ISG Provider Lens™ Healthcare Digital Services - U.S. 2020 - Payer Digital Transformation Services
The global pandemic of COVID-19 unquestionably accelerated the move to digital services in the healthcare industry. However, ISG considers this the acceleration of pre-pandemic activity by healthcare providers and payers to enhance operations, reduce costs and improve engagement with their stakeholders using digital services.
For years, new players have been entering the healthcare markets from the technology solutions business, including hyperscale cloud behemoths such as Amazon, Google and Microsoft. In October 2020, Microsoft released Microsoft Cloud for Healthcare, which includes data models, cross-cloud connectors, workflows, application programming interfaces (APIs) and built-in healthcare-specific components, along with its horizontal cloud apps and services. Salesforce Health Cloud is a popular healthcare customer relationship management (CRM) solution supported by most service providers in this study. At present, health technology stalwarts such as Allscripts, Cerner and Optum are expanding their service offerings, posing a competitive threat to traditional IT service providers.
The service providers in this industry are ready for a change not only because of new entrants and the shift to digital and cloud but also because of contract expiration. According to ISG Research, between 2021 and 2023, a total of 384 IT outsourcing (ITO) deals are expected to expire in the healthcare industry in North America. Application development and management (ADM) and infrastructure, as well as pure ADM services, account for about 74 percent of the total expiring deals by total contract value. As healthcare companies in the U.S. seek to control costs and change with the market, digital transformation is growing, along with business process as a service (BPaaS).
Interoperability remains a challenge for the industry, resulting in inadequate data sharing, especially between payers and providers. The Fast Healthcare Interoperability Resources (FHIR) standard was developed to exchange health information. In December, the U.S. Centers for Medicare and Medicaid Services (CMS) issued a proposed rule to require Medicaid, Children’s Health Insurance Program (CHIP) and Qualified Health Plan (QHP) programs to build HL7 FHIR-based APIs to support data exchange and prior authorization. The rule also includes a proposed API standard for healthcare operations nationwide. The 21st Century Cures Act: Information Blocking, Interoperability, and the Office of the National Coordinator for Health Information Technology (ONC) Health IT Certification Program Final Rule (ONC Cures Act Final Rule) requires health IT developers to comply with a set of certifications, APIs and other data access improvements. In April, also to address interoperability Google Cloud rolled out the general availability of Cloud Healthcare API, a tool to make it easier for health systems and providers to connect data across different sources and share that data with patients. In December, Amazon Web Services (AWS) launched HealthLake for storage and analysis of data, automatically structured into the FHIR standard. All the service providers in this study embrace the FHIR standard in their digital transformation programs.
Automation is key to digital services as healthcare enterprises gradually adopt robotic process automation (RPA) and artificial intelligence (AI) technologies to improve specific processes, including claims processing, medical diagnosis and patient care management. With the ongoing COVID-19 pandemic, there is an increased adoption of telemedicine systems as doctors must overcome lockdowns and reduce in-person exposure risks to treat their patients. Healthcare providers are deploying connected healthcare monitoring devices at an explosive rate: According to the Consumer Technology Association, the U.S. shipment revenue rose by 73 percent in 2020 and is forecast to reach US$1.2 billion by 2024. Security is an essential component of a digital services ecosystem for employee productivity and patient record protection. In addition, ride-hailing platform companies are joining with their own services. Lyft Healthcare already provides non-emergency medical transportation (NEMT) services in the U.S., and it recently partnered with Anthem, JPMorgan Chase, United Way and others to get people in underserved communities to COVID-19 vaccination sites.
The COVID-19 pandemic will continue to influence the behavior of U.S. policymakers, citizens and companies in the healthcare ecosystem in 2021 as they take a fresh look at the business of healthcare management in the war against this disease that is dragging onward. In early January 2021, the U.S. Department of Health and Human Services (HHS) renewed the declaration of the public health emergency from the COVID-19 pandemic, extending key waivers for regulations on services such as telehealth until April. Recent executive actions from the new presidential administration to help quell the pandemic include commitments to government assistance in prevention, care and treatments for COVID-19 and to the supply chain and worker health. In the next few years, the healthcare industry services for all aspects of care will look radically different. Governmental and intergovernmental agencies are building new frameworks for disease response and data sharing. Public and private alliances and collaborations are emerging and will be mandated soon. Regulations, spending priorities and the current resiliency posture of healthcare ecosystems will determine the “new future” for healthcare payers and providers. It is against this backdrop that digital services will be central to positive outcomes in health and the health business.
