Health Care and the Internet Frontier
Over the next ten years, the Internet may dramatically change our healthcare system.
It starts with consumers. Using the Internet, they are able to access and leverage a wealth of online medical information. And in the future they will have more opportunities to take care of other healthcare needs over the Net. The Palo Alto Medical Foundation, for example, is establishing “virtual clinic” Web sites through which patients can make appointments, submit updates on their conditions, obtain test results, get prescription refills and obtain other information from their physicians. Meanwhile, doctors increasingly can order prescriptions, schedule patients and access allergy information at the point of care by using wireless, hand-held computers.
The Internet is also changing the way some employers manage healthcare benefits. Consider, for example, the selection of insurance providers. American Airlines took health plan negotiations online, reducing costs and making considerable cuts in negotiation time. American used UltraLink, an online auction model, to negotiate rates for HMO plans covering California and Texas workers. American ended up staying with the same providers, Maxicare and PacifiCare, but at a 2.2% cost savings.
The Internet is also being used by insurers to make their operations more efficient. For example, HMO Kaiser Permanente is undergoing a “digital revolution” to improve healthcare quality and reduce costs, notes chief executive David M. Lawrence. Kaiser’s changes include the creation of digital medical records as well as the ability to order supplies and procedures online. The system has already reduced prescription drug expenses and some affected clinics have reported 20% cost decreases. Kaiser thinks that the system will enable it to deliver customized quotes quickly. It’s establishing customized Web sites for some large customers, including General Motors and Wells Fargo, which allow them to check rates and coverage.
And Internet advances are streamlining benefits administration. Selecting a healthcare provider that offers Web-based technology can significantly reduce enrollment costs, suggests Eric Peterson of XyberNET, Inc. The cost of enrolling an employee on a paper-based system ranges from $4.75 to $13, compared with 89 cents to perform the same task online. The savings have not gone unnoticed. More than 55% of employers are using information technology for benefits enrollments, according to a survey by Watson Wyatt. “It's a huge trend,” says Steve McCormick, a senior consultant at Watson Wyatt.
IBM has been a leader in this trend. This year, over 140,000 employees are getting all their enrollment benefits information online. The firm projects that about 90% of employees who enroll this year will do so via its intranet, saving IBM about $1 million.
But some experts express concerns about relying too heavily on the Internet. Although gathering and benchmarking health plan information online can be beneficial, conducting a Web auction among insurance carriers may not be the best means of negotiation, suggests Towers Perrin principal Brian Dolan. “When you hear about these auctions, you hear that they saved a percent, or perhaps two percent. The question is, what did they leave on the table?” Dolan asks. “When the risk management strategy is crafted very carefully, there’s more to be [saved] than a percent or two.”
Another Internet-related concern is employee privacy. The U.S. Department of Health and Human Services (HHS) has proposed privacy guidelines on electronic transmission of medical records, and these could wind up being costly for businesses, according to the Society for Human Resource Management (SHRM). HHS claims that nationwide expenses could total $1.165 billion the first year, mounting to $3.775 billion in five years. And some industry experts predict even higher totals. Because such steep costs could convince some companies to abandon healthcare coverage completely, SHRM has proposed that HHS use an alternative method – the ERISA fiduciary model – to help employers maintain medical records privacy at lower costs. HHS finalized electronic filing standards in August, but additional security and privacy measures are expected to be issued later this year.
And these are just a few of the issues related to the Internet and health care. Some futurists believe that virtually everything will be transformed. “Start with patients and physicians,” recommends Ian Morrison of the Institute of the Future, “demonstrate value based on customer joy, align incentives, pay physicians for performance and use the Internet for everything.” Whether we can use the Internet for “everything” related to health care remains a question, but employers should at least plan for some major changes ahead.
====================================================
A major report on the future of health care, including the role of the Internet, has been published by professional services firm PriceWaterhouseCoopers. See HealthCast 2010 at
http://www.pwchealth.com/healthcast2010.html.
SHRM's letter commenting on HHS guidelines is available online at
http://www.shrm.org/government/regulatory/0200privacy.htm.
