Achieving operational excellence through best practices
By Thomas Rekart, September 2012
There can be numerous benefits to engaging a business management partner.
In the 1970s and ‘80s, Japanese companies exchanged employees. These employees would then return to their own firms with new ideas and approaches to improve operational performance. This practice was done in the pursuit of dantotsu. Roughly translated, dantotsu means “the best of the best.” In the business world, it means finding those companies that are the best at each of several functions and then replicating what they do within one’s own organization. The approach worked; Japanese industry flourished.
Today, employee exchanges are rare and benchmarking studies too often fall short of expectations, for a variety of reasons. Apples are compared with oranges. Management sponsorship wanes. Benchmarking teams are staffed with the wrong people. Metrics are stressed at the expense of process. Or follow-through simply doesn’t happen.
So how’s a healthcare payer organization to realize dantotsu – to discover the best processes for each of multiple functions, adopt these processes and improve its financial and operational results? The answer: by engaging a business management partner who can identify best practices and implement and manage them for operational excellence.
The benefits of engaging a business management partner are numerous. Assuming the partner works with multiple firms, a health plan profits not only from its own intellectual capital but from the partner’s as well. Think of it as knowledge transfer without walls. Further, a business management partner frees a healthcare payer to focus its precious resources on innovation and differentiation. Lastly, a business management partner can deliver lower, more predictable operating costs, scalability during peak periods, higher accuracy rates and faster cycle times.
To begin the journey toward dantotsu, a health plan first should choose longstanding core and noncore business functions for which established best practices can deliver operational excellence. The following functions are suggested:
- Enrollment administration – group and individual setup, member enrollment, enrollment-related correspondence and Medicare and Medicaid state-specific enrollment processing.
- Front-end processing – mailroom processing, imaging, data entry, OCR, member and provider matching, EDI-to-image processing and image storage and retrieval.
- Claims administration – manual claims adjudication with pend resolution, adjustment processing, coordination of benefits processing and provider and member correspondence.
- Billing and reconciliation – premium billing and reconciliation, cash posting from lockbox, broker commissions, capitation administration and billing correspondence.
- Customer service – member and provider inbound and outbound call-center services for benefit explanation and verification, claims-status inquiries, eligibility verification and provider inquiries.
- Configuration services – product design and configuration that help build and maintain products and provider contracts, fee schedules, code sets and health incentive programs.
Second, the health plan must choose a business management partner. Bear in mind, the ideal partner will be one that has touched many organizations, evaluated numerous operations and hence discovered prevailing best practices. So, the partner should bring a long track record with a broad base of clients. Fifteen-plus years of work with dozens of clients, supporting millions of lives, handling tens of millions in claims – all of this is indicative of a strong track record. The best partners also have client councils and user groups that encourage open, candid dialogue and provide input to continuously improve operational processes.
A good partner will follow a roadmap for specific, continuous improvement of its services for clients. It will walk the talk, investing in the continuous improvement of the staff that serves its clients.
A business management partner should offer “flexible delivery models.” In plain English, the partner should be able to manage a client’s business functions on a full-time, ongoing basis or augment the client’s staff intermittently, as needed. The partner should offer “flexible sourcing models,” as well – providing help onshore, offshore or through a combination of domestic and international staff.
There are numerous examples of healthcare payer organizations that have achieved operational excellence, or dantotsu, by working with business management partners. Self-Insured Plans LLC, a Naples, Fla.-based third-party administrator (TPA), has found great value in the services of its partner, The TriZetto Group Inc. For five years, TriZetto’s trained examiners and other professional staff have administered claims and customer service for Self-Insured Plans, drawing upon years of experience serving scores of health plans and understanding best practices.
“Ten years ago, a TPA’s value prop was in how well and fast it paid claims,” says Steve Rasnick, president of Self-Insured Plans. “Today, our value is in population health management and cost control through risk management. Our business management partner has enabled us to redirect our resources to these new priorities and points of differentiation without compromising high service levels.”
Specifically, the partner has freed this TPA to pursue new opportunities in the emerging markets of accountable care organizations (ACOs) and health insurance exchanges. Rasnick has created a separate, distinct line of business to administer self-funded benefits under the ACO model of care delivery in the Medicare, Medicaid and commercial markets. He also has positioned his organization to provide benefits administration for co-ops, “mini-exchanges” that are a precursor to the state insurance exchanges that will debut in 2014. The federal government has set aside billions of dollars in funding for co-ops, and many entities have filed to create these small exchanges.
“Without our business management partner, it would be immensely difficult to focus our resources on these and other opportunities for innovation and differentiation,” says Rasnick.
The famous oil executive J. Paul Getty once received a request from a magazine for a short article explaining his success. The multimillionaire obligingly wrote, “Some people find oil. Others don’t.” While rarely so simple or simply explained, success – and operational excellence through dantotsu – lies well within the reach of a healthcare payer organization that chooses the right business management partner.
About the author
Thomas Rekart is senior vice president, business management services, The TriZetto Group Inc. For more on TriZetto Group, click here.