Gear Up for CAMPing!

HeadstrongHealthcareDomainConsulting
© 2012 Headstrong Corporation. All rights reserved.
2012
Gear Up
for CAMPing!

Introduction
The world around us is always
changing, sometimes at a pace
that makes it challenging to keep
up with. The parameters for
success in the modern business
world are unprecedented. It is no
longer as simple as keeping your
customers happy, or meeting
the expectations of Wall Street.
Whether it is profitable or not,
business must elevate their
standards and approximate those
of their competitors. A business
that fails to do so risks losing
customers, market share, and the ability to maintain
a competitive edge.
The Healthcare industry is no exception. As a whole, the
industry is rapidly changing and undergoing a massive
transformation. The industry has become too complex
and costly. In 2009, US Healthcare costs were 17.3% of
GDP, or $7,290 per capita. With a predicted average
growth rate of 5.8 percent a year, the nation is expected
to spend $4.6 trillion on health care in 2020. This is
nearly double the $2.6 trillion spent last year. Yet, in
spite of such impressive spending levels, the results
are disappointing:
U.S. Census data recorded in 2009 indicates that
an estimated 50.7 million Americans are without
health insurance
The cost of insurance continues to rise, increasing
120% since 1999
2,500 people file for bankruptcy everyday due to
healthcare and medical costs
54% of U.S. patients do not seek
care, fill prescriptions, or visit a
doctor because of healthcare
costs
In 2010, 12.6 million non-elderly
adults were discriminated
against due to pre-existing
conditions
98,000 Americans die each
year as a result of medical
errors
Lack of prescription medication
adherence costs between $250
and $300 billion a year
U.S. ranks last among seven
countries on Health System
Performance based on measures of quality,
efficiency, access, equity, and healthy lives.
There are a multitude of forces that are impacting the
Healthcare industry. New and unprecedented regulations
(e.g., HIPAA, HITECH, PPACA), severe economic pressures,
the mandate to cut costs while improving the quality of
services, and a highly demanding consumer base are
changing how Healthcare companies cope with their
ecosystems. Because they lack the resources and capital
of larger companies, small and medium sized Healthcare
organizations face the increased risk of being swept
away by today’s volatile and always changing business
environment.
There are also segment-specific challenges that have
substantially increased the degree of difficulty in competing
and succeeding in the market. Each segment has its own
unique challenges. For example:
Gear Up for CAMPing!
1
By John Reza Headstrong
The Four Essential
Ingredients for
Healthcare Payers,
Providers, and PBMs to
Become a Formidable
Competitor: Cloud,
Analytics, Mobility,
Process

Hospital revenues are under severe pressure from
Medicaid payment cuts. 33 states have proposed
cutting Medicaid payments this year. Medicaid is
the single largest expenditure representing 22% of
all spending at the state level. Recent Healthcare
reform legislation is cutting Medicare payments to
hospitals by $150B over 10 years. Medicare cuts
will total $500B, including cuts to private insurers
who run Medicare Advantage plans.
Hospitals are required to take care of any
patient who comes through their doors. Due to
the increasing number of uninsured Americans,
hospitals are receiving decreased compensation
for their services. This decline in reimbursements
has driven consolidation throughout the hospital
segment. The Healthcare M&A reports 704
transactions in the first three quarters of 2011,
valued at $185B. For the six-month period
ending June 2011, there were 56 hospital M&A
transactions.
2
Physicians have their own challenges, driving a
large number of them to believe that working as
employees for hospitals is a better option. In fact,
12 of practicing physicians in the US currently
work for a hospital system. They receive better
hours, a guaranteed salary, and no practice
management hassles and expenses.
Health insurance companies are not immune from
Medicare cuts, and must now adhere to Minimum
Loss Ratio requirements. These new requirements
mandate that insurance companies spend a
certain percentage of each dollar paid towards a
premium on medical care and quality improvement
activities. Insurance companies in the individual
and small group markets must spend at least 80%
towards this end, and those in the large group
market must spend at least 85% . This leaves
little for administrative expenses, and will require
process reengineering to make their internal
operations more efficient and cost effective.
Figure 1: Healthcare Industry Ecosystem

