Outsourcing: A Strategic Tool for Health Plans

June 15, 2017
The provision of high-quality healthcare services at affordable prices has become increasingly difficult for health plans in recent years. Health plans have been struggling for decades to deliver excellent service, quickly and cheaply. And as we’ve observed before, when it comes to “good, fast and cheap,” you really can pick only two.
 
In recent years, roll-out of the Affordable Care Act (ACA) has placed unprecedented strains on health plans. Millions of previously-uninsured Americans entered the market, placing increased demand for delivery of excellent, timely services at affordable prices.
 
In response to the spike in volume, health plans are increasingly focusing on their core competencies and are turning to outside experts to handle their mid- and back-office functions. Outsourcing offers the best possibility for health plans to achieve the ideal of good, fast and cheap.
 
Focusing on core competencies, outsourcing the rest
 
According to Shashi Yadiki, of Dell Services Health Plan, the core functions of health plans include sales, marketing, and member experience. These are the areas where individual health plans differentiate themselves from the competition. But to thrive in an increasingly efficient market, plans have found it useful to outsource various functions so as to take advantage of economies of scale and expertise.
 
According to Black Book Market Research, health plan outsourcing increased 22% from 2014 to 2015 and is expected to grow 40% over the next two years. Some of the functions being outsourced include claims adjudication, call centers, and member processing. But with the arrival of “Big Data” in healthcare, plans are increasingly outsourcing predictive analytics and population health functions in an effort to grapple with the problem of managing large populations with complex chronic diseases. Black Book predicts that virtually all payers will have outsourced analytics by the end of 2017.
 
Late to the party
 
Whereas outsourcing of business processes has been common across many industries since the 1990s, the healthcare industry has been slow to jump on the bandwagon. However, even prior to the advent of the ACA, economic realities had been compelling payers and allied organizations to focus on core functions and outsource the rest.
 
This trend is particularly pronounced in the self-insurance market, where complexity, compliance, and associated expense are driving the move to outsourcing. Pharmacy benefit managers, as well as home care benefit management agencies are seeing substantial increases in volume over the last several years.
 
The keys to achieving the goal of good-fast-and-cheap in healthcare may involve lowering the regulatory barriers that slow progression of innovation, as well as willingness on the part of major stakeholders to develop a common language for secure transmission of health data. The technological tools are within arms-reach: all that remains is the will to use them.

 

Tags: Health Insurance, Healthcare, home-based care

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