5 Ways Healthcare Payers and Providers Should Prioritize IT Investments

How can healthcare providers and payers choose decide which projects to start now, and which can wait until later?

(Surgeons at work. Photo credit: SSgt. Derrick C. Goode, U.S. Air Force.)

Healthcare payers and providers are in an uncomfortable place when it comes to technology investment. With so many areas to address, including security, basic infrastructure improvements, an increasingly digital enterprise, and in the face of tight budgets, and seemingly conflicting needs, these organizations are finding it difficult to decide where to focus their technology dollars.

These organizations must find a way to prioritize their IT investments to boost the odds of success in the face of limited resources and mounting internal and external scrutiny. While getting the job done in one bite may address pressing issues simultaneously, it’s not always best to invest in a large-scale approach. While “big bang” projects can address multiple issues simultaneously, these efforts are known to be disruptive, costly and risky. CIOs looking to this comprehensive approach may be better-advised to take a step back, look at the real business pain points and opportunities and instead opt to pursue smaller and more manageable initiatives. Approaching technology investments in incremental steps can enable organizations not only to minimize risk and disruption, it also allows them to build upon their successes and learn from their experiences.

(Related: What’s Worrying Health Plans about Healthcare Industry Convergence?)

To solidify an understanding of the pressures facing healthcare organizations and identify issues most critical to these companies, TCS commissioned a technology priorities survey across a broad segment of roles within healthcare payer and provider organizations. Survey findings confirmed that in many cases, current technology investment is not adequately aligned with strategic goals. We see five areas that healthcare organizations must consider when prioritizing technology investments:

Cost containment pressures: As is the case with most businesses today, healthcare providers are under pressure to hold costs down. A large majority of provider survey respondents (86 percent) listed technology service costs as a critical issue. When homing in on vendor capabilities, 98 percent of respondents listed “improved vendor productivity and cost performance” as somewhere between “important” and “absolutely essential.” Providers clearly want the latest technologies, and they need to take advantage of big data, analytics and digitization, but only as part of an overall plan that takes cost cutting into consideration.

The requirement for an agile, flexible infrastructure: Payer CIOs and IR managers, in particular, need to focus on a flexible, modern infrastructure that costs less to operate while providing more business opportunities. Infrastructure services generate 15 to 20 percent of administrative costs for payers, so effective optimization can have a dramatic effect upon the organization’s bottom line.

The bulk of infrastructure services address day-to-day activities like keeping the lights on. Healthcare organizations should not be tying up valuable subject matter experts for these purposes. Outsourcing infrastructure services would free up SMEs to innovate and create real value for their organizations.

An urgent need to secure data: Damaging and costly, both in dollars and reputation, security breaches in healthcare are rising. The TCS survey found that security is the highest provider CIO mandate, above many other traditional mandates. In fact, 87 percent of provider participants and more than 90 percent of payer respondents say they view data security as the key IT challenge; higher than any other pressing concern about their IT portfolio. However, even with the urgent and growing need to safeguard their data, both payers and providers may not be taking an optimal approach to data security. They may be concentrating on network and firewall security to keep hackers out, but still end up unable to prevent intrusion.

A better tactic might be to address the visibility and usability of any data that winds up being compromised. Masking data is a good start in addressing data security. While it may just be a matter of time until an organization’s system is hacked, masking the data can protect payers and providers from putting data elements together in an exploitable format.

Digitization: Digital technologies are changing both patient care delivery methods and other healthcare processes. The TCS survey found that providers are seeing a paradigm shift that places customer engagement at the center of healthcare operations, and as a means to optimize practices and improve patient care. Efforts to improve customer engagement will enable providers to reduce costs and boost profitability while improving the standard of care. The good news is that 80 percent of providers have already implemented or plan to implement digital initiatives this year. All efforts aim to improve care, speed up processes and reduce costs.

A full 85 percent of payers in the TCS survey are either in the planning stages of or have completed digital initiatives. Payers cited an array of reasons for their digitization efforts, including customer engagement on social media, improving outcomes, growing prominence of the individuals market and proliferation of mobile devices.

The healthcare business has shifted from a group business to an individual business. Today, with smart phone usage so widespread, it’s become essential for healthcare organizations to find ways for people to easily and conveniently contact their healthcare providers on their mobile phones so that they don’t have to spend time on high-touch contact center interactions.

Ongoing payer-provider convergence: Payer-provider convergence can create efficiencies, increase data quality and improve healthcare. Convergence and collaboration could result in shared BPO, shared data warehousing, joint analytics, and fresh expertise. From an industry standpoint, greater standardization measures could result in simplified transactions, faster care cycles, and greater data sharing.

True convergence occurs when the two groups come together, and right now payers and providers typically function as separate entities operating together, but only on paper. True convergence requires a comprehensive integration of the two parties, and those who will survive in this space will be able to truly converge. Positive outcomes are likely, but the industry is still early in the maturity cycle.

Magna Hadley // Magna Hadley is Global Head, Healthcare Domain Practice, Tata Consultancy Services (TCS). Hadley has over 25 years of experience in defining and leading the delivery of strategic business solutions and technology-enabled transformations. She is internationally-recognized as a dynamic strategist of business growth and profitability and has extensive experience in leading large-scale systems implementations, driving initiatives to optimize efficiencies and maintaining performance quality.

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