3
Additionally, by law insurance companies must
refund policyholders with any excess revenues.
For example, last year Blue Cross and Blue Shield
of North Carolina, the state’s largest health insurer,
announced refunds of $155.8M to approximately
215,000 individual policyholders.
New “Accountable Care Organizations” have
created an identity crisis for most insurers. Many
insurers must also change their business model to
accommodate the individual and small business
markets in light of the individual mandate and
State Insurance Exchanges. An example is Cigna
spending $25M to market to individuals with a new
slogan called “Go You.”
Pharmacy Benefit Managers have their own share
of struggles too. Competition is fierce as PBMs
constantly battle with each other over large
contracts. A high risk to mitigate is the loss of
large contracts and the uncertainty about future
revenues. A recent example that received press
coverage was MEDCO’s announcement that they
had lost UnitedHealth Group’s contract, which
accounted for 17% of MEDCO’s revenues in 2010.
Various federal laws, including the Patient Protection and
Affordable Care Act, have put the healthcare industry and its
performance at the center of the nation’s agenda. Lack of
care and coverage, and the high cost of healthcare, continues
to humble all segments of the industry. These concerns have
made the issue of healthcare a national priority.
With change however, comes the chance to seize upon new
strategies and market opportunities. In this case, there
is an unprecedented opportunity to level the playing field
and enjoy the same rewards as large multi-billion dollar
companies. Conversely, traditional industry giants will need
to focus on utilizing their resources in a way that secures
future growth in a more equitable market.
Running a business successfully is obviously based on a
plethora of criterion. Michael Porter’s generic strategies as
described in his book Competitive Advantage: Creating and
Sustaining Superior Performance covers three of them (i.e.,
Niche, Cost, and Differentiation). However, regardless of the
type or the duration of your strategy, if you are currently not
Figure 2: Market Segment Pressure Snapshot

4
geared up for CAMPing or in the process for doing so then
you might want to reexamine your strategy. They are four
essential ingredients for becoming an astute competitor in
today’s business climate and to win market share:
Cloud Computing
Advanced Analytics
Mobility
Process Improvement
CAMPing is a hybrid strategy that allows a company to
combine Information Technology and Business Processes to
strengthen its internal and external capabilities. If executed
in harmony, the four elements are intertwined and advance
each other. Let’s examine each element in detail and
highlight the reasons why they are the essential ingredients
for success in today’s business climate.
Cloud Computing
According to Forrester Research, the global cloud
computing market is expected to be worth $241B by
2020, nearly six times its value in 2011. In simple terms,
Cloud Computing is a “ready to use hardware and
software environment” that comes in different flavors
(e.g., private, public, or hybrid). The old era of waiting
months to secure and provision hardware and software
resources for a service deployment or product rollout
are gone forever. Regardless of the size of your wallet
or needs, you can use the Cloud to your advantage.
Let me use an example to better explain Cloud
Computing. Imagine a warehouse with an unlimited
quantity of groceries that can be delivered to you,
your family, and your friends anytime you need them,
24 hours a day, 7 days a week, with no blackouts. This
warehouse is always fully stocked, and problems of
supply never arise. When you need something, you get
it. Now imagine that you didn’t have to pay to build the
warehouse, stock its shelves, or maintain its inventory.
You didn’t have to hire people to run the warehouse or
pay for utilities or insurance. You didn’t have to pay for
its security and protect it against theft or intrusions.
Figure 3: US Healthcare National Agenda

5
And if the warehouse caught on fire and was destroyed,
you would have instant access to another warehouse
just like the one that was destroyed. Cloud computing
supplies a similar hardware, software, and a total data
center infrastructure for businesses. This model can
accommodate all of your needs, and utilizes a “pay as
you go” payment structure.
Cloud computing provides a means to level the playing
field. Smaller and medium size companies such as some
Health Plans and large physician’s offices can now have
access to the same impressive infrastructure that large
corporations have (e.g., Tier IV datacenters). Typically,
large corporations suffer from internal struggles
over how to allocate expensive, exclusive computer
hardware and software. But with Cloud Computing,
these struggles disappear as the provision of hardware
resources will become a lot easier.
Cloud Computing is a paradigm shift in how business
and IT interact with each other, and it will greatly
improve their relationship, for example:
Service Level Agreements used by Cloud vendors
are legally binding and adherence to those
agreements directly impacts their survival.
This in turn results in superior services and
maximum uptime for their customers. Business
continuity, (automatic failover to a redundant site)
disaster recovery, and the proper backing up and
restoring of your corporate data will become their
responsibility.
The time to production accelerates as the planning,
preparation, supply, and provisioning of date
center resources are outsourced to a vendor that
is legally obligated to meet their Service Level
Agreements. This is also true with internal Clouds
as most IT organizations will require less time
to prepare a data center environment for their
internal customers through virtualization.
Figure 4

