Services Thinking For Health Plans - Object Management Group · • Services Thinking is a business-driven, services-based approach to value delivery that facilitates sustainable

SOA In Healthcare Conference, June 04th 2009.

Phil Ruth, Director, Deloitte Consulting LLPRenu Pandit, Sr. Manager, Deloitte Consulting LLP

Services Thinking For Health Plans

Renu Pandit, Sr. Manager, Deloitte Consulting LLP

The age of uncertainty?The perfect storm seems to be brewing for the US Health Plan industry. Multiple trends impact the ability to maintain business value.

• Health insurance products are changing to transition more of the cost burden onto the consumer

• Cost-shifting is creating a larger responsibility for consumers to cover health care costs out of their own pocket

• Consumers moving to the web for on-line shopping, health information

Consumerism

• Sweeping health reforms are a national priority with significant funding allocation

• Looming uncertainty around ICD-10 and HIPAA 5010 compliance

• Increasing pressure to bolster sponsored

Legislation

US

• An aging population and a shrinking labor force are creating inflationary pressures on health care costs in US

• Health insurance costs are the fastest growing cost components for employers

Rising costs

Copyright © 2009 Deloitte Development LLC. All rights reserved.1

• Increasing consumer financial accountability is creating demand for financing and decision support systems

• Specialty players are emerging in the health plan space

• Employers are actively looking to reduce their health insurance costs

Health plan operations

• Since 1980, 76 Blues have combined with larger plans and are down to three major groups

• Consolidation activity is expected to continue in the future

• 20% insured by more than 500 non-public regional health plans

Consolidation

• The requirement to manage electronic health records and information sharing across networks and health information exchanges (HIEs) are seen as onerous

• Profitability considerations are impeding investments in expansion and infrastructure

• New care delivery models are gaining traction and skilled staffing is in shortage – both impede operational efficiency

Provider challenges

• Increasing pressure to bolster sponsored programs and needs of the underinsuredUS

Health Plans

growing cost components for employers• Average employee contribution to

company-provided health insurance has increased

Source:Strategic Flexibility For The Health Plan Industry, Deloitte Center For Health Solutions, 2008The Strategy Paradox, Michael Raynor, 2007

Building strategic capabilities

A Sample Problem: Many Health Plan executives are understandably frustrated with their inability to quickly integrate new products including fast growing products such as private Medicare offerings. The challenges are all too familiar:

• You are looking for decreasing the cost of doing business in this competitive environment

• Your enrollment process can’t report on the success of individual enrollment, it can only report group enrollment

• In addition, the process for eligibility is all paper based, you can’t integrate to the underwriting system


system

• The Federal government is asking for additional visibility into your Medicare business

• The population of eligible Medicare citizens is growing at twice the rate of your other businesses

• Your IT department cannot figure out how to support the growing eligible member base and reduce lead times to update processes to add/remove lines of business

• Your sales and marketing engine stops cold as it lacks basic tools to target eligible members

• You have contracted with a third party disease management firm and want to provide them an integrated view of your member’ care management. But with all the disparate systems, you cannot figure out an efficient way to do this.

How Services Thinking can helpcan help

Challenges Services Thinking Response

• Respond effectively to shifting membership trends, profitability pressures and responsiveness to regulations and mandates

• With business processes packaged as modular, accessible business services, you can connect them rapidly to optimize processes across partners and your own internal applications to design new and complex benefits and reduce the time-to-market for these offerings.

Services Thinking can help Health Plans address the complexities of the current environment and respond in an effective manner by enabling the building and sustenance of business capabilities.

How does Services Thinking deliver the promise?

Business Agility


• Introduce innovative new products and services to cater to the health of the membership, not simply provide coverage.

• As the Health Plan environment changes, your technology teams can more easily map process changes to applications and then implement the appropriate IT changes.

• Effectively use timely information and processing events to optimize care and service decisions throughout the lifecycle of a constituent’s interaction.

• Services Thinking promotes an enterprise view of business processes, their underlying information assets , and coupled with the right information architecture, can provide a robust business intelligence layer.

• Better manage processes beyond the transmission and acceptance of claims, increase auto-adjudication rates, reduce claim rejection rates, improve claims accuracy and decrease claims processing costs. Create value for other participants in the health care delivery system. (e.g. providers and health care technology vendors)

• Because “services” are modeled against business processes, the flow of data and transactions through service-oriented applications is valuable data.

