Blues Plans Must Erase Tech Debt To Stay Competitive
Once the driving force in their markets, regional Blue Cross Blue Shield plans now face the daunting task of keeping pace with larger and better-financed rivals in an increasingly technology-centric world. If they hope to stay competitive, BCBS plans must revolutionize their technology and data management approach. In short, they have to solve a tech debt that is straining margins and their ability to provide improved services to members and health system partners.
The good news is there’s a way out that doesn’t involve breaking the bank. It does, however, require sustained commitment from leadership to not only address technological shortcomings but also rethink how staff are trained and deployed.
A shift in the market
Regional BCBS plans have long relied on local scale — strong connections with providers, intimate knowledge of the market, and local presence — to serve customers and members. The model served them well when meeting the needs of a largely commercial fully insured segment and was supported by a built-for-purpose technology platform. However, as the market transitioned from full risk to administrative services only to Medicare to Medicaid, the reliance on a dominant platform has proven counterproductive. In the meantime, competition has increased — from large national payers with deeper pockets and national scale, as well as from smaller, nimbler start-ups that rely on new, flexible tech.
A big part of the problem is customization. Many BCBS plan’s IT systems have been acquired over time, sit apart from one another, and require a patchwork quilt of solutions to stitch them together. Years of neglect created siloed systems and fragmented data, making it more difficult for plans to generate unified data sets. And that, in turn, hindered their ability to streamline operations and bring more innovative products to market. The costs associated with maintaining an outdated infrastructure and implementing makeshift solutions are a significant burden. Across healthcare, we typically see a 10% to 20% burden associated with technology debt for regional BCBS plans.
3 ways to erase tech debt
If regional BCBS plans are going to compete, they need to aggressively close the tech gap that exists with other payers. The first step is to conduct a thorough assessment of their tech stack. This should be a top-to-bottom review of systems to identify where gaps exist and any internal obstacles that need to be addressed, including IT governance. Once that assessment is completed, companies should move to these three priority areas:
Go modular to build quicker, faster, cheaper: As we noted above, one of the biggest challenges facing regional BCBS plans is tying together older IT systems. This has required a lot of expensive customization. Instead, plans should embrace a modular operating system approach. This allows for more flexibility and enables companies to add, remove, or replace components without breaking the whole system. For example, when adding a new utilization management platform, a modular architecture would allow a Blues plan to integrate with front-end portals and optical character recognition to receive prior authorization forms. It could use application programming interfaces — APIs — to connect with back-end data stores and platforms to access member benefits, provider contract details, usage limitations, and more. Importantly, results from a prior authorization check can be fed back using micro-services to the claims adjudication platform. If the interfaces between the various systems are maintained, it becomes easier to switch solutions and add additional functionality.
Critically, migrating to a modular approach will force plans to reconcile data sets and create an opportunity to centralize data storage. A centralized repository that’s built with self-service applications will give business units quicker access to data and empower them to develop innovative offerings. It also reduces reliance on IT departments to support those efforts.
Regularly rationalize the tech stack: Most of the IT infrastructure at BCBS plans was built for a different business model and has gone through multiple enhancements to try and meet today’s needs. However we found that organizations haven’t taken time to decommission and streamline redundant systems. Doing so is a must to ensure that any new additions to the tech stack deliver a strong return on investment. Organizations should also routinely refactor processes. Many processes put in place over the years have multiple steps and checks involving various legacy systems, several of which might not be needed today. BCBS plans should also check if all the applications and systems in the IT asset inventory are still in use and to what level. Doing a cost-benefit analysis and sunsetting those that aren’t necessary should be done quickly.
Plans that struggle with building or modifying infrastructure can look to the cloud for help. The ubiquity of cloud and other on-demand solutions presents relatively cost-effective options and can be deployed instantly. They also ease access to data for business units. But there are risks, especially in this era of cybercriminals targeting healthcare. Plans should bolster their HIPAA-compliant business associate contracts with any cloud vendor before turning over the keys to their data.
Aligning people and processes: Since a regional BCBS plan must optimize every dollar spent, it is vital that staff are given the right tools to run a lean operation. Processes and workflows must be updated to position the organization for success, including a review of IT governance to ensure the company can be nimble. For leaders, that means embracing a technology-first mindset and automating mundane or repetitive tasks. Taking that step will free up valuable human resources to focus on more mission-critical functions and explore growth opportunities.
The competitive environment is only going to get tighter for BCBS plans, especially as consolidation continues across the industry and national players expand their reach. If Blues Plans want to stay in the conversation, they need to take a serious look at canceling out their tech debt. Doing so will enable them to compete with innovative solutions all the while better leveraging their existing relationships with local health systems.