Labor arbitrage in healthcare is dying. So what’s next?
In today’s environment, payers need the triple play of automation, analytics and As-a-Service to survive—and thrive.
Overview
-
Seventy-two percent of senior healthcare/pharmaceutical operations executives say that they have exhausted the labor arbitrage model and must look elsewhere for value, according to an Accenture and HfS Research survey.1
Robotic process automation (RPA), analytics and As-a-Service are connected and complementary elements that can deliver progressive levels of business value. They can reduce cost structure and transform parts of the business that labor arbitrage cannot touch, adding greater value to the sourcing model.
1Phil Fersht and Barbra Sheridan McGann, HfS Research, Beware of the Smoke: Your Platform is Burning, July 2015.
-
Large national payers have long relied on labor arbitrage models to reduce operating costs and worked with traditional outsourcing providers to improve processes. While payers have lowered cost profiles with these methods, they must do more to improve business results.
Many factors—such as the Affordable Care Act, healthcare consumerism and digital technology—are rapidly transforming healthcare. Survival is about more than driving out costs. It demands a whole new way of doing business, supported by agile business operations.
Key Findings
Payers have historically used sourcing primarily to leverage labor arbitrage. Now they must switch gears to a new partnership model of consumption-based, innovative and flexible arrangements.
Payers will need to rethink how they select partners to help them with the short-term goal of cost take out and long-term plans to adapt to digital technology, new reimbursement models, and the migration from lower cost labor to outcomes-based labor.
Analysis
-
The next wave of managing operations outcomes includes automation, analytics and As-a-Service:
-
Automation: Where humans and machines meet
Automation removes the human element from manual, repetitive and predictable process work to increase productivity. It also introduces learning into processes to predict transaction results, providing more insight into business outcomes.
Accenture experience shows that automation can increase productivity and quality from 10 to 50 percent, delivering direct cost savings. One automation tool improved the quote-to-card process—reducing processing and turnaround time by at least 20 percent. The payer reduced costs and serviced new members more quickly; and members received coverage faster.
Automation has yet to fully take off with payers for a variety of reasons. In fact, across all industries, HfS Research reports that just 11 percent of enterprise buyers have direct experience with robotic process automation.1 This reveals what an emerging growth area it still is, despite heavy investment on the part of service providers.
1 Horses for Sources, How Robotic Process Automation has Become a Right Dog’s Breakfast, September 3, 2015.
-
-
-
Analytics: Toward more intelligent operations
Payers are hungry to understand how to use their data better to drive out costs, improve compliance and quality, and increase market share.
Automation offers a new approach to analytics. It provides higher quality, digitized data for enhanced analysis of payers’ business, which can inform continuous process improvement and large-scale change.
Analytics tools provide insight to reduce medical costs and identify other opportunities to lower costs or grow revenues. For example, an analytics tool can create and prioritize a standardized clinical review list. Using this tool, health plans typically realize 15 to 40 percent in administrative cost savings and up to 15 percent in medical cost savings based on Accenture experience.
-
-
-
As-a-Service: The next level of business value
Think of the As-a-Service model as the next step in payer transformation that allows for a flexible, adaptable business model.
Technology, data, analytics and talent combine to deliver value through on-demand, highly-scalable, plug-and-play services that eliminate complexity and manual processes. Relationships move from paying for people to paying for outcomes—a longstanding desire for most payers that has been challenging to define.
As payers see the benefit of As-a-Service for new lines of business, they are likely to expand their use of As-a-Service models over time. Eighty-four percent of healthcare and pharmaceutical survey respondents believe that their core enterprise processes will be delivered As-a-Service within the next five years—or sooner, according to the Accenture and HfS survey.
-
Recommendations
-
VIEW CHART
The attraction to As-a-Service: Top 3 drivers for healthcare/pharmaceutical executives
What are the most significant drivers in your move to the “As-a-Service Economy”?
Payers risk their very survival if they do not make bold moves now to modernize to stay relevant to consumers. This demands more than labor arbitrage in healthcare. Only payers that embrace the next wave in managing operations outcomes—the triple play of automation, analytics and As-a-Service—can survive and thrive.
Comment submitted
Submitted comment may not display automatically.