6
The various Cloud Computing models have introduced
a bevy of opportunities and benefits for vendors,
businesses, and Information Technology organizations
and they will have a promising place in the evolution
of information and data processing.
There are several vendors who are excelling at Cloud
Computing and providing Infrastructure as a Service
(IaaS). For a thorough understanding of the strength
and weaknesses of these vendors you can refer to
the Gartner report titled Magic Quadrant for Cloud
Infrastructure as a Service and Web Hosting.
Without utilizing Cloud Computing as an integrated
part of your strategy, you will diminish your speed of
time-to-market and gradually lose to your competitors
who use the Cloud to their advantage.
Advanced Analytics
Analytics is the application of statistical tools and
techniques to healthcare-related data in order to study
past situations (e.g., operational performance or clinical
outcomes) to improve the quality and efficiency of
future processes and performance. It is no longer an
option to be capable of performing advanced analytics;
it is an imperative to sustaining a business advantage.
The HITECH Act through its EHR Incentive Program
has brought to the industry a proliferation of the
meaningful use of Electronic Health Records. The
Office of the National Coordinator, through its National
Standards & a massive injection of funding to regional
communities and state governments, has enhanced
the sustainability and existence of 100’s of private and
state government based Health Information Exchanges.
Recent healthcare reform initiatives such as the Shared
Savings Program, Accountable Care Organizations
(ACO), Minimum Loss Ratios, the State Insurance
Exchanges have changed the competitive landscape of
the industry. They have brought with them a growing
demand for accurate, timely, and readily available
financial and clinical information analysis.
Insurance companies, pharmacy chains, PBMs,
physicians, patients, and government agencies, have
all been impacted by these two laws. As a result, all
major industry participants must be prepared to use
new analytical tools to systematically analyze in an
effort to support the mission and responsibilities of
their organizations.
Figure 5

7
Each business or government agency generally
develops its own methods of data analytics to solve
problems. For example, a health insurance company
may have a database for millions of claims paid.
Computer program and algorithms could be run to
identify false claims requiring investigation. Centers
for Disease Control & Prevention might use advanced
analytics so its scientists studying a potential cure
for cancer can analyze the test results of hundreds,
thousands, or even millions of patients.
If you combine the information analyses and reporting
requirements that are common to all of these
companies and the ones that are segment specific
you come up with an example list of what is being
presented to you on Figure 7. How well an organization
can review large amounts of raw data for new industry
trends or customer behavior,, and then generate a plan
of action to maximize this knowledge will determine
which organizations will maintain a competitive edge
in this new healthcare market.
It is no longer an option but a business imperative for
companies to have adequate capabilities in terms of
their analytic resources, tools, and technologies.
In September of last year, WellPoint and IBM announced
an agreement to create the first commercial application
of IBM’s Watson technology. “Under the agreement,
WellPoint will develop and launch Watson-based
solutions to help improve patient care through the
delivery of up-to-date, evidence-based health care for
millions of Americans.” This is advanced analytics at
its best.
“New solutions incorporating Watson are being
developed to have the ability to look at massive
amounts of medical literature, population health data,
and even a patient’s health record, in compliance
with applicable privacy and security laws, to answer
profoundly complex questions. Watson can sift through
an equivalent of about 1 million books or roughly 200
million pages of data, and analyze this information
Figure 6

