Purchasers of health and disease management services have had limited insight into cost savings or specific clinical activities that create value for their employees or members. Learn how OptumHealth is addressing that issue with its Real-Time Performance Management solution.

Summary

A persistent concern for purchasers of health management services is that of quantifying the value of its activities. Recognizing that a wide variety of methods are available for assessing financial outcomes of health management programming, as well as a continued lack of consensus on best practices for evaluating program outcomes, OptumHealth developed a Real-Time Performance Management solution using Value Drivers to provide a practical method for measuring and reporting leading indicators of value delivered.

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Introduction

Organizations in both the public and private sectors are confronting the operational implications of healthcare reform fueled by mandates and continually rising health costs as executives across industries analyze their options. Many are realizing that their most significant opportunities for taking control of healthcare management challenges lie within their own business processes and IT environments and may require them to transform the way they do business.

The convergence of sweeping regulatory demands for increased transparency, connectivity and security have combined with the industry’s long-standing dependence on legacy applications, data silos and point solutions, to generate a “perfect storm” that can overwhelm many organizations. This storm has the potential to disrupt organizations that do not evolve from their fragmented information systems into environments that integrate business processes at all levels of health service delivery.

For many organizations, the answer to these challenges lies in moving to cloud-based computing environments. Cloud computing enables on-demand network access to a shared pool of configurable technology resources (such as networks, servers, storage, applications and services).1 Because the cloud creates a computing environment in which resources can be rapidly provisioned and released with minimal management effort or service provider interaction, it represents a way to address new regulatory and market trends. It can help organizations reduce the healthcare cost curve while improving outcomes.

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 The US health care landscape is transforming rapidly, fueled by continued rising 

medical costs, economic instability and the pressures of the health care reform 

law. In the midst of this explosive change, health insurance plans face tremendous 

challenges and opportunities, many of which may require them to transform 

the way they do business. Ultimately, the future of individual health plans – and 

potentially the US health insurance industry as a whole – will be determined by how nimbly and effectively they are able to address these challenges.  

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Executive Summary

Health insurance brokers traditionally have played the role of linking business customers with insurers, leveraging their resources to find the most cost-effective solutions for those businesses and their employees. The centerpiece of that strategy has been healthcare cost control, either by steering employers toward less expensive plans, cutting benefits, or by increasing employee contributions. However, as steam picks up behind the concept of Healthcare Performance Management (HPM), the competitive imperatives in the broker industry will change dramatically.

HPM is a technology-enabled, data-driven business strategy that tackles the challenge of controlling healthcare costs and improving quality in much the same way that enterprises have optimized customer relations, supply chain management and enterprise resource management.

As the healthcare landscape changes, brokers who embrace and master the principles of HPM can benefit greatly from the changes that this discipline introduces into the enterprise management of health plans and policies. It is becoming increasingly evident that it is no longer good enough to simply adjust plan costs and establish stand-alone wellness initiatives within an enterprise.

Changes in insurer and carrier business practices caused by health reform legislation also underscore the need for a new broker business model. The Patient Protection and Affordable Care Act, which requires carriers to satisfy minimum medical loss ratio (MLR) requirements, places significant new pressure on broker commissions. Insurers are already reducing broker commissions in the small-group market to help ensure compliance with MLR rules. While these efforts are expected to reduce premiums, they will also reduce broker commissions, now counted as administrative expenses. It raises a compelling question: What future do brokers have unless they find alternative ways to create new revenue streams?

“All stakeholders in healthcare, including insurance brokers, will have to adapt their business model and develop new areas of expertise and capabilities to be successful in the reform era,” says Michael Weinstein, a spokesman for Highmark, Pennsylvania’s largest health plan, to Insurance & Financial Advisor, one of the nation’s leading sources for insurance industry news.

An HPM-driven new business model can help brokers and their customers use data about key workforce population risk factors and trends to make rational investments in preventive programs within a specific employee population. The data can then be leveraged to effect desired changes in health outcomes.

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Preface

Strengthening governance, risk and compliance in the banking industry is an Economist Intelligence Unit report sponsored by SAP. The Economist Intelligence Unit bears sole responsibility for this report. The Economist Intelligence Unit’s editorial team conducted the interviews and wrote the report. The findings and views expressed in this report do not necessarily refl ect the views of the sponsor. Dan Armstrong was the editor of the report and Mike Kenny was responsible for layout and design. Our thanks are due to all of the survey respondents and interviewees for their time and insights.

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