In an industry-wide race to adopt analytics capabilities, health carriers have consistently lagged behind P&C insurers. The nature of the health insurance sector forces providers to weave their way through regulatory barriers and fragmented systems to obtain the data they need.
“In 2014, the major healthcare trend was that everybody started to talk about how important it is to do analytics after all the changes healthcare reform was bringing to the industry,” says Qasim Hussain, principal at X by 2 with a focus on analytics.
As they prepare for a new year of data challenges, health insurers are juggling two options: to buy an analytics platform and get it up and running, or to procure the funds to build a platform from scratch. Some will move towards implementation in 2015, but more of that will be seen in upcoming years.
The challenge for health insurers lies in infrastructure. As they start integrating platforms to capture more data, many find that healthcare systems and connectivity are fragmented. A lack of infrastructure to capture data is the biggest challenge for most people, he notes. In an industry that has been largely dominated by paper-based transactions, electronic documents are still evolving.
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That evolution will continue to move forward in 2015 as health providers have additional incentive to boost their capabilities. While P&C carriers are trying to determine how analytics can boost revenue, health contracts are written in a way that money is paid based on how well patients are doing. This motivates insurers to build their analytics platforms.
“What’s really driving innovation faster in healthcare is the fact that there’s dollars and cents clearly associated with analytics. When there is a line of sight to how you can make more revenue, that pushes innovation faster.”
He predicts that the future of health insurance investments will involve more buying than building, but each choice presents challenges. Companies that choose to purchase systems can get them up and running in a shorter period of time, but they don’t have many solutions to choose from. Vendors are working to improve their product offerings but haven’t reached the maturity that many insurers need.
Even with the additional incentive and their predicted progress, health insurers will remain behind P&C carriers. “My theory is, the healthcare industry is underinvested in technology infrastructure.” The P&C industry has tried to stay on par with competitors throughout financial services and retail. Health insurers embody a culture that innovates based, not on competition, but on government requirements.
As they try to catch up, Hussain notes that security will play a major role in health insurers’ strategies. With paper documents, they didn’t have to think about complex security measures. Digital information presents a new obstacle. Now carriers will have to focus more on who has access to data and how they will use it.
Kelly is an associate editor for InformationWeek. She most recently reported on financial tech for Insurance & Technology, before which she was a staff writer for InformationWeek and InformationWeek Education. When she’s not catching up on the latest in tech, Kelly enjoys … View Full Bio