Calif.
Cheung said his organization has developed its own enterprise data warehouse. It's working under a 10-year contract with Utah-based Health Catalyst, a data warehousing and analytics firm. “We've invested heavily in our population health management and care coordination and care-management capabilities,” Cheung said. The medical group, however, is buying core claims payment and adjudication services from a commercial vendor.
“Insurance companies have tremendous experience doing that,” he said. “I don't see us creating a new claims-processing system.”
Eight-hospital St. Luke's Health System in Boise, Idaho, has contracted with SelectHealth, the health insurance arm of Salt Lake City-based Intermountain Healthcare, to serve as third-party administrator for St. Luke's 2-year-old health plan. The plan is a joint venture between St. Luke's and Intermountain. SelectHealth handles the back-end IT duties for the plan, said Beth Toal, a St. Luke's spokeswoman. The plan covers St. Luke's employees and the public, including enrollees from Utah's federal insurance exchange and workers in employer plans. It also offers a Medicare Advantage product.