Business Flexibility

IntegratedEnterprise

OperationalEfficiency

SOA or Services Thinking?

So what is the answer? Business Agility through ServicesThinking.

• Services Thinking is a business-driven, services-based approach to value delivery that facilitates sustainable adaptability in today’s rapidly changing market. Services Thinking extends services concepts beyond technology to include market structures, business strategies, process, operations, sourcing, organization, people, and more.

The Business-Technology

Business Processes

Business Drivers & ModelsMarkets

Business CapabilitiesBusiness

Perspective

Many SOA vendors have touted SOA as the silver bullet capable of providing these strategic capabilities. However, many have hit the wall trying to use SOA to address business flexibility, business agility, an integrated enterprise and operational efficiencies.


• Services Thinking closes the gap between business and IT perspectives — it extends the business perspective to take increased ownership of realizations, and extends the IT perspective to provide services that are tightly aligned with business strategies, processes, and organizations

Debunking the myth…This is not about technology alone.

• SOA has been positioned as an answer to the agility demands of organizations. The true realization of such a promise, however, is constrained by the limiting technology-focused approachesprevalent in the industry today.

Services Thinking uses the concepts of SOA (loosely coupled, well defined, clear ownership, reusability, etc.) and marries them to value mapping, organization models, process engineering, enterprise architecture, and

human capital capabilities.

The Business-Technology Alignment Gap

Applications & DatabasesTechnology & Infrastructure

IT Perspective

Services Thinking bridges this gap

How does it differ from conventional thinking?

Siloed responses to the emerging business model

Conventional Thinking

Capability centric approach to emerging business models

Services Thinking

Services Thinking moves the needle from reactive and prescriptive technical responses to agile business responses.


Reactive responses and big-bang implementations

Fear complexity – standardize everything

You don’t have to bet the farm

Embrace complexity – Knit and un-knit capabilities with ease

Services Thinking appliedapplied

Our framework

Vision and Strategy

Business modelTarget

Business strategy

Services Thinking

Deloitte’s Services Thinking framework provides an integrated approach to help Health Plan organization succeed.


Faster response to market needs

Reconfigure the business on demand

Increase the speed of collaboration

Reduced complexity

Common business language

Consistent definitions and usage of data

Business Processes

Applications & Databases

InformationServices

Technology & Infrastructure

Business strategy Align

Health Plan enterprise Transform

Solution DesignImplement

InfrastructureOperate

Execution Referencematerial

Knowledgemanagement Tools Governance

Client Situation

A regional health plan is struggling to achieve operational efficiencies.

The plan is expanding its product and services offerings in response to the changing business imperatives of

• Increased speed to market of new products

• Enhanced system interoperability

• Quick response to new regulations

Our Response

• Using our Services Thinking framework, we start with a definition of the relevant business processes.

• These business processes are used to identify the entities/systems that consume enrollment data and producers that generate enrollment related data.

• Further, we identify integration scenarios between producers and consumers to derive shared business entities.

Applying our framework at a Regional Health Plan


The product and service offerings include member online self services applications, disease management and CDHPs.

Fragmented business processes associated with membership and eligibility are resulting in several redundancies and inefficiencies.

The plan wants to,

• Increase flexibility and agility in CDHP benefits configuration

• Centralize the management of member enrollment and membership across all lines of business

• Achieve effective regulatory compliance in an ever changing regulatory landscape

entities.

• Efficiencies are gained as an enterprise services architecture is developed and implemented to remove redundancies and inefficiencies

• Greater visibility into the process is gained as the technical solution delivers a well-defined set of capabilities. Capability inter-dependencies are also easily understood.

