High administrative costs, which consume approximately 30% of premiums, negatively impact the future of the healthcare industry. Our ability to streamline business processes and better utilize data is hindered by slow adoption of technology.

Healthcare is strategically positioned to initiate a major process transformation. Due to the proliferation of information systems, increased data capture, and industrywide expansion of an electronic infrastructure, we've seen significant improvements. The industry has decreased redundant data entry, streamlined core business processes, and reduced the inefficient paper shuffle.

Because healthcare is constantly in flux, organizations must have the agility to adapt and respond to continuously changing market conditions, which include:

HIPAA Data Standards. Under HIPAA, healthcare organizations must adhere to national data standards for electronic transactions. Unfortunately, the way these standards were mandated, they created more chaos than clarity. Experts in the field of electronic data interchange say that HIPAA standards actually increased variations within healthcare data formats, creating administrative burdens to convert data from various trading partners.

A Highly Competitive Market. With major health plans competing for the same employer groups and insureds, they are constantly striving to develop new, more attractive packages to grow their membership. With changing benefit plans, healthcare organizations are in an ongoing battle just to maintain currency on the various types of plans they administer.

New Data to Track. As benefit plans change, they also require the collection of additional data elements. For example, highly specific diagnosis codes are now required on claims to enable proper processing and timely payment.

Greater Demands for Data Analysis. Health plans want to be able to analyze data to better understand how they can optimize performance, value, and outcomes. This requires both a rich data set and sophisticated data analysis capabilities. Organizations are also accelerating the speed at which analysis and action occurs—from retrospective, to real time, and in more cases, to become predictive.

Complying with regulatory and statutory requirements, tracking and analyzing data in new and innovative ways, and administering ever changing benefit plans are primary examples of trends that contribute to increase administrative burden and costs. However, there is also an opportunity in each of these areas to realize savings by leveraging technology to automate operations.

A number of key factors must be considered when selecting an administrative solution:

1. Customized Data Elements. Within any major component of an administrative system, healthcare organizations should have the flexibility to create and define fields to collect, track, and process new data elements. Organizations should be able to configure key business processes—such as case management—to follow their unique requirements, rather than have a system dictate how operations are handled.

2. Converting Paper into Electronic Data. The capability to transform paper forms, such as claims, into electronic data files has significantly matured. Many utilize a data capture vendor or a business process-outsourcing (BPO) partner. Using this strategy, organizations send paper files or electronic images of paper files to the vendor, who then converts the documents into electronic data based on the organization's specific guidelines and requirements. By employing a reputable vendor, organizations can achieve nearly 100 percent electronic submission rates quickly. After processes are running smoothly, organizations can then approach individual providers to gradually increase direct submission and reduce vendor involvement.

3. Greater Information Access. Open solutions are available that provide organizations and users with the power to extract any information on their own and on the fly. This enables organizations to gain deeper insight for key business decisions, such as contract negotiations and financial management. They are able to better manage not only administrative costs, but also healthcare delivery expenditures. With comprehensive, ready access to information, organizations can better focus utilization management, case management, and disease management efforts to improve overall wellness of their patient population. Not only can these organizations meet reporting requirements more efficiently, but they can also better respond to changing market demands.