GHP January 2016

6 | ghp January 2016 Health Insurers Speed up Digital Transformation The company’s Health Insurance Information Technology: US Overview and Outlook, 2014-2020: Changing IT Priorities for Next Generation Health Plans (http://www.healthcareIT.frost.com) discovered that health insurers are actively deploying new types of information technology as a lever for required improvements in transformation and operational ef- ficiency to increasingly consumer-focused business models. New regulatory and compliance obligations have been brought to the insurance industry, due to the Affordable Care Act (ACA) has brought, thus upending traditional business practices and chang- ing known IT priorities. In addition, the pace and extent of industry change demands fresh approaches that need embracing cultural change on a huge scale. Also, fundamental issues health insurers are en- countering today include: • Continued cost inflation caused by hospitals, technology vendors and pharmaceutical compa- nies; • Stricter contract negotiations with large employ- ers and provider systems; • Higher levels of individual consumers demand- ing an increased level of service and lower premiums; • Growing experimentation with changing reim- bursement models and risk-sharing arrange- ments that need a more cohesive approach to sharing information with providers and members. As health insurers move towards to new market re- alities, IT will be at the heart of enabling their transi- tion to new business models which is reliant on maximising containing financial risk and consumer engagement. While IT spending for the industry is predicted to expand in line with premium growth, reflecting a surge of new covered lives due to ACA, Frost & Sullivan thinks the industry standard percentage of the total premium devoted to IT will not increase significantly overall due to the need to contain rising administrative costs and increasing margin pressures Principal Connected Health Analyst, Nancy Fabozzi at Frost & Sullivan said: “ACA is an overwhelmingly disruptive force for the U.S. healthcare system. Health insurance organizations will continue to respond by aggres- sively containing administrative costs including IT purchasing. Significant shifts in how spending is allocated across IT market segments will force many vendors to develop new strategies and capabilities, particularly for consumer and analytics IT, which is imperative to remain competitive.” The research predicts the U.S. Health Insurance IT market will grow at a compound annual growth rate of 5.5% from 2015 and 2020. While IT spending will increase overall, allocation of the spending will shift with less capital devoted to IT infrastructure and core administrative systems to more spending consumer engagement solutions and analytics. Therefore, the allocation of spend among a number health insurance IT segments will move to turn the spotlight on new business priorities resulting from the shift to a direct-to-consumer model. Fabozzi added: “IT spending priorities for the health insurance industry will increasingly focus on new tools for data analytics, consumer engagement, as well as population health and care management, especially building out new capabilities capable of improving communication and engagement with members, including mobile and real-time decision support.” The drivers of this trend include: • The need for patients to take on increased financial responsibility for their healthcare costs; especially with the rise of high-deductible health plans and; • Greater consumer access to medical informa- tion via the Internet. The report concludes there is a strong upward trend in incentives from providers, payers and employers fashioned to build and grow consumer health awareness, cultural shifts in attitudes about patients’ right to access their personal health information, not to mention the rising use of mobile devices and apps by consumers and healthcare providers alike. Finding sufficient financial resources and embracing needed cultural change not be an easy task, according to analysis by Frost & Sullivan in November. news