BPO in the Healthcare Payer Market - Resurgence or Still Just Talking?

This Health Industry Insights report describes business process outsourcing drivers and adoption trends among U.S. healthcare payer organizations and projects these trends for 2008-2010. Many of the recent inconsistencies in healthcare payer BPO strategies and execution reflect highly variable business strategies and rapidly changing market dynamics within the past 10 years, including HIPAA compliance, the rise of consumerism, ebusiness and the subsequent evolution to Web 2.0, transaction automation and, more recently, cost and quality reporting initiatives and health, wellness, and care management programs. With each new wave, healthcare payers have paused to reevaluate their business models and reassess where the differentiation and opportunities for future success lie.

And healthcare payers embrace BPO for different reasons. Some view the BPO relationship as a tactical strategy to "keep the lights on" of the existing business while using their own resources for strategic investment. Tactical initiatives tend to include outsourcing critical but nonstrategic transaction acquisition and data processing, for example enrollment or claim submission and data verification. Others include BPO partners in strategic initiatives, including strategic product launches such as consumer-driven health plans and various Medicare programs, outsourcing of all services, and management for a specific product (CDHP, Medicare Drug Program) or a particular strategic process (care management, health and wellness programs).

"The variability of health plan BPO initiatives and perspectives will continue. However, the extreme business challenges facing healthcare payers and all constituents, the expanding business model of the healthcare payer, and the need for expedient and cost-efficient execution will most likely drive an increase in BPO in the healthcare payers' market in the next two to three years," reports Janice Young, program director, Healthcare payer IT Strategies.