• Cognizant 20-20 InsightsU.S. Healthcare:Converting Vision to Reality   A tremendous amount of change has occurred in    ...
engaged in managing their own health, through        Real-Time Connections                   smartphone applications and i...
In the long term, payment based on the quality               The increasingly sophisticated and information-of data collec...
This will only exacerbate predicted shortages of                    Not all of these physicians eschew technology,        ...
for information sharing and satisfy the demands        radiological scans, to analyzing population healthof a millennial w...
of service provider economies of scale. Simul-           taneously, commoditization will give healthcare               A H...
About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process ...
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U.S. Healthcare - Converting Vision to Reality


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U.S. Healthcare - Converting Vision to Reality

  1. 1. • Cognizant 20-20 InsightsU.S. Healthcare:Converting Vision to Reality A tremendous amount of change has occurred in mid-term elections. Significant progress, however, healthcare over the last decade as the industry can be anticipated in the following areas: has pushed to address significant cost and quality issues. Long before the Patient Protection and • A national/international healthcare IT (HIT) Affordable Care Act (PPACA), the healthcare infrastructure, linking providers, health plans industry has steadily worked to enact funda- and consumers. This infrastructure is likely mental changes to everything from administra- to comprise public and private networks, tion to patient care, prompted by incremental with data collected and shared electronically regulatory change. Given increasing demand for using an array of enablers and tools, from services and the unwieldiness of the industry Web services-based transactions between — tens of thousands of professionals across trading partners and personal smartphones, to hospital systems, physician groups, long-term netbooks and social network-style applications care facilities, bio-pharmaceutical firms, health for consumers. insurers, government agencies, suppliers — the redesign of healthcare to reduce costs and improve Given increasing demand for access for all U.S. consumers will continue to be a services and the unwieldiness large-scale transformation effort. of the industry, the redesign Recent legislation such as the PPACA, as well of healthcare to reduce as provisions in the American Reinvestment costs and improve access and Recovery Act (ARRA), are seen as catalysts for all U.S. consumers will that are accelerating the transformation process through mandates and incentives. Mechanisms continue to be a large-scale that the government hopes will accelerate transformation effort. industry change include the use of electronic health records, enhanced data coding standards • Integrated health management based on and the creation of health insurance exchanges the concept of coordinated care. This means to support direct sales to consumers. While a a healthcare process that is not a series of number of PPACA provisions went into effect in disjointed events but a synchronized effort to 2010, many mandates are expected to be phased provide wellness services and preventive care, in over the next decade. It is hard to predict along with acute/post-acute care, through exactly how healthcare reform will proceed, given patient-centered medical homes (PCMH) and the broad scope of the legislation, still undefined accountable care organizations (ACO). The provisions and the uncertainty introduced by the effort also includes consumers increasingly cognizant 20-20 insights | may 2011
  2. 2. engaged in managing their own health, through Real-Time Connections smartphone applications and intelligent home The HIT infrastructure is a basic requirement monitoring tools. for a connected healthcare system that shares • Personalized care strategies based on more patient data with whomever requires it, at the targeted diagnostic tests made possible moment it is needed. Another requirement is through advances in molecular profiling widespread availability of standards-based health technologies, including genetic testing, and data that can be shared through Health Informa- coordinated by both local and virtual teams tion Exchanges (HIE), and properly and safely of caregivers who have real-time access to interpreted by another caregiver. monitoring data, as well as electronic health record information. At the macro level, all this makes sense: providing information in real time to caregivers, who can • Easier access to care, through mass use of then make informed, accurate decisions and new applications such as physician office visits thus eliminate expensive redundant tests, inef- (e-visits), online appointment scheduling, fective treatments and prescription errors, while online access to test results, and the ability for improving outcomes. However, at the organiza- patients to connect electronically with their tional level, developing a business case for EHRs physicians through secure e-mail messaging. and HIEs has been challenging. For example, management consulting firm McKinsey & Co. Pieces of this vision exist PCMH and ACO today, but many changes are estimates that U.S. hospitals will need to spend approximately $120 billion, at an average of organizations required to bring it to fruition. $80,000 to $100,000 per bed, for the required and quality-based For example, the electronic, EHR project planning, software, hardware, real-time exchange of health- reimbursement care information, whether clini- implementation and training.1 Incentives are, therefore, likely to offset only up to one-fifth ofmodels require more cal or administrative, requires the total expenditures, leaving a significant gapexperimentation and an extensive base of content, that hospitals will have to fill through improved transaction, interoperability, development before product and messaging stan- management, process efficiency and quality. broad adoption can dards. Many of these standards HIEs also face challenges. According to the seventh be achieved. exist and are in various stages annual HIE