technology adoption is progressing, but slowly

Over the last few years, health plans have made progress in reducing their almost intractable reliance on paper-based transactions. The use of EDI as a platform for high-volume transactions is firmly in place, and more recently, web-based technologies have helped health plans drive provider adoption of critical transactions such as claim submission. Large firms, such as WebMD, and solution vendors, such as HealthTrio, Navimedix, and athenahealth, have become key players in this space - while HIPAA regulations have standardized transactions. Still, provider adoption is lagging. Heres why:

· The digital health plan has not yet arrived. Health plans continue to spend less on IT than do companies in other service-oriented industries, such as financial services. According to one estimate, the healthcare industry spends only 2% of its gross revenues on IT, as compared to the financial services industry, which spends as much as 10% on IT. (1) This means that many health plans have been late to implement electronic transactions and supporting technologies. Just as importantly, many providers particularly those who are associated with smaller practices do not yet have access to the technologies (e.g. EDI, broadband internet access) that would enable them to leverage these capabilities.

· Many providers dont see the value - yet. The benefits of electronic transactions from cost, efficiency, and accuracy perspectives are demonstrable. Many providers, however, still believe that the value proposition is not compelling. In other cases, providers dont have the technical infrastructure to support electronic transactions, arent aware that health plans offer these options, or are simply resistant to change. In too many cases, health plans havent developed effective e-channel strategies to reach this untapped market of skeptical providers.

· Channel infrastructure and organizational issues within health plans are an obstacle. Support functions associated with e-channels are often fragmented within health plans, leaving the onus on providers to figure out how best to access support. For example, EDI issues are typically directed to a health plans IT department, paper claims might be mailed to a third-party clearinghouse or billing service, and questions regarding web-based transactions might be directed to a e-business group within IT. In many cases, providers find that transactions (particularly claim and referral submissions) are processed more reliably when sent on paper.

Recommendations

focus on value, invest in outreach

· Health Plans should focus on cost-effective transactions and e-channels. Some transaction types deliver more value (in terms of administrative cost savings) than others. For example, claims that are submitted electronically cost far less to process than those submitted on paper. Just as importantly, some e-channels are far more cost-effective than others. Health plans should move away from reliance on intermediary organizations such as clearinghouses, which charge on a per transaction basis, and consider channels with fixed-cost delivery models. For example, the New England Healthcare EDI Network (NEHEN) combines the collaboration of regional providers and payers with a viable and cost-effective technical platform for electronic transactions.

· Overcome barriers to adoption and implementation. Health plans should recognize that the key to adoption is a clearly articulated value proposition for electronic transactions. The emphasis should be on transactions rather than technologies, since providers are more concerned with tangible business benefits than they are with the specific technologies that deliver those benefits. In addition, any initiative to increase adoption should be viewed as a true marketing effort encompassing the creation of a compelling message and active, targeted outreach to laggard providers. The effort should not stop there health plans should invest in services to help providers identify the most appropriate options, assist with implementation, and provide training.

· Keep in mind that all providers are not created equal. Health plans should create a provider e-channel marketing strategy that segments providers by projected transaction volume, transactions required, and technical capabilities. A solo family practice will not, for example, be a good candidate for an EDI-based option and may not be able to afford the start-up costs associated with a regional collaborative such as NEHEN. This type of practice could, however, potentially benefit from lower-cost web-based options that are geared toward lower transaction volumes.

WHAT IT MEANS

Electronic transactions can serve as a catalyst for future adoption

In many cases, new innovations in healthcare IT will achieve their full potential only if they are adopted by healthcare providers. In view of this, its important to note that successful implementation of electronic transactions can set the stage for adoption of other technologies, such as electronic medical record (EMR) and disease management (DM). Although electronic transactions are typically managed by office staff, in many cases physicians are web-savvy and are likely to be receptive to technology when it adds value. Its also noteworthy that many younger physicians view information technology as essential to their career success, which portends well for future technology adoption.

Endnotes

(1) Raymond, B. and C. Dold. "Clinical Information Systems: Achieving the Vision. Sponsored by the Kaiser Permanente Institute for Health Policy, 2001.