It starts with consumers. Using the Internet, they are able to access and leverage a wealth of online medical information. And in the future they will have more opportunities to take care of other healthcare needs over the Net. The Palo Alto Medical Foundation, for example, is establishing “virtual clinic” Web sites through which patients can make appointments, submit updates on their conditions, obtain test results, get prescription refills and obtain other information from their physicians. Meanwhile, doctors increasingly can order prescriptions, schedule patients and access allergy information at the point of care by using wireless, hand-held computers.
The Internet is also changing the way some employers manage healthcare benefits. Consider, for example, the selection of insurance providers. American Airlines took health plan negotiations online, reducing costs and making considerable cuts in negotiation time. American used UltraLink, an online auction model, to negotiate rates for HMO plans covering California and Texas workers. American ended up staying with the same providers, Maxicare and PacifiCare, but at a 2.2% cost savings.
The Internet is also being used by insurers to make their operations more efficient. For example, HMO Kaiser Permanente is undergoing a “digital revolution” to improve healthcare quality and reduce costs, notes chief executive David M. Lawrence. Kaiser’s changes include the creation of digital medical records as well as the ability to order supplies and procedures online. The system has already reduced prescription drug expenses and some affected clinics have reported 20% cost decreases. Kaiser thinks that the system will enable it to deliver customized quotes quickly. It’s establishing customized Web sites for some large customers, including General Motors and Wells Fargo, which allow them to check rates and coverage.
And Internet advances are streamlining benefits administration. Selecting a healthcare provider that offers Web-based technology can significantly reduce enrollment costs, suggests Eric Peterson of XyberNET, Inc. The cost of enrolling an employee on a paper-based system ranges from $4.75 to $13, compared with 89 cents to perform the same task online. The savings have not gone unnoticed. More than 55% of employers are using information technology for benefits enrollments, according to a survey by Watson Wyatt. “It's a huge trend,” says Steve McCormick, a senior consultant at Watson Wyatt.
IBM has been a leader in this trend. This year, over 140,000 employees are getting all their enrollment benefits information online. The firm projects that about 90% of employees who enroll this year will do so via its intranet, saving IBM about $1 million.
But some experts express concerns about relying too heavily on the Internet. Although gathering and benchmarking health plan information online can be beneficial, conducting a Web auction among insurance carriers may not be the best means of negotiation, suggests Towers Perrin principal Brian Dolan. “When you hear about these auctions, you hear that they saved a percent, or perhaps two percent. The question is, what did they leave on the table?” Dolan asks. “When the risk management strategy is crafted very carefully, there’s more to be [saved] than a percent or two.”
Another Internet-related concern is employee privacy. The U.S. Department of Health and Human Services (HHS) has proposed privacy guidelines on electronic transmission of medical records, and these could wind up being costly for businesses, according to the Society for Human Resource Management (SHRM). HHS claims that nationwide expenses could total $1.165 billion the first year, mounting to $3.775 billion in five years. And some industry experts predict even higher totals. Because such steep costs could convince some companies to abandon healthcare coverage completely, SHRM has proposed that HHS use an alternative method – the ERISA fiduciary model – to help employers maintain medical records privacy at lower costs. HHS finalized electronic filing standards in August, but additional security and privacy measures are expected to be issued later this year.
And these are just a few of the issues related to the Internet and health care. Some futurists believe that virtually everything will be transformed. “Start with patients and physicians,” recommends Ian Morrison of the Institute of the Future, “demonstrate value based on customer joy, align incentives, pay physicians for performance and use the Internet for everything.” Whether we can use the Internet for “everything” related to health care remains a question, but employers should at least plan for some major changes ahead.
====================================================
A major report on the future of health care, including the role of the Internet, has been published by professional services firm PriceWaterhouseCoopers. See HealthCast 2010 at
http://www.pwchealth.com/healthcast2010.html.
SHRM's letter commenting on HHS guidelines is available online at
http://www.shrm.org/government/regulatory/0200privacy.htm.