8
and provide precise responses in less than three
seconds. Using this extraordinary capability WellPoint is
expected to enable Watson to allow physicians to easily
coordinate medical data programmed into Watson with
specified patient factors, to help identify the most likely
diagnosis and treatment options in complex cases.
Watson is expected to serve as a powerful tool in the
physician’s decision making process.”
“There are breathtaking advances in medical science and
clinical knowledge, however; this clinical information is
not always used in the care of patients. Imagine having
the ability to take in all the information around a
patient’s medical care -- symptoms, findings, patient
interviews and diagnostic studies. Then, imagine using
Watson analytic capabilities to consider all of the prior
cases, the state-of-the-art clinical knowledge in the
medical literature and clinical best practices to help
a physician advance a diagnosis and guide a course
of treatment,” said Sam Nussbaum, M.D., WellPoint’s
Chief Medical Officer. “We believe this will be an
invaluable resource for our partnering physicians and
will dramatically enhance the quality and effectiveness
of medical care they deliver to our members.”
There is a direct correlation between a company’s
Analytics Maturity level and their competiveness. In
the May 2009 Aberdeen Group report titled: Executive
Dashboards – The Key to Unlocking Double Digit Profit
Growth, the top pressures faced by business executives
are divided into two key topics:
There is a need to increase confidence in the
decisions made by an organization,
and
There is a need to increase the speed at which
access to vital decision making data can be made
available.
Healthcare organizations must ask themselves what
their Analytics Maturity Level is, and strive for the next
maturity level in order to facilitate decision making
and the speed with which access to vital decision
making data is made available. As the volume and
availability of healthcare data continues to grow (e.g.,
EHR’s, Health Information and Insurance Exchanges),
and as the breadth of digital data increases (e.g.,
point-of-care encounters, medical claims, lab results,
genetic markers) there is an increased and currently
unanswered need for more and better analytical tools.
Figure 7

9
Mobility
During the last several years the large and rapid
emergence of mobile applications for the healthcare
industry has been more than impressive. The
proliferation and consumption of handheld devices
such as smart phones, tablets, and PDAs has had a
major impact on the growth of mobile healthcare, or
mHealth technologies.
However, the utilization and application of mobile
technologies varies significantly between different
industry segments. This is evidenced by a large number
of customer service related mobile applications that
have been developed and introduced to the market
by health plans, insurers, and pharmacy chains
versus the number of mobile applications that have
been developed and introduced for clinical support
and patient medical information. This is primarily
due to the stringent regulations enacted by HIPAA
and HITECH to protect the privacy and security of
patients’ Protected Health Information (PHI), when
such information is being transmitted over a wireless
infrastructure.
Payers have made great strides in developing a broad
spectrum of mobile applications to make it easier for
their customers to manage their healthcare needs.
Almost all of the large Healthcare insurance companies
such as Aetna, Cigna, Humana, WellPoint, and United
Healthcare provide a combination of the following
services through their mobile applications:
Find an in-network doctor, hospital, or urgent care
facility
Check claims status
View coverage details including benefits and
out of pocket expenses such as deductibles, co-
insurance, and co-pay
Schedule an appointment with a provider
ID card details
Spending account balances
Find a pharmacy
However, this high adoption rate of mobile technologies
has not resulted in a high number of consumers who
use them. In an online survey conducted by North
American Technographics Healthcare in the 3rd quarter
of 2011, less than 3% of non-elderly commercially
insured consumers used their cell phones to inquire
about their health insurance coverage, find a provider,
price a drug, or schedule a health appointment. This
trend will diminish overtime as more consumers will find
the convenience of using such applications irresistible,
making them a routine way to maintain their healthcare
needs and services.
The affordability of developing mobile applications
is a major disadvantage for smaller health plans
and organizations that do not have the internal
Information Technology resources and the scale to
get a desirable return on their investments. Over
time those organizations that invest heavily in mobile
applications will have a competitive advantage over
their smaller and less resourceful counterparts. Studies
have shown that age is a strong predictor of mobile
sophistication, and with generations X and Y growing
up with computers as an integral part of their social
life,it will become very difficult for most companies to
gain and sustain market share without offering mobile
applications.
Providers, including hospitals, physicians, and physician
offices, have increased their use of handheld devices.
Handheld devices such as tablets and smart phones
have changed how medicine is practiced. In January
2011, The New York Times reported there were 17,000
health-related mobile applications. It is forecasted that
the number of users of mobile health services would
reach 500 million by 2015.
Already, 72% of American doctors have a Smartphone,
with that number expected to rise by another 8% within
two years. Physicians already use or would like to use
Smartphones for four primary reasons: communication,
transaction, knowledge, and integration. A majority of
physicians would like to see their patients use remote