survey published by the eHealth of adoption, but more are Initiative, respondents cited sustainable business needed. PCMH and ACO organizations and qual- models as one of the top three challenges facing ity-based reimbursement models require more HIEs. On a positive note, the same survey reported experimentation and development before broad that out of 234 known initiatives, 73 were opera- adoption can be achieved. Finally, personal- tional and 18 were breaking even without federal ized medicine is still in the funding, the major source of funds being subscrip- In the long term, early stages of development, tion fees and membership dues. payment based although the industry is2015. ed to double in size by expect- Innovation will be necessary to bring down the cost on the quality of of needed technological solutions. One promising Healthcare will also be affected data collected and by external societal and cultural area of innovation that could accelerate the deployment of HIT is cloud computing. Through exchanged with changes, as well as the rise of the cloud, providers could avoid capital expenses other partners disruptive, ubiquitous technol- and pay only for the capacity they need, yet still ogies and structures, such as in the healthcare cloud computing, mobile apps have access to the latest technology. ecosystem will help and social networking tools, Using hosted services and cloud computing forsustain the industry’s globalization and virtualization. patient demographic and medical information And because its fundamental requires adherence to significant data, security investment in IT. purpose is caring for individu- and privacy requirements. Effectively managing als — often at their most vulnerable moments — these requirements, however, goes well beyond tackling these shifts will require sensitive, well- mere compliance — consumers will want additional designed and well-executed change management assurances that their personal health data is strategies. private and well protected. cognizant 20-20 insights 2
  3. 3. In the long term, payment based on the quality The increasingly sophisticated and information-of data collected and exchanged with other rich diagnostic tests that will enable personalizedpartners in the healthcare ecosystem will help medical care will also likely alter business modelssustain the industry’s investment in IT. Specific and workflows for deliveringissues require more sophisticated solutions to preventive care. The industry, asmake this a reality. For example, healthcare has well as society, will It will be important for thesespecific security and privacy challenges that must new delivery models to need to define whatbe addressed in order to adequately protect datafrom unauthorized access and use. In addition, continue emerging alongside constitutes a qualitythe industry’s ability to actively analyze data and more traditional approaches outcome for a variety to prevent business disruption.use it for informed decision-making will be critical Transitioning will require sig- of diagnoses.to achieving improved outcomes at lower costs.Achieving a positive return on investment should nificant change management, a process that willdrive continued IT investment. challenge all players across the industry.New Business Models The Millennial ImpactIntertwined with HIT are new and evolving models Interwoven with these shifts are profoundlyof care and reimbursement structures. PCMHs disruptive societal and cultural changes thatand ACOs are concepts designed to provide coor- have a direct impact on the professionals who willdinated comprehensive wellness and preventive deliver care, as well as those who receive it. Thesecare to individuals and thus reduce urgent and changes may pose the greatest business opportu-acute care episodes. Deploying these models will nities — and challenges — of all.not only require new organizational models but Members of the millennial workforce now enter-also a significant level of collaboration among ing the profession have essentially been raisedproviders and health insurance plans to transition using the Internet, mobile devices and social net-from volume-based to value-based care. working tools. They require this technology to beWith reimbursement patterns changing to effective in their jobs. Thisreward wellness and quality outcomes, plans and fact alone has powerful impli- Millennial workersproviders will have to collect and analyze more cations for the industry and may not be drawn todata in new ways to effectively monitor and its technology investments: healthcare as readilyoptimize the health of a specific segment of the Millennial workers may notpopulation. The industry, as well as society, will be drawn to healthcare as if they perceiveneed to define what constitutes a quality outcome readily if they perceive it as it as behind thefor a variety of diagnoses. behind the technology curve. technology curve.Large-Scale Transformation Accelerators Planned Outcomes Description National/international Linking providers, health plans and consumers to collect Drivers Mandates healthcare IT (HIT) and share data electronically using an array of devices and infrastructure and tools. incentives; Cost concerns; Integrated health Synchronized effort to provide wellness services and electronic health quality issues; management (based preventive care along with acute/post-acute care through records; legislation content on the concept of patient-centered medical homes (PCMH) and accountable (ARRA PPACA) standards; coordinated care) care organizations (ACO). B2C Using more targeted diagnostic tests made possible due insurance Personalized care to advances in molecular profiling technologies, includ- exchanges strategies ing genetic testing. Leveraging technology to create virtual teams of caregiv- Easier access to care ers who have real-time access to monitoring data as well as electronic health record information.Figure 1 cognizant 20-20 insights 3
