The E-Mergence of E-Health

Perhaps no single nonclinical factor holds greater promise in fostering the continued evolution of health care delivery and financing in the United States than the explosive growth of "e-health," which uses the Internet and Web-based technology to dramatically enhance communication and information transfer among various health care constituents.

Information technology has been vitally important to the health insurance industry for decades. In fact, the insurance industry was one of the earliest, broad-scale users of mainframe data systems for record keeping and claims processing. Today, few health plans could operate effectively without fully automated eligibility, billing, claims and medical management systems.

However, the advent of the Internet has dramatically changed business operations throughout the country, in virtually every industry. The impact in health care is monumental, with the ability to greatly expand the flow of information among providers, health plans, plan sponsors, and consumers unlike any venue to date.

Realities of Managed Care Today

Managed care is the prevalent means of health care coverage for most Americans. As a result, the vast majority of medical claim payments today are already discounted or reimbursed in some negotiated manner. With the continued consolidation of managed care organization (MCO) and health care systems, coupled with the tremendous financial pressures placed on hospitals and health care systems because of Medicare/Medicaid payment reductions in the late 1990s, discounts in many metropolitan areas have reached practical limits. While there will continue to be active management of unit costs, the days of purely discounted managed care are past.

Similarly, the days of micro-inspection forms of utilization management are waning. Many of the largest MCOs have significantly loosened or eliminated their prospective methods of utilization approvals for many medical services. Some HMOs have even eliminated the referral management systems between primary care physicians and specialists. In lieu of a prior PCP referral, these plans often have higher copayments for direct, self-referred specialist treatment. Such "open access" plans provide greater flexibility for plan members in seeking care as well as eliminating the time-consuming processes previously required for referrals.

As managed care continues to evolve, it is evermore apparent that the key to effective health care is getting the right patient the right medical service at the right time. Central to facilitating this process is the need to significantly change communication and knowledge-sharing within the patient/provider relationship, including:

• Immediately accessible and correct data on plan benefits, member eligibility, and claims status;
• Increased patient knowledge of illness and treatment options;
• Continuous communication among the patient, the provider, and the health plan to aid in the timely and appropriate level of medical service.

Increasing consumer demand in health care delivery is aiding this evolution. As information becomes more timely, more accurate and more usable, consumers will be more willing to accept responsibility for their health care, and to be more involved in specific decisions regarding the quantity, quality, and cost of health care selected. This degree of increased "consumerism" is leading a paradigm shift in an industry which traditionally placed the patient largely outside of the decision-making circle.

Realities of E-Commerce Today

Virtually all sectors of American business have incorporated some degree of e-commerce strategies into their business operations, whether through sales distribution on external Web sites or e-mail communications with other business partners through the Internet. The growth of business-to-business (B2B) relationships has improved communication and information management among suppliers and business vendors. Likewise, the growth of business-to-consumer (B2C) applications on the Internet has generated new sales and marketing opportunities as well as a wider variety of direct customer services.

Furthermore, the Internet has created a time compression in information exchange previously unseen in corporate business, especially within service-based industries. Web-based service models, which rely much more on the use of automated assistance, can be created, changed to meet consumer preferences, or completely eliminated in much shorter time periods than traditional service models, which were largely dependent on human assistance.

Through Internet-based technology, many service-based companies and consumer product manufacturers, can make changes in product/service type and distribution and can even respond to market pricing changes in a fraction of the time previously required. As consumers grow increasingly able to access this quicker form of information, those companies who do not take full advantage of Internet technology will find themselves at a great competitive disadvantage.

The Internet also facilitates the ability of different companies to blend their specialized expertise in various new combinations. With the formation of unique partnerships, "virtual" companies can create end-to-end product/service development and management. This permits the quick formulation of new types of products, often faster than a single company could devote internal resources to accomplish the same objective.