An example of delivering flexibility and simplification

Disparate enrolment and membership processes and

information needs reside throughout the organization

Services thinking applied across process, data,

architecture and systems

Strategy and process optimized through technology, rationalized

enterprise capabilities and business services defined and

delivered

• Support eligibility inquiries from online member self service applications, IVRs and provider information portal

• Technology aligned to support vision and strategy

• Business processes optimized

Processes Results

Services thinking transformed multiple enrollment and membership management processes into a few discrete capabilities and a set of defined business services that support these capabilities.


and provider information portal

• Provide group and member information to be used in account renewals

• Provide member eligibility information to Host Plans for processing

• Transfer eligibility transactions for members in groups with HSA, HRA benefits to the appropriate benefit processors

• Provide eligibility data for claim adjudication

• Provide member eligibility information for disease management

• Pass member and group eligibility information to vision benefit managers, PBMs and national account systems

•• Exchange of eligibility information

between inter-plan partners in a HIPAA compliant format

• Business processes optimized by leveraging workflow services

• Faster response to market needs and easy reconfiguration on demand

• Reduced complexity and easier collaboration capabilities

• Common business language and consistent use of information as an enterprise asset

• Flexible application and data integration capabilities with shorter delivery times

• Scalable technology and infrastructure designed to accommodate growth and market demands

• Governance defined to manage and maintain data, services and processes

ProcessDefinition

Operational Improvement

Process Capability & Improvement

Standard Language

Data StandardizationData

StandardsMetadata &Master Data

SystemsData Integration Data Harmonization

ArchitectureScalability Structure &

StandardsData

Lifecycle

Services Thinking provides…• Modular components to simplify workflow and hand-offs• Data standardization to provide consistent and common understanding of information• Technology that can respond rapidly to changing business needs and increase speed to

market

Eligibility

Member

Group

Benefit

Services

Managing business strategy changes

New Business Processes

Sub process

Work step

Business

Activity

Process Decompositions are

hierarchical lists

Flow diagrams

incorporate sequencing and logic

NewAcquisition

Services Thinking Applied• Business-Technology alignment as the primary goal

of new business integration

• Reuse of capabilities is driven via governance processes

• Restriction of wrapping or extensions to areas with marginal functional or technical fit

In accordance with the health plan’s growth strategy, another regional health plan with a large client base in the Medicare market was acquired. Eligibility inquiry services designed earlier were leveraged as the new senior market membership base was integrated into the enterprise.


