Core systems modernization for health insurance plans

Is it time to fix the back office?

Reimagining core technologies and business logic can help health insurance plans gain flexibility to get ahead in the fast-paced, consumer-focused market.

A foundation for growth and innovation

Consumerism, accountable care, new payment approaches, and demand for effective engagement with subscribers and business partners create enormous pressure to innovate and shorten time-to-market—while also driving operational efficiency and reducing costs.

Outdated administration systems can impede an organization’s ability to respond with agility to the volatile market. You may not be able to control many forces that will shape your requirements and user preferences over the years to come, but you can control how well your technology platforms position you to meet evolving needs and expectations.

Core systems modernization provides an opportunity to redesign technology and business logic to align with enterprise strategy and establish a digital foundation that can help you adapt to changes—foreseen and unforeseen—that lie ahead.

Do you need core systems modernization?

Answering “yes” to any of the following may indicate the need to modernize back office technology and business logic:

  • Is your technology ecosystem unable to meet all of your business needs?
  • Are lengthy approval processes causing delays and loss of market timeliness?
  • Are competitors beating you to market with new innovations?
  • Is there a long lead time between new product requests and time to deliver?
  • Are your systems maintenance costs for legacy claims platforms too high?

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Turning core systems into business drivers

Modernizing doesn’t have to mean wholesale replacement of legacy systems and applications. Cloud platforms and advanced analytics are examples of technology advances that can support less risky core modernization approaches, and which can often be executed with smaller investments and in shorter timeframes. A pragmatic approach to modernization can:

  • Increase operational efficiency through improved delivery/service channels
  • Reduce costs associated with legacy systems
  • Gain technical agility and speed to market through improved system architecture
  • Increase customer growth and loyalty, and lower customer acquisition costs

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Winning with the four “Rs”

The vision of core systems modernization is to transform a tightly-controlled code base and hardware into modularized cloud applications where traditional layers are converted into components that can be consumed only as needed. Four specific strategies have emerged—we call them the four “Rs”—which can be combined to craft an approach tailored to your specific requirements.

The objective of replatforming is to move off existing mainframe/legacy technology by custom-developing a future-state solution. It requires redefining business processes and core technology components to eliminate unnecessary dependencies that hinder agility and flexibility.

Remediation involves repair of existing mainframe/legacy technology. The process, data, interfaces, and business logic are encapsulated into reusable, extendable application components and services. Security and compliance risks are addressed, and data is cleansed to address quality issues.

Revitalizing means rebuilding the transactional layer with digital extensions and user-centric process redesign. Visualization and discovery tools are leveraged to improve reporting and analytics on top of underlying systems, and develop new ideas, products, and offerings using the core foundation.

A replacement strategy involves selecting best-of-breed “n-tier” or platform-as-a-service solution packages and migrating functional areas to these best-of-breed solutions.

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Learning from a state government example

The State of Texas Department of Motor Vehicles (DMV) faced challenges familiar to health insurance plans: It handles millions of transactions annually and provides services to a wide range of individuals, third parties, and service centers. The agency wanted to port its registration and titling systems to a modern data and application architecture without code freezes and incremental releases, and therefore maintained their legacy applications through the project duration.

With Deloitte, the DMV transformed its core systems and rolled out functionality to Texas' 254 counties one year ahead of schedule at an estimated annual savings of approximately 20 percent.

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