Friday, April 28, 2006

 

HealthCare Industry: Aetna's Strategy for EMRs

Executive Summary

Electronic Medical Records (EMRs) is the electronic version of Patient’s medical history which includes patient’s full clinical experience, including appointment scheduling, office visits, labs, health maintenance, referrals, authorizations and medications. Providing a reliable and instantaneous source of health information, EMRs enhance patient care, improves efficiency, increases profitability and help health care providers stay current and compliant with industry standards and regulations including CMS and HIPAA.

Aetna Inc., a Health Insurance major of US can leverage the benefits of EMRs to improve operational efficiency and in turn enhance its service capabilities. At present Aetna maintains medical information of individual members in a variety of formats and at several locations. EMRs would enable Aetna to decouple the medical information from various areas and deploy it in one location. Such a restructuring will further streamline Aetna’s internal processes and ensure consistency and coherence of information flow. On the other hand, Aetna can now cash in on the EMRs to plan its future products and services by having a closer insight into its customer segments and their respective requirements. On the same lines, we evaluate future scenarios for Aetna and observe that investing into EMRs is a strategic move for Aetna, which has a series of short term and long term benefits. Aetna can not only drive its operational costs down, but also can leverage the EMRS to make more accurate and swift decision in terms of launching new products and service in the future.

Aetna Inc. Company Profile:
(www.aetna.com)

Aetna (NYSE: ΑET) is one of the nation's leaders in health care, dental, pharmacy, group life, disability, and long-term care insurance and employee benefits. Dedicated to helping people achieve health and financial security, Aetna puts information and helpful resources to work for its members to help them make better-informed decisions about their health care. With over 40 million members, Aetna partners with more than 735,000 health care professionals, 437,000 primary care doctors and specialists and 4,373 hospitals to provide its members broad range of insurance and employee benefits

Being the nation’s first full-service health insurer to offer a consumer-directed health plans, Aetna continues to lead the way with in the Health Insurance Industry. Aetna offers a wide array of programs and services that help control rising employee benefits costs while striving to improve the quality of health care, such as case management; disease management and patient safety programs; integrated medical, dental, pharmaceutical, behavioral health and disability information.

Aetna’s customers are employers and not the individuals. The employers are classifies as Small, Medium or Large/National depending on the number of employees in the payroll. Operational in 50 states of US and around 26 countries, Aetna services a broad range of customers from small, mid-sized and large multi-site national employers. Aetna serves its international customers through its “Global benefits program” which can be availed in selected countries across the globe.

Aetna’s EMR Touch Points:



The figure above highlights the operational areas of Aetna which are directly impacted by the medical records of Patients. There may be several other business processes which are indirectly impacted by the medical records of patients. Of the fours key business segments with in the company viz. Product, Plan, Members and Claims, the business units dealing with Members enrollment and Claim Processing are directly impacted by the EMR technology. The medical information in these domains serves as the basis of several key business decisions in these domains with in the company. These business domains rely on the medical information of the individuals to accomplish a variety of objectives as follows:

Assessment of policy premiums

The medical information of individuals is used to determine the risk associated with individuals as well as the employer as a whole. For instance, a Metal Foundry has higher average risk of injury than a Software Company. Hence a Software company employee will have a lower premium as compared to Foundry employee for same health coverage.

Selection of Healthcare products

Depending on the medical records of individuals, Aetna offers different combination of products and services to its customers. For instance, 40+ yrs old working near a furnace will require coverage against skin and eye damage more than 40+ yrs old working in an academic institute.

Settlement of Claims

Finally, while honoring a claim Aetna needs to validate whether a particular member actually got served by a health care provider for a valid reason as per the negotiated contract. In this process EMRs can significantly reduce the operational cost by providing single point access to this information.


Future Scenarios:




The present state of Healthcare industry entails low popularity of EMRs and high overall HealthCare costs. The past trends of HealthCare industry focus heavily on reducing the Healthcare costs and increasing the total number of individual and business customers. While on the one hand EMRs empower healthcare providers to achieve lower operational costs, on the other hand EMRs also shift the power to consumers in terms of choosing the best and most reasonable healthcare provider. Based on the two key drivers of the industry viz. “Healthcare cost” and “Popularity of EMRs” we can generate two possible futuristic scenarios for a Health insurance company. The first scenario entails high health cost along with increased popularity of EMRs. This scenario has a short term implication and is most likely to happen in the industry. Once EMRs gain popularity the industry is likely to witness lower healthcare cost in the long run, which leads to the second scenario which has Low healthcare cost as well as high EMR popularity and usage. Immaterial of which path the industry matures in the future i.e. among Path 1, 2 or Path 3, its in the best interest for a Healthcare insurance provider to plan ahead for EMRs and making strategic moves to unleash the potential of EMRs.

Low Hanging Fruit for Aetna:




As highlighted above, Aetna has the medical information segregated across Member and Claims business units. This information needs constant and ongoing maintenance in terms retaining the most recent view of the individual medical information. The primary source of this information is Employers or the Healthcare providers. The information has to be synced up at a particular frequency in order to effective and useful.

At the present state of operations, Aetna employees a group of professionals around all the touch points where medical information is maintained. Such an operation is not only cost intensive to Aetna but also slow and prone to errors. Switching to EMRs as the primary source of medical information will enable Aetna to take advantage of the technology in order to reduce costs and increase the efficiency of operations. At current state of systems, there are several loose strings not only in terms of misinterpreted medical information but also in terms of obsolete medical information. Overall, EMRs value proposition overshadows the initial costs and a worthy long term investment.

Recommendations and Next Steps:

Business Process Reengineering

The EMRs have a long term benefit and the best way to capitalize on the EMRs technology is to re-engineer the various business processes and IT support systems to integrate the EMRs in to Aetna’s operations. The present state of Aetna’s operations entails scattered patient’s medical information across business units. The first step is to assess the current state and identify the areas where medical information is used/processed/stored. Once we have a handle on the as-is state, the next step is to identify the alternate ways of feeding the medical information across the impacted areas. This could be done either through services or through restricted access to EMR information.

Strategy Consultation

The present of Aetna reveals that the business and IT systems are complicated and convoluted. In such a situation seeking consultation from well-known strategy consulting firms is a viable starting point. Once we are clear on the strategic road map for both short term and long term, we can then plan the allocation of resources and time in the direction of achieving the strategic goals.

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