Open Enrollment is Six Months Away…How Can Cloud Help? | Deloitte US has been saved
By Kareem Syed, managing director of cloud strategy and transformation, and Preety Agrawal, senior manager, Deloitte Consulting LLP
The annual open-enrollment period for employer-based and individual health coverage is about six months away. In anticipation, some health plans have moved, or are considering moving, some or all of their processes to a cloud platform. Along with helping to reduce costs, cloud technology may help health plans improve the member experience, boost retention, and have a positive impact on revenue. However, challenges in determining the likely return on investment could keep some health plans from making such a move.
Last month, our colleagues Neal Batra and Michael Black explored how moving to a cloud platform could be a “necessary catalyst for change” among hospitals and health systems (see A strong cloud strategy may help hospitals avoid the storm). Then, Raveen Sharma and Lita Sands described how pharmaceutical companies and medical device manufacturers are using cloud to innovate and scale more quickly (see Life sciences firms should try to find cloud’s virtuous circle). For part three of our three-part series on cloud, we look at the role cloud could play during the open-enrollment period.
Technology systems used by health plans tend to be complex. In addition, they generally house sensitive protected health information (PHI) and personally identifiable information (PII). They might rely on their legacy systems for performing critical functions such as member enrollment and re-enrollment, provider contracting, data management, claims processing, premium processing, and data analytics, to name a few. Determining the potential return on investment might be the best place to start. Some of the nation’s largest health plans have already started to leverage cloud technology for their business operations in some shape or form. These health plans have generally adopted cloud more quickly than medium-to-small-size health plans.
Like every transformation, modernizing to cloud needs to have a demonstratable business value. Deloitte has analyzed the value streams of a typical health plan and determined that the open-enrollment value stream could have a significant impact when modernized using cloud and related technologies.
The annual open-enrollment period can be the busiest time of the year for a health plan. This is when a health plan re-enrolls existing members and welcomes new ones. For most commercial health plans, this period runs from October to February.
A health plan’s technology stack (e.g., computing power, storage capabilities, and network capacity) can be stretched thin during open enrollment due to the typical surge of operational activity. In the months leading up to open-enrollment, a health plan might add more data storage capacity, increase computing power, fix outstanding software defects, and hire more call-center staff. A health plan might spend millions of dollars each year to prepare its people, processes, and technologies for the anticipated wave of activity that will take place. If the health plan’s systems are not elastic and scalable, preparing systems for open enrollment will likely take longer and those investments (especially for storage and software) far less sustainable.
Now let’s imagine if this value stream of applications and processes were to be modernized and re-imagined with the potential of the cloud. A onetime investment in cloud technology could lead to sustainable cost savings and increased member satisfaction. Member satisfaction could then translate to better member retention, which could mean improved revenue growth.
Consider this: A health plan has 1 million members. It might have a goal of re-enrolling as many members as possible. During the open-enrollment period, member information will need to be processed, and new ID cards will need to be printed and distributed. Maintaining a database of member IDs can require a tremendous amount of storage capacity. In addition, call centers might need to be expanded to respond to an increased volume of inquiries from employers and members. The health plan might also need more data storage space. If some of these processes can be modernized and moved to the cloud, additional computing power or storage space likely won’t need to be added because the cloud is highly scalable. Once the open-enrollment period has passed, storage capacity can be scaled back.
A health plan might spend an average of $2 million to $3 million a year to prepare for the annual open-enrollment period. This expense might include additional data storage and increased computing power. After five years, that health plan might have spent $10 million to $15 million. Now imagine if that health plan had instead invested in cloud technology. That $15 million investment would likely translate into sustainable cost savings. Other benefits might include:
However, due to the complex technology landscape—and the limited number of immediate small wins that a move to cloud typically generates—health plans might have to project and plan for a return on investment in a rolling fashion. Health plans might consider diverting future investments into legacy systems toward modernizing and/or re-imagining business processes by moving to a cloud platform. This strategy could help increase member satisfaction, retention, and revenue growth.
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