“It is not the strongest or the most intelligent who will survive but those who can best manage change”- Charles Darwin.
It has been nearly two decades of my association with the healthcare industry and I have not witnessed a single day when we have not talked about modernization, be it application modernization, legacy transformation, or digital transformation; all these words have been used interchangeably quite often. It has been one of the most active pursuits where we work with the sales teams, solution teams, the customer, or even within the delivery teams. Within the umbrella of digital transformation, Application modernization is one of the top priorities of health insurance organizations and the application modernization services market is expected to reach approximately USD 20 billion by 2023, growing at a CAGR of 18%. Application modernization services relate to the transformation of legacy or older applications to fully optimized and modern applications. The major components of the services include assessment, migration, integration, re-platforming, re-hosting, re-coding, re-architecting, reengineering, remediation, and retirement/replacement, which can lead to large-scale digital healthcare.
Insurance in the healthcare industry is mostly dominated by the core administrative platforms that the payers or health insurance companies use. The core administrative platform is the heart of the processing system and delivers services like managing health benefits, enrolling members, invoice processing (both groups and individuals), and processing & payment of insurance claims. These core applications are mostly written in legacy technologies like Cobol, PL/I, and Fortran etc., which are being replaced by Java and .NET codes predominantly.
Drawbacks of Legacy Systems
The legacy applications are generally incompatible with today’s new and continuously evolving technologies such as cloud, mobility, AI, and ML. The traditional systems (core administrative platforms) lack smart enrollment and payment innovation mechanisms to begin with. For payers, the key challenge in healthcare claims management is to reduce medical and operating costs whilst improving customer experience. With legacy systems, payer organizations will always carry an increased risk and huge costs as there’s a scarcity of resources with knowledge of the legacy technologies. According to a Forrester study, upgrading the legacy applications enhances the productivity of your development team by as much as 40%. Developers get access to better development tools and sophisticated cloud technologies that helps them improve efficiency. The best solution for solving these issues is to transform and re-architect the legacy application into modern object-oriented applications based on a modern Java or .NET core architecture by leveraging the cloud.
Healthcare Platforms in the Post-COVID Era
Healthcare is an ever-changing area and it will continue to change even more post-COVID-19. Many applications that were written more than two decades ago are now obsolete and no longer meet the changing business needs. There will be an urgent need to be more compliant with the regulatory guidelines and the policy changes mandated by the Centers for Medicaid and Medicare Services (CMS) due to this pandemic. These changes are recommended by the US Federal Government on a frequent basis and the systems need to be scalable and flexible to adapt to those changes. Some of the changes, for example, for payers/insurance organizations are elimination of copayments for all COVID-19-related cases, easing out on complex and time-consuming pre-authorization approvals for similar treatments, and payment changes for telehealth to be at par with normal in-person visits. Provider organizations also have to adapt to facilitate waivers for provider enrollments, implementation of online algorithms for patients with respiratory problems, and usage of online testing and at-home preventive healthcare. As next-gen digital technologies continue to transform the healthcare industry every day, payer organizations need the most contemporary and scalable platform with deep domain and industry experience. Most payer organizations also continue to use a combination of one of the core administration platforms and other custom solutions to process different lines of business such as government health plans and commercial health plans. This restricts payer capabilities to expand their offerings and posts huge design and architectural challenges when adding new service lines. Below is the market analysis or comparison of features of the available healthcare insurance core administrative platforms.
A study conducted by Gartner shows that by 2025, 25% of U.S. healthcare payer administrative systems will transition to a cloud (SaaS, BPaaS or PaaS) environment. Per Gartner, “Next-generation core administrative platforms are more agile and intelligent than legacy solutions. They also enable faster new product launches, real-time data sharing, and transaction processing between payers and providers, and personalized benefits management tools to help engage and serve members. Next-generation core administrative platforms are defined by the following characteristics: ecosystem enablement, cloud delivery, modern architecture, configurability, componentization, and value-based payment enablement.” This is the best time to step forward to provide preventive, personalized, predictive, and coordinated care, so it becomes essential to transform the isolated and outdated structures.
Recent Gartner surveys show that more than a third of companies today see cloud migration as a top investment priority.
Accepted Modernization Strategies in the Healthcare Domain
- Re-hosting or lift and shift: This technique is usually least expensive and requires taking the source code or moving a mainframe application to a physical, virtual, or cloud setup. Typically, there are no code changes, and the architecture remains the same. This fast, cost-effective legacy modernization option makes the most sense for many of today’s businesses, but these applications might have performance issues and cannot take full advantage of the cloud.
- Improve existing setup or remediate: Repair the existing mainframe/legacy technology platform by improved design. Usually the core stack remains the same, and redundant codes are removed. Small-scale changes are performed using new technology to address specific issues in the application while the application core architecture and technology remain the same. This takes more time as compared to lift and shift but has longer-term benefits.
- Redesign or Re-engineer: Re-engineering requires a more significant effort than re-hosting but allows you to modernize your aging mainframe code to take advantage of modern programming languages and innovations such as Service Oriented Architecture (SOA) and web services.
Modernization in the healthcare industry has transformed the way the providers, payers, and patients function and interact. Today’s healthcare consumers are demanding seamless access to data, services, information, and analysis. Healthcare organizations should continue to add new services to nurture patient care and build value in the progress to digital healthcare. With clients arduously looking for innovation and usability, modern technology bundled with advanced data analytics offers the solution to drive scalability, flexibility and superior customer experience. New applications, faster claims processing, increased adherence to compliance, and best-in class customer service will soon envelop digital transformation initiatives and become the “new normal”.