10
monitoring devices to gather information about their
blood sugars, weight, and vital signs and electronically
communicate that information to their providers. They
would like to have access to evidenced-based medicine
knowledge at the point of care and be able to use their
Smartphones for ePrescribing.
Although there has been a lot of successful deployment
of mobile technologies in hospitals, an area that has
not matured due to security and privacy issues is the
integration of Smartphones and tablets with EHR’s.
Doctors, nurses, lab technicians, and other important
hospital staff would like to access patient records,
including medical history, x-rays, and other lab results,
right from their iPads. This would greatly reduce, if
not outright eliminate, the need for charts and other
paperwork.
The potential of using mobile devices and applications
in healthcare is unlimited and growing in all of its
sectors. The mobile healthcare market was at $2.1
billion in 2011. There is an increasing trend to use mobile
healthcare for general monitoring, Personal Emergency
Response Systems (PERS), Telemedicine, Health and
Fitness Software, and reducing medical errors in care
delivery.
Those providers, payers, and PBMs who embrace
mobile technologies and applications to reduce their
cost of doing business, streamline their operations
and processes, and to provide a more efficient,
higher quality care to their members, patients,
beneficiaries, and customers will gain a huge
competitive advantage.
Figure 8: National Health Information Network Future State

11
Process Redesign
The lowest common denominator for the existence
of a company regardless of its size, products, or
industry is that it provides a service that is in demand
by society at large. The degree to which a company’s
internal processes are optimized directly impacts what
standing a company holds in its industry. This standing
is measured by various ratios and indicators (e.g.,
financial, operational, mechanical).
In the Healthcare industry, how well or poorly a process
is performed could mean everything from a patient
dying due to a medical error all the way to successful
research that results in a cure for a chronic disease.
It could mean that a patient’s medical claims get
processed on a timely basis all the way to violating
laws and regulations that bring with it a hefty financial
penalty.
At the macro level, planning, designing, and
implementing even multiple processes seems to be a
simple task. However, when you combine processes
with people, technologies, and add a time dimension,
complexities arise. The degree of these complexities is
dependent on where a company is in their life cycle and
how well their processes are managed and controlled.
Start-ups, for example, have the luxury of planning,
designing, and implementing their processes from the
start and then making sure that their processes grow as
the company grows in an efficient and effective fashion.
On the other hand, larger Healthcare organizations
such as multibillion dollar insurance companies or PBMs
already have 100’s if not 1000’s of internal processes
that run their operations.
A current example of how internal processes can make
or break an industry are the silos that payers, providers,
pharmacies, and PBMs have created when providing
healthcare services to a patient or beneficiary.
Currently the industry has been very volume-driven
and transaction based mainly focusing on financials.
Here patients are not usually at the center of attention.
They are treated and cared for in a very fragmented
and disconnected healthcare system. Patients become
identified only by transactions made with diagnostic
and procedure codes, which traverse through electronic
claims, and become housed in paper records and
folders. This results in an abundance of paper work,
administrative overhead and isolated views of the
patients’ total health. It is an environment that fosters
medical errors, inefficiencies, and higher costs of care.
Figure 9