Existing Business Processes

Existing ServicesExisting Capabilities

Customer Dynamics

Billing

Net

wor

k El

emen

ts

Perform Billing & Remittance

Develop, Enhance, & Withdraw

Products & Services

Market & Sell Products & Services

CDRProcessing

CarrierCosting &Settlement

Rating

BillCalculation

InvoiceProduction &Distribution

CustomerBill RetailReporting

AccountsReceivable

Col lections PaymentProcessing

FraudDetection

FinancialReporting

MarketingIntelligence

Sales ForceManagement

OpportunityManagement

Products & Services Catalog

Perform Order Mgmt

OrderEntry

Call CenterManagement

OSS

Perform Service Provisioning

ServiceOrder

ManagementSAG

PIC/CARENumberAdmin

E911Management

InterfaceGateway

Plan, Design & Build the Network

Service Activation

Loca

l

LD Dat

a

Inte

rnet

Cab

le

Oth

er

PerformService Assurance

NetworkProducts & Services

NumberCustomer

Infrastructure/ERP Performance MgmtData Warehouse EISHR Finance Logistics

Directory & Operator Services

Oth

erCab

leIn

tern

et

Res

iden

tial

Sm

all

Bus

ines

s

Dat

aLo

ngD

ista

nce

Maj

orAcc

ount

s

Loca

l

SolutionAdvisor

MarketingEncyclopedia

MarketingDecisionSupport

CustomerService

CreditScreening

1 2

3 4

5 6

7 8

9 10

11 12

Network Mgmt

Switc

h

Tra

nspo

rt

Dat

a

Line

Testing

Line

Circ

uit

Trouble Management

Network Planning

1

NetworkEngineering

2

NetworkImplementa-

tion 3

NetworkProvisioning

4

Traffic Analysis

Switc

h

Tran

spor

t

Dat

a

SS7

5

Facilities Management

Workforce Management

Security Management

Customer Dynamics

Billing

Net

wor

k El

emen

ts

Perform Billing & Remittance

Develop, Enhance, & Withdraw

Products & Services

Market & Sell Products & Services

CDRProcessing

CarrierCosting &Settlement

Rating

BillCalculation

InvoiceProduction &Distribution

CustomerBill RetailReporting

AccountsReceivable

Col lections PaymentProcessing

FraudDetection

FinancialReporting

MarketingIntelligence

Sales ForceManagement

OpportunityManagement

Products & Services Catalog

Perform Order Mgmt

OrderEntry

Call CenterManagement

OSS

Perform Service Provisioning

ServiceOrder

ManagementSAG

PIC/CARENumberAdmin

E911Management

InterfaceGateway

Plan, Design & Build the Network

Service Activation

Loca

l

LD Dat

a

Inte

rnet

Cab

le

Oth

er

Service Activation

Loca

l

LD Dat

a

Inte

rnet

Cab

le

Oth

er

PerformService Assurance

NetworkProducts & Services

NumberCustomer

Infrastructure/ERP Performance MgmtData Warehouse EISHR Finance Logistics

Directory & Operator Services

Oth

erCab

leIn

tern

et

Res

iden

tial

Sm

all

Bus

ines

s

Dat

aLo

ngD

ista

nce

Maj

orAcc

ount

s

Loca

l

SolutionAdvisor

MarketingEncyclopedia

MarketingDecisionSupport

CustomerService

CreditScreening

1 2

3 4

5 6

7 8

9 10

11 12

Network Mgmt

Switc

h

Tra

nspo

rt

Dat

a

Line

Network Mgmt

Switc

h

Tra

nspo

rt

Dat

a

Line

Testing

Line

Circ

uit

Testing

Line

Circ

uit

Trouble Management

Network Planning

1

Network Planning

1

NetworkEngineering

2

NetworkEngineering

2

NetworkImplementa-

tion 3

NetworkImplementa-

tion 3

NetworkProvisioning

4

NetworkProvisioning

4

Traffic Analysis

Switc

h

Tran

spor

t

Dat

a

SS7

5

Traffic Analysis

Switc

h

Tran

spor

t

Dat

a

SS7

5

Facilities Management

Workforce Management

Security Management

Func

tiona

l Fit

Technical Fit

ReuseWrap

Invest Extend

Sub process

Work step

BusinessActivity

Process Decompositions are hierarchical lists

Flow diagrams incorporate

sequencing and logic

• Optimization of investments to areas where capabilities are lacking

• The health plan extends customer service and care procedures to the new membership base at a lower total cost.

• Existing eligibility services are extended at marginal cost.

• Larger investments are directed to the integration of product systems and sales systems for the new market.

• The investments enable new capabilities.

• Another victory — Services Thinking applied.

Moving from uncertainty to certainty

Ensures that activities areProvides the framework

Drives substantial benefits that

easily justify the cost of

transformation by enabling better

and more informed decisions earlier

in the life cycle

Services Thinking has the potential to play a critical role for health plans seeking to add definitive ways to remain flexible and innovate their business model.


Services Thinking

Ensures that activities are

coordinated across the enterprise

by weaving together disparate

elements - processes,

technologies, tools

Provides the framework

by which changing business

needs can be accommodated

by process and

system infrastructure

Provides a governance model

to ensure that control

and compliance functions

stay front and center

Where to start the journey

Start here if Services Thinking is a new competitive strategy

Start here if implementations are being supported

Start here if new ways to drive benefits are being sought

Start here if accelerators are being applied

Start here if existing strategies are being redefined

The best place to start this journey depends on where the organization is currently, and what the objectives are. Conducting an SOA readiness assessment and an SOA maturity assessment would help to identify gaps and pain points in business strategy, organization, governance, and technology that would need to be addressed. A roadmap with a supporting governance model is the next step.


Align Transform Assess Plan Implement

Define a unifying business strategy

Identify opportunitiesto implement

strategy

Lay out capabilities and assess gaps in

strategy

Create a Services Thinking

Implementation roadmap

Implement the roadmap

• Define a unifying business strategy to transform the Health Plan enterprise.

• Identify transformational opportunities to implement the defined business strategy.

• Identify gaps and services opportunities. Assess the degree of change needed to close the gaps.

• Identify Services Thinking priorities

• Create a Services Thinking implementation roadmap.

• Create a Project Management organization to manage the component initiatives.

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Documents

Services Thinking For Health Plans - Object Management Group · • Services Thinking is a business-driven, services-based approach to value delivery that facilitates sustainable