Sam Sunsets Legacy Software to Achieve a Savings of $3.1 Million*
May 20, 2016
Patricia Ingerick, MBA, MSHS / Director of The Geneia Institute
Time flies, as they say. Nearly two years ago, we launched the Theon® platform, our advanced analytics solution that helps health plans, physicians, hospitals and employers better understand, evaluate and manage the health of their populations. Since then, we’ve been adding new capabilities designed to help our clients succeed in the transformation from volume to value-based reimbursement.
One thing we’ve learned this year is how much the Theon® platform is helping health plans achieve their population health, cost and quality goals. A few months ago, we introduced you to Val who trimmed claims costs by two percent.
To refresh your memory, Val reports to the chief medical officer of a health plan with about three million members, about 300,000 of whom are Medicare beneficiaries. The health plan’s business is split approximately 70-30 between administrative services only (ASO) and fully insured business. The plan is involved with a few accountable care organizations (ACOs) and has created a number of other risk-sharing arrangements with its provider partners.
Now I want to introduce you to Val’s colleague, Sam. He reports to the health plan’s chief information officer, and about three years ago, was charged with making sense of the myriad of systems the plan had been using to try to manage network performance and member health within its value-based contracts.
Like many of its peers, Sam’s health plan had cobbled together a number of existing systems that were previously licensed for another use and were – sometimes successfully and sometimes not – being repurposed for use in risk-bearing arrangements and population health. For example, Sam’s health plan was using a tool that was originally licensed to measure actuarial risk and set premium levels to understand and manage individual and population risk. In our experience, health plans try to integrate and aggregate as many as a dozen tools to measure and achieve population health, often from different vendors and almost always lacking the scalability and flexibility of one advanced analytics solution.
To contend with its accountable care arrangements and risk-sharing contracts, Sam’s plan initially repurposed eight of its existing software products from seven different vendors. Each of these tools had a different function, including:
- Provider profiling
- Predictive modeling for underwriting
- Member disease and case identification and stratification
- Healthcare Effectiveness Data and Information Set (HEDIS®) measurement to close gaps in care
- Physician portal for patient management
- Employer group reporting from two different companies, and
- Member outreach and analytics
Together, the annual licensing fees exceeded $3.1 million, and most were expected to increase in the coming years. The annual fee for the physician portal, for example, was projected to nearly double by 2017.
Equally importantly, there were seven vendor relationships to manage along with periodic upgrades for eight products, all of which required independent testing efforts. The staffing demands to manage these relationships and upgrades were extensive. Some estimates suggested that the required staffing added an additional 50 percent to the annual licensing costs of $2.85 million.
Two years ago, Sam’s health plan decided to find one solution that could not only replace these eight retrofitted tools, but also was created expressly to measure, manage and improve population health within the context of value-based contracts. That’s what Geneia’s advanced analytics platform readily does.
Sam’s health plan sun-setted the eight tools and licensed the Theon® platform to support all of its accountable care arrangements and population health initiatives. The plan reaped many benefits from this integrated approach, including:
- A savings of $3.1 million in annual licensing fees to the seven vendors with a net savings of approximately $1.7 million after its investment in the analytics platform;
- An expense reduction of nearly $1.4 million in staffing no longer needed to support seven vendors;
- Claims cost savings of two percent due, in part, to a lower rate of growth for overall medical and pharmacy costs and fewer emergency department visits, hospitalizations and readmissions;
- A streamlined approach to managing population health and risk-based contracts that increased physician satisfaction as well as provider’s ability to meet contracted quality and cost goals; and
- Improved member health as the result of better performance on HEDIS® measures and more effective chronic disease management
A triple win in healthcare is a rarity. Yet that is what Sam’s health plan achieved as the result of licensing the Theon® advanced analytics and insights platform: improved administrative and medical costs, provider satisfaction and member health.
*Sam’s experience is an illustrative example based upon the actual experience of a Geneia client. This information is provided for illustrative purposes only. Sam is fictional and not intended to represent any specific person. Any direct similarities to any real person are purely coincidental and unintentional.