  4. 4. This will only exacerbate predicted shortages of Not all of these physicians eschew technology, qualified personnel. yet many see no compelling business reason to invest in EHRs or support HIEs. This may change, Furthermore, these same individuals will expand however, given recent decisions by several health the ranks of healthcare consumers. They will insurance plans to require physicians to have want to interact with the healthcare ecosystem in EHRs in order to remain part of their provider net- the same way that they interact with all of their works. It is the younger physicians, themselves other service providers: through Web sites and millennials, who will expect to use technology. portals, via e-mail, usingConsumers 65 years smartphone and tablet Balancing the requirements of millennialof age and older will PC apps. Technologically astute industry players will employees and consumers with those who prefer more traditional methods will require careful remain the largest have the advantage with attention to what technology is implemented, consumers of the these consumers. how and where. Satisfying such a wide range of needs could require a mix of traditional and newhealthcare dollar, and Yet providers and health methodologies. For instance, some physicians arewhile some members insurance plans also will hiring scribes to enter data into electronic devices have hundreds of thou- of this group would sands of employees and while they give full attention to their patients. welcome new mobile customers who will prefer Handling the Future Now and Web-based more traditional, non-tech- nical tools. Consumers 65 Many of the tensions, challenges and opportu- technologies, most years of age and older will nities specific to healthcare also mirror broader,simply will not, unlike remain the largest con- critical megatrends that promise to redefine how millennials, who sumers of the healthcare successful enterprises will engage their employees, dollar, and while some customers and partners. Specifically, the explosion view technology as a members of this group of cloud computing, the rise of knowledge global- necessity. would welcome new mobile ization and an increase in virtualization all hold and Web-based technolo- great potential for the healthcare industry. gies, most simply will not, unlike millennials, who view technology as a necessity. Healthcare players across the ecosystem that are able to embrace these trends should have the tech- Furthermore, approximately 36% of practicing nological and business agility required to test new physicians today are 55 years of age or older. business models, create powerful real-time data Megatrends Driving Change Healthcare organizations must Cloud computing and mobile tools like carefully select cloud, mobile and social Technology – smartphones and social networking A solutions that offer new business Real-Time Connections applications offer real-time data collection, value or capabilities aligned access and collaboration that can help with specific business objectives. solve healthcare challenges. Social Change – B Globalization – The Millennial Impact D New Business Models Technology and globalization are Mobile and social technologies have converging to enable the creation of rapidly become necessities for virtual organizations, processes and teams. millennial consumers and employees. In healthcare, this trend is already visible in They are increasingly frustrated by Virtualization – workplaces with technology lagging the form of ACOs and PCMHs. C A Precursor to behind the tools they use at home. Globalization Figure 2 cognizant 20-20 insights 4
  5. 5. for information sharing and satisfy the demands radiological scans, to analyzing population healthof a millennial workforce and customer base. data. Clearly defined core expertise — what a healthcare organization does better than anyoneKey trends shaping the future of healthcare today else — will be a critical pre-requisite to successful-include: ly adopting globally-based knowledge resources. Only then will organizations understand whichTechnology: Cloud computing and mobile tools global knowledge and skills to tap and why.such as smartphones and social networkingapplications offer real-time data collection, In particular, globally sourced Healthcareaccess and collaboration that can help solve skills and processes — delivered via the cloud — can help reduce organizations musthealthcare challenges. This “anytime, anyplace”data management makes it possible to design the costs of mission-critical carefully selectand support new, virtual ways of delivering care but noncore operations. Trust- cloud, mobile andthat use information and expertise, wherever ing these processes to a low- cost service provider releases social solutions thatit is located. Cloud solutions can support HITdeployment and benefits exchanges, as well as human and financial resources offer new businessinternal data sharing. When combined, these to strengthen and adapt core value or capabilitiestechnologies and tools will support ACOs, PCMHs, expertise to respond to the many forces exerting pressure that are aligned withpersonalized care, information-sharing applica-tions and more. on the industry. The flexibility specific business to re-focus resources will help objectives.In addition, mobile and social technologies have the industry develop an HITrapidly become necessities for millennial con- infrastructure, shift to integrated health manage-sumers and employees. They expect to interact ment and personalized care delivery services,with all of their service providers virtually and in and make those services easier to obtain, morereal time, and are increasingly frustrated by affordable and of higher quality.workplaces with technology lagging behind thetools they use at home. The healthcare industry Virtualization: Technology and globalization arewill need to adopt cloud and mobility to meet converging to enable the creation of virtual orga-baseline service expectations of the next genera- nizations, processes and teams. In healthcare, thistion of consumers, and to compete successfully trend is already visible in the form of ACOs andfor talent. PCMHs. These are effectively virtual organizations. Each The flexibility to re-Fortunately, cloud and mobile solutions can be member entity provides its focus resources willdeployed without inflating capital budgets and core expertise, while commoncan actually reduce costs and improve efficiency. administrative processes could help the industryThat said, new cloud platforms will typically be outsourced to a third party, develop an HITcomplement