Electronic Commerce Business Transformation Feasibility Study

Joseph M. DeLuca, FACHE

Introduction

Electronic Commerce (EC) is a business technique at the center of media and technology discussions today. Driven by underlying social and technological transformation, electronic commerce business transactions enable a wide range of consumer-to-business, business-to-business and business-to-supplier interactions. Popular examples include book purchasing (Amazon.com), online supplier bidding (Boeing.com), virtual investing & information (Schwab.com) and electronic banking (Anybank.com). Electronic commerce in these business environments provides a high volume, low unit cost transaction process. More significantly, electronic commerce increases market share by accessing new markets, increasing customer satisfaction and adding unique, distinguishable business value to the electronic commerce enabled business.

In health care, electronic commerce is most typically associated with claims processing electronic data interchange (EDI). This process is an alternative to traditional claims submission from providers to payers & intermediaries on hardcopy HCFA 1500 forms UB 92 forms, as well as uniform encounter forms, with benefits of reduced cost, faster payment cycle times, more accurate data, increased revenue, and increased member, provider and employee satisfaction. EDI usage is rapidly expanding, supported by the Health Insurance Portability and Accountability Act regulatory mandates (which you will have to comply with), into eligibility, referral, authorization, payment, quality measurement and clinical data exchange.

More broadly, electronic commerce in health care is also emerging as a viable consumer, member and provider business tool. Other capabilities are now available and at the forefront of fundamental change in the health care industry. These include: online medication (prescription and OTC) ordering (Drugstore.com, McKesson.com); physician quality data management; provider knowledge bases (Physicians Online); and electronic networks for benefits/provider network management, clinical data sharing and end to end patient financial and clinical data management (Healtheon, ProxyMed). Today, these are just a few examples of the reach and range of electronic commerce capabilities, and the future potential is limitless.

Electronic commerce can transform a health care business by streamlining transaction management processes related to workflow management, provider-payer network functions (such as member eligibility checking, authorization/referral processing), clinical information sharing, and even data mining for consumer and population health information management. Electronic commerce can also open up new patient, member and provider markets, increase revenue, and significantly reduce costs. The result: a more viable, sustainable market position and economics. These economic and strategic benefits to all parties will be magnified as electronic commerce applications and technology proliferate within health care.

However, inadequate strategic and near-term electronic commerce or EDI planning can actually cost an organization cash, time and strategic positioning. Breakthrough electronic commerce business transformation must be a conscious and planned organization development process.

IT Optimizers (IT Optimizers), a business unit of Health Care Investment Visions LLC, can help you achieve a successful and comprehensive electronic commerce transformation experience. We recognize the importance of assessing the value of electronic commerce and creating a viable, realistic EC development plan before deciding to proceed with an ambitious and costly implementation effort. This critical groundwork can serve to set expectations appropriately or even to dissuade an organization from proceeding prematurely or in an unplanned manner.

IT Optimizers’s Electronic Commerce Business Transformation Feasibility Study consists of a proven set of tasks and deliverables, as described below.

Conduct Baseline Process Analysis

Assess Current Market Conditions
Utilize external sources to gain an objective view of conditions within the client’s business and geographic market. The objective of this research will be to understand the current dynamics within the client’s local market domain which will have an impact on business decisions and priorities. We will endeavor to incorporate relevant forecasts for the region, competitive pressures, legislative activities, and outside perceptions of the client organization.

Assess Executive Readiness for EC
Conduct executive-level meeting(s) to learn the vision, strategy, priorities, and challenges of the client organization from the perspective of its leaders. The objective of these meetings will be to understand client organization’s business model, as well as the short- and long-term focus of the key executives, their awareness of and comfort with information systems, their tolerance for change within their organization, and their willingness to address staffing reduction or redeployment issues.

Assess Current Use of Technology
Meet with IS management to understand current and planned usage of information systems. The objective will be to gather information about in-place systems and those which are planned/budgeted for future deployment. We will also learn about hardware/software/database preferences, conformance to data standards, Internet strategy, and interfacing requirements.

Review Current State Transaction Processing
Meet with managers and supervisors from key operational departments to learn about and observe current processes. The objective will be to understand the existing organizational structure and staffing levels, high-level workflows, transaction volumes, and issues associated with the relevant operations within the client organization.

Design Electronic Commerce Enabled Business Model

Develop High-level Future State Processes & Organization Structure
Synthesize information gathered about current processes with knowledge of market dynamics, executive priorities, and information systems strategy to develop streamlined processes. Create and document a vision of future operations which incorporates electronic commerce technology to achieve desired business goals, enhance components of current systems and processes and to address any relevant corporate priorities. Meet with key individuals from operations and information services to validate high-level future state workflows and organization structure.

Estimate Staffing Requirements and Cost
Based on an understanding of current operations and staffing, estimated volumes, and the future state vision of workflows, the staffing and timeline required to develop, implement, and deploy an electronic system for transaction processing will be outlined. The costs associated with implementing an EC system will also be estimated within a reasonable margin of error.

Estimate Benefits of EC
Based on an understanding of current issues and intended future directions, we will describe the advantages of electronic commerce specific to the client organization – both an estimate of economic benefits and an evaluation of potential strategic impact (Revenue enhancement, market share gains, member/provider satisfaction gains) will be included. In particular, this deliverable will incorporate an assessment of the compatibility of electronic commerce with the client’s business strategy.

Deliver Results of Study

Present Overall Recommendations and Cost/Benefit Analysis
The results of our study will be documented and presented, including final recommendation(s) regarding electronic commerce deployment, as well as estimated costs and benefits. This recommendation(s) will take into account the potential solutions offered by electronic commerce relative to the associated costs. Essentially, we will offer an objective opinion of whether an electronic commerce undertaking should be considered within the near-term and/or long-term planning horizon for the client organization and, if so, what dependencies should dictate its timing.

Deliverables

Electronic Commerce Business Transformation Feasibility Study Report

• Overall Recommendation
• Electronic Commerce Business Goals
• Future State Workflows (high-level)
• Future State Organization Structure
• Cost/Benefit Analysis
• Implementation Phasing (components and dependencies)

Electronic Commerce in Health Care – Market Primer

• Description & Definition of EC
• Specific Applications & Technologies
• Cost & Benefit Components
• Best Practices in Health Care
• Established & Emerging Vendor Summary

Additional Services Offered

• Provider Technology Usage Survey
• Requirements Gathering / RFI Development
• Vendor Selection
• Contract Negotiation
• Project Management
• Project Planning
• Project Team Development
• Current & Future State Analysis
• Re-engineering Support
• System Development Support
• Provider Marketing
• Process Re-design
• Organizational Redesign
• System Deployment Support
• On-going Support Planning

Joseph M. DeLuca is a frequent national commentator on health care public policy and information system issues. Email: info@hciv.com

 

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