November 18, 2014


Alternate Application Development & Maintenance (ADM) for Payers

The Current Paradigm Shift

Payers in the U.S. are going through some interesting times. The Affordable Care Act (ACA) has really challenged them to look at their existing members and future member prospects in a completely different setup. Last year, when the healthcare exchange (HIX) was opened for the first time, approximately 8 million new members were enrolled. Payer participation on the HIX was varied - some successes and significant lessons learned; most of the payers are getting ready for the second enrollment around the corner.

Even if the ACA is seen as a challenge by most payers to enroll a healthy population, the most important point to notice is the rejuvenated force we see in all payers today, leading to one aspect – “Customer Centricity”. This phrase, simple as it may sound, is the most difficult problem that payers need to solve. The reasons are many:

  • The definition of the customer has changed from groups to individuals; from a broad provider base to narrow networks.

  • Most of the payers have grown by acquisition, resulting in an array of solutions around claims, adjudications, provider management, and fraud detection systems. Information Technology (IT) is not integrated to provide one view of the customer.

  • The outreach to customers in the past was transaction oriented. Changing this to keep the customer at the center of all business functions is becoming a huge technology challenge. The transparency between payer and customer and what is being communicated is becoming constrained.

Payers today need to leverage technology to serve customers like never before. But for payers’ to focus on new age technology, they have to overcome two very crucial problems:

  • Manage and run their current IT applications in an effective and predictive manner so that the CIO organization can focus on “Customer Centricity”.

  • As funds for digital programs are squeezed, current application development and maintenance must get more affordable so that the cost saved from ADM can be reinvested in front-end/digital technologies.

This is easier said than done as the maturity amongst most payers in running their ADM is based on old models of staff augmentation. In the past, cost was never a problem; so, most of the work was usually done at location proximity with payer IT taking the bulk of the load in getting things done.

As the times change, payers are actively looking to change this old model but in a manner where they can gradually shift into more mature application development and maintenance models.

HCL’s ALT ADM Solution

HCL has designed an alternative view to ADM for payers (ALT ADM™) to mitigate the challenges described in the section above. The solution has the following tenets:

  • Application Support: Based on HCL’s MASCoT™ framework (Managed Services with Continuous improvement and Transformation) HCL provides a unique approach to move payers to managed services in three stages over a 2 to 3 year period – staff augmentation, to fixed price, to managed services . While the model allows payers to gradually embrace the process at a pace they can absorb, yet the productivity benefits start from year one onwards.  This is achieved because of the following solution pillars:

    • Proactive Obsolescence – Based on Lean Six Sigma and process motion time observance, we can bring 20% productivity gains in less than 3 years

    • Proactive Problem Management – Analysis of top tickets and solving them at the root brings 10% of productivity gains in the first year itself.

    • Payer Accelerators – In our experience, we have seen that 3 out of the top 5 incidents and Service Requests are industry specific. We have created 15 solutions that can dramatically reduce the incidents resulting in a further 10% in productivity gains.

  • Application Development – Based on HCL’s ADEX™ (Application Development Acceleration) framework, this works on a journey philosophy and moves payers from staff augmentation, to managed capacity, to managed services over a 2 to 3 year period.  The ADEX provides the following:

    • Well defined development methodologies for Agile and Waterfall – a portal with all the processes, templates and best practices are provided for quicker assimilation and usage

    • Skill based resource profiling /acquisition – a resource skill tool which enables the right profile at the right time for the right work enabled

    • Program/ Project Management Tools – a set of tools governed under HCL’s PMSmart™ software for managing Agile/Waterfall programs. HCL also offers a customer portal to provide complete program, resource and project visibility at a customer’s fingertips

    • Code Analyzer tools – Auto code analyzer (HCL PACE Software) helps develop quality code on time and within budget. PACE is based on SPR coding standards

  • Financial Models – HCL has developed a very unique pricing model which will tremendously help payers to save cost and invest in the technologies of tomorrow:

    • ASM is fixed price with guaranteed 30-40% savings over 3 years

    • For ASM, HCL also offers application based pricing to help payers to plug out applications to be replaced with a more modern application set in the future. As the application moves out, the customer understands exactly how the support cost would be reduced over a period of time

    •  One Average Blended Rate (ABR) for all development work regardless of location and ABR improvement year-on-year

  • Value Creation - HCL has a huge focus on creating customer value beyond the contractual terms. This continues our corporate credo of a “relationship beyond the contract”

    • Value Portal – HCL provides its customers with a value portal from day one of the engagement. The value portal enables all HCL employees ideate on a customer’s behalf.  The best ideas are filtered, and once approved, they are implemented.

    • Transformation Board – HCL invests in forming a transformation board with industry /technology leaders to help ideate big transformational ideas together with the customer, to bring an outside-in perspective to the customer.

The time for payers to think about new business innovation models, is now. For payers to focus on real problems it is paramount that they relook at the way they are getting their ADM work done. In this blog, I’ve attempted to highlight HCL’s thought process and approach that will immensely benefit payers, helping them overcome the tactical bottlenecks and focus on strategic initiatives.

*Views or opinions, if any, presented in this blog post are solely those of the author and may not necessarily reflect the views or opinions of HCL or its affiliates. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and / or publication of its contents without the prior written consent of authorized representative of HCL is strictly prohibited.