Payer Digital Transformation Services
According to the U.S. Census Bureau, the percentage of people with health insurance coverage for all or part of 2019 (the most recent year studied) was 92 percent, and private health insurance continued to be more prevalent than public, covering 68 percent and 34 percent of the population, respectively. However, the insured are dissatisfied with their health insurance companies. The American Customer Satisfaction Index (ACSI) shows that Americans were less satisfied with their health insurance in 2020, and the discontent is permeating nearly the entire industry. Member satisfaction weakened by 2.7 percent to an ACSI score of 72, bringing the industry to its lowest point since 2016. Claims are becoming harder to submit and processing is taking longer. However, the U.S. payers seek to remedy these issues, and digital transformation helps them meet member service requirements, changing regulations and competitive pressures. Payers measure the success of technology investments based on business outcomes, so finance and other business leaders − not IT − often drive digital transformation.
Payers are using RPA to automate mundane back-end business processes such as price estimates using predefined rules, documentation of insurance contracts, claims notification and verification processes across their value chain. Many payers apply AI in the back office by combining multiple data sources to interpret clinical data to improve services. Healthcare payers require a frictionless flow of information between sales and service channels. By leveraging automation, payers can significantly lower costs, enable faster decision-making and focus on product and service innovations. More advanced technologies such as blockchain are rarely used, despite use cases such as sharing patient data records.
Accenture, Cognizant, HCL, IBM, Infosys, NTT DATA, Optum, TCS, UST and Wipro are identified as leaders, while EXL and Genpact are the Rising Stars.
Provider Digital Transformation Services
Healthcare providers are in crisis. In the U.S., the COVID-19 pandemic has overloaded hospitals, stalled elective procedures and reduced productivity, with many professionals are unable to do their jobs, all of which has erased profits. The ACSI measures patient satisfaction with hospitals (including inpatient, outpatient and emergency room services) as well as ambulatory care (office visits to doctors, dentists, optometrists and mental health professionals). Following a sharp drop last year of more than 5 percent, patient satisfaction with hospitals fell to the lowest level in nearly two decades. For ambulatory care, patient satisfaction retreated for the first time in five years, dropping to an all-time low.
In response, healthcare providers are changing from a fee-for-service to a value-based care (VBC) delivery model, as patients are increasingly expecting personalized and cost-effective care. Digital services are facilitating greater value at reduced cost with minimal touch interactions. In addition, VBC is shifting the healthcare paradigm from “disease care” to “health outcomes.” The service providers in this study embrace VBC and help their clients move toward it through digital transformation. Investments in cloud solutions to help enable digital services are driven in part by the need for greater agility in the time of a pandemic, coupled with the growing expectation for transparency through easily accessible portals and mobile solutions.
Healthcare providers are increasingly introducing wearables and other sensors to monitor patient health and influence the course and choices of patient care. Digital channels that are centered around the patient can dramatically influence wellness, facilitate the capture of data to improve efficacy of treatments and feed other applications to monitor and better manage diseases.
Accenture, Cognizant, Genpact, IBM, NTT DATA, UST and Wipro are identified as leaders, while Conduent is a Rising Star.
Payer Business Process As A Service
Automating business processes is critical to payers seeking to reduce costs and streamline services. Business process as a service (BPaaS) reduces TCO by breaking silos and optimizing costs. It also helps payers modernize their operations and accelerate their transition to a VBC model. Operational flexibility is another benefit that is considered important in pandemic and post-pandemic times. Cloud infrastructure supports modernization of payer infrastructure as well as movement to enterprise agility, which will help the service providers in this study that excel in BPaaS to offer strong cloud migration services.
Accenture, Cognizant, HCL, IBM, Infosys, NTT DATA, Optum, TCS, UST and Wipro are identified as leaders, while EXL and Genpact are identified as Rising Stars.
Access to the full report requires a subscription to ISG Research. Please contact us for subscription inquiries.