existing IT platforms, which meanshealthcare organizations must carefully select giving patients and consumers infrastructure, shift the experience of dealing withcloud, mobile and social solutions that offer new only one organization. New to integrated healthbusiness value or capabilities that are aligned partnerships among industry management andwith specific business objectives. Further, thehealthcare industry’s ever-present regulatory players could also be support- personalized care ed by virtualized structurescompliance requirements are likely to affect how and processes that enable delivery services,it uses these tools. a blending of expertise with and make those reduced capital investmentGlobalization: The real-time, mobile and social services easier and operating costs.aspects of technology are enabling a new phase to obtain, moreof globalization, in which knowledge is freely The impact of virtualization affordable and ofaccessible from all points, worldwide — including will also be apparent as certainhealthcare expertise and skills. Using resources higher quality. highly repetitive, redundantfrom the global marketplace, healthcare organi- industry processes become commoditized andzations can accomplish labor-intensive, repetitive ripe for servicing by trusted third parties. Thesetasks, such as physician credentialing, at lower process-commodities are likely to range fromcosts. The global market is also able to manage claims administration to data analytics. Commod-complex tasks more cost effectively, from reading itized processes will lead to lower costs because cognizant 20-20 insights 5
  6. 6. of service provider economies of scale. Simul- taneously, commoditization will give healthcare A Healthier Future organizations both the freedom and the necessity The conversion from ICD-9 to the ICD-10 of differentiating themselves based on how well coding structure will provide opportuni- they deliver their core expertise. ties for the healthcare industry to use technology, globalization and virtualization The impact of Finally, virtualization of knowl- to its advantage. edge will enable the health- virtualization will care ecosystem to use the ICD-10 will provide more granular data also be apparent most effective resources and than ICD-9. The diagnostic detail in the as certain highly services available, whether new codes should enable health insurance they are across town or on repetitive, the other side of the globe. plans and providers to more effectively identify at-risk populations, detect fraud redundant industry All the key trends coalesce and abuse and enable new types of care processes become here: Technology enables and reimbursement models, such as knowledge to be accessed commoditized and regardless of its location in PCMHs and ACOs. The processes required for effective use of credible ICD-10 data ripe for servicing by the network infrastructure, must be supported by technology thattrusted third parties. and tools like smartphones can maximize the value of the additional and tablet PCs can function diagnostic detail available. as video cameras and communications devices. This allows analytics data to be accessed anytime/ With the use of effective processes and anywhere (privileges permitting) from a cloud- technology, the transition to ICD-10 will based server. Globalization opens up a wealth provide the opportunity for more sophisti- of knowledge and ability regardless of location, cated data analytics and thus the potential so virtual teams can collaborate on everything to enhance quality and reduce costs. The from administrative tasks to patient care, and contributions that virtualization, globaliza- can include both internal resources and business tion and cloud-based applications can make partners. It will be the combination of technology, to improve the quality and cost equations globalization and virtualization that will shape the will make them strategic considerations as industry, even as it enables effective new strate- the industry matures in driving value from gies and services. the transition to ICD-10. Healthcare is one of the five major sectors of the U.S. economy and represents 17% of the GDP. The industry faces momentous change, not just in response to legislative efforts but because globalization and virtualization to help them flex, medical science is evolving so rapidly. Healthcare shift and evolve so they can succeed in delivering organizations need the benefits of technology, high-quality, lower-cost care for everyone. Footnote 1 “Reforming Hospitals with IT Investment,” McKinsey & Co., Summer 2010. About the Author Patricia (Trish) Birch is a Cognizant Vice President and leads the company’s Healthcare Consulting Practice within Cognizant Business Consulting. She has 25 years of experience in healthcare operations and management consulting and serves on the board of directors of Franciscan Services Corp., which provides healthcare services in the midwest and south-central U.S. Trish is also a published author and speaker on issues facing the healthcare industry. She earned a BSBA in Finance from Boston University and an MBA from Jacksonville University. Trish can be reached at Patricia.Birch@cognizant.com. cognizant 20-20 insights 6
  7. 7. About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered inTeaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industryand business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50delivery centers worldwide and approximately 111,000 employees as of March 31, 2011, Cognizant is a member of theNASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 1000 and is ranked among the top performingand fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. Haymarket House #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA 28-29 Haymarket Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London SW1Y 4SP UK Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7321 4888 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7321 4890 Fax: +91 (0) 44 4209 6060 Email: inquiry@cognizant.com Email: infouk@cognizant.com Email: inquiryindia@cognizant.com© Copyright 2011, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein issubject to change without notice. All other trademarks mentioned herein are the property of their respective owners.