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E-commerce: Lessons from the Field
Jane L. Healy, MS Industrial Engineering
For years, the health care industry has seemed reluctant to embrace
new information technology solutions...however, a new day appears
to be dawning! While e-commerce within health care may still be in
its infancy, there is considerable, well-publicized momentum among
health care information technology (HCIT) vendors, and even current
functionality can offer substantial benefit. Health care organizations
should not pursue e-commerce initiatives hastily, but there is no
need to wait for all the bells and whistles. E-commerce technology
and applications are well-suited to a phased approached, and incremental
benefits can be achieved relatively quickly.
However, the benefits of e-commerce applications cannot be fully
realized without thoughtful planning and careful implementation. Many
aspects of an e-commerce project are similar to other mission-critical
IT installations within health care organizations, but because these
applications cross organizational boundaries, certain areas warrant
particular attention.
An administrative or financial e-commerce application, such as automated
claims or authorization processing, involves a combination of disparate
entities from a list which includes a physician practice, hospital/health
system, medical group, IPA, HMO/payer, and HCIT vendor. If these parties
are organizationally unrelated (e.g. the physicians are not employees
of the IPA), system usage will be discretionary. Therefore, the interests
of all parties must be well-balanced to achieve the desired financial
and operational improvements from such an e-commerce implementation.
Pre-implementation Considerations
| A sponsoring organization will
generally seek the most functionally-rich, technically-robust
system within their budget, and those criteria will strongly
influence e-commerce acquisition decisions, as well. However,
e-commerce applications introduce new challenges to system
selection. |
- Confirm unwavering adherence to data security standards.
Data security is of paramount importance in health care, and
when Internet-based systems are introduced, concern can be heightened.
Once compromised, patient confidentiality and trust would be difficult
to restore, and the ramifications could be extensive - there is
no room for error in this realm. Therefore, if the sponsoring organization
chooses to acquire a system, it will be important to confirm
that the selected vendor concurs with this priority and demonstrates
their concern for data security in their applications. Internal
development efforts would likewise require knowledgeable resources
to fully address all security requirements and provide ongoing maintenance.
- Evaluate system flexibility and scalability
Thin-client architecture inherent in well-designed Internet-based
applications enables integration with legacy systems more easily
than previous technologies. As a result, new e-commerce applications
can be implemented with less disruption to existing systems, and
health care organizations can start small - a single application,
limited deployment, etc. - with e-commerce and grow their adoption.
With such an approach, system flexibility and scalability increase
in significance among system selection criteria.
- Thoroughly research prospective HCIT vendor partners.
If the decision is made to acquire an e-commerce solution, rather
than develop it in-house, the real challenge is not identifying
viable technology. It is more likely to be maneuvering the dynamic
vendor market and developing an effective partnership with the technology
company of choice. The proliferation of new ventures, as well as
merger and acquisition activity, continues unabated. Considerable
research of any potential vendor partner is imperative and should
include a thorough examination of corporate vision, products, executive
management and board, company background, customers, trading partners,
financial backers, and "alliance" plans.
- Design formal agreements with carefully aligned incentives.
Some e-commerce vendors tout the number of registered physicians
as the barometer for their success, but this measurement can be
misleading. Offering free first-year enrollment to physicians has
become a common marketing strategy for HCIT vendors, but there is
often no compelling incentive to promote usage of the available
applications. Without widespread adoption, the expected benefits
for the e-commerce system sponsor will be compromised. This common
disparity between the number of registered users and actual usage
supports an argument for pricing based on volume of transactions,
rather than registered users. Well-aligned incentives for the vendor
and the sponsoring organization will ensure continuous, carefully
targeted product enhancements and more satisfied users.
Implementation Considerations
| The ultimate success of an e-commerce
project is predicated on effectively migrating a large proportion
of manual operations to an automated process - otherwise,
an acceptable return-on-investment (ROI) will not be achieved. |
- Ensure that gains for one entity are not at the expense of
another.
Unlike most traditional applications implemented by a health
care organization, e-commerce system usage cannot be mandated because
the users are often independent physicians, not employees. Therefore,
with such applications, it is more critical than ever to ensure
in advance that the users will recognize the advantages - e.g. financial,
operational - to adopting the new systems and processes.
To gain this assurance, sponsoring organizations must understand
the impact of a proposed new system on their constituents' workflows.
For example, are the cost and labor associated with the additional
system tasks required to electronically submit claims offset by
the printing and mailing resources being displaced? Does an expedited
authorization approval turnaround outweigh the inconvenience of
submitting the authorization request electronically but having to
manually fax the supporting documentation? Careful consideration
must be given to the full range of participants and their potential
benefits, and obstacles to their adoption must be addressed in advance.
- Avoid shortchanging the back-end process re-engineering effort.
In administrative/financial e-commerce applications, such as
automated claims, authorizations, referrals, the users at the back-end
of the workflow are usually employees of the sponsoring organization
-a payer, IPA, medical group. It is essential to the success of
the project for them to be effective users. While their usage
of the system can be mandated, staff can easily resort to inefficient
old habits if their processes are not re-engineered to incorporate
the new technology.
An automated system which includes functionality to route certain
claims or authorizations to electronic queues for manual problem
resolution provides a clear example. Unless new operations are carefully
designed and taught to end-users, there might be a tendency for
users to print the items in the queue and work them on paper, rather
than adapting to an online, paperless process. If potential back-end
processing inefficiencies are overlooked in the planning stages,
the project ROI and expected productivity gains can be negatively
impacted.
- Thoughtfully develop parallel/transitional processes.
There will be simultaneous manual and electronic operations
during the transition, and they may continue indefinitely. For example,
in spite of the sponsoring organization's best efforts, it is unlikely
that all constituents - especially low volume submitters
- will acknowledge the advantages of electronic claim or authorization
processing and make the migration during the expected life of the
system. This population is likely to decrease over time, but it
may constitute 10%, 20%, or even greater than 30% of the transactions
for awhile. Therefore, consistency between manual and electronic
processing rules should be a goal, and discrepancies should be identified.
An ideal approach to achieving process consistency and efficiency
is to undertake an effective re-engineering effort in advance of
the introduction of new technology. Initially streamlining the processes
allows operational disruptions to be introduced gradually and system
requirements to be developed accurately.
With ongoing system enhancements - especially more real-time transaction
processing -the long-term prospects for e-commerce in health care
are tremendous. It is clear that even today's e-commerce technology
offers vast improvements over business-as-usual manual processes,
and health care enterprises should not postpone their assessment of
the value these new technologies can bring to their operations. The
benefits can be impressive, but a well-planned and executed implementation
- incorporating the needs of all involved entities - is essential
to both short- and long-term e-commerce success.
Jane Healy is a Client Services Executive for
Health Care Investment Visions.
Email: info@hciv.com
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