12
For the above scenario, the needs and services required
by a patient can be placed at the center of focus, and
the internal and external processes can be designed
around those needs and services.
An efficient and effective business process that
produces the desired goals and objectives of an
organization is the single most important ammunition
in the war of winning a market share. Companies
can hire the smartest employees, purchase the
most sophisticated technologies, and apply the best
management techniques to run their operations, but
if the underlying process that is at the core of their
business operations is broken, inefficient, or weak,
they will simply waste time and resources. In simple
terms, a company is only as good as its internal
business processes. Those Healthcare organizations
that have ingrained a principle of continuous procedural
improvement into their cultures have consistently
outperformed those that don’t.
Those who have already contributed to or successfully
implemented effective business processes will find
the above assertion to be overly obvious. However,
business processes are like fresh fruits. With the
passage of time they become rotten. Fruits need to be
refrigerated, consumed, replaced or frozen. Business
processes should be reviewed, assessed, and revised
often.
A multitude of healthcare organizations have adopted
various quality assurance and process improvement
initiatives. Some have been successful and some have
failed. Some have been small in scope and others at an
enterprise level. Regardless of the previous attempts,
experiences, and results, there are three steps that
most companies should take to stay ahead of their
competitors:
Create current state process maps for all of your
core business functions to create a base for
reference, regardless if they are broken or not.
Develop a systematic program to examine
those processes on an annual basis, including
requirements for resources, identification of tools
and techniques (e.g., Six Sigma and BPM), and a
plan that can be repeated annually.
Make the systematic program a core part of your
company’s strategy and support its objectives at
the Board level.
It is not being naïve to suggest that it is as simple as
the above three steps to take control of your business
processes and to refine them annually. It is however
naïve to think that it will be simple to execute the
above plan. The good news is that the results of the
first iteration of these steps feed into the subsequent
ones to create an incremental added benefit effect that
are invaluable to the long-term success of a company.

About Headstrong
Headstrong is a global consulting and IT services company with a specialized focus in capital markets. With three decades of do-
main expertise, Headstrong is the world’s leading offshore outsourcing company for the financial services and securities industry.
Headstrong delivers targeted domain solutions and a full complement of services, from strategy and business consulting to
technology and operations, using multi-shore resources and global project management tools, methods and standards. Head-
strong maintains operations in seven countries, with extensive offshore and nearshore capabilities and 4,000 employees globally.
Our parent company, Genpact, offers an industry leading set of services that enable us to create transformative change for
our clients. Our expanded global footprint allows us to deliver from more locations and our overall scale gives us the ability
to staff projects more quickly with exactly the right people. For more information, visit www.headstrong.com or e-mail at
information@headstrong.com.
About Genpact
Genpact is a global leader in business process and technology management. Our entire organization of over 53,000+ employees is
focused on process and engaged in improving client processes and driving business impact. We look at process as a science and our
proprietary Smart Enterprise Processes (SEPSM) employs a scientific, highly granular approach to managing business processes.
Genpact couples its deep process knowledge, insights and best practices with focused IT capabilities, targeted analytics and
pragmatic reengineering to deliver a comprehensive solution. Our broad portfolio consists of both enterprise G&A and industry-
specific services. In every area, we go from meeting simple transactional needs to providing process management capabilities,
where complex decision making and keen judgment are required. Services are seamlessly delivered from a global network of
centers in 13 countries to meet a client’s business objectives, cultural and language needs, and cost reduction strategy.
Genpact’s culture is uniquely ingrained in Lean Six Sigma, the capability having been driven through the organization and lever-
aged in all we do in a highly visible manner. Our mindset is 100 percent customer-centric, demonstrated daily through our comfort
with destroying our own revenue to deliver greater efficiency, the 100 percent empowerment of our employees to do what is
needed for the client, and the fact we don’t let a contract get in the way of client success.
The Company enjoys a rich heritage, tracing its beginnings to 1997, when it was an independent business unit of the General
Electric Company (GE). Built from the ground up, the organization was charted to provide business process management capa-
bilities that would deliver outstanding efficiencies to all of GE’s businesses. The company became independent in January 2005,
bringing process strength to companies outside of GE, and was successfully listed on the NYSE in August 2007 under the trading
symbol ‘G’. Today, the Company manages over 3,000 processes for more than 400 clients worldwide.
Are You Ready to Go CAMPing?
www.headstrong.com
2012
© 2012 Headstrong Corporation. “Headstrong”, logo and designs are registered trademarks of Headstrong Corporation. All other names
and logos may be trademarks of other companies. All rights reserved.
This paper was originally published at http://www.headstrong.com
13
John Reza, MBA
Headstrong Healthcare Leadership
Healthcare Domain Consulting Group
John.reza@headstrong.com
+1 312 373 4490

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