Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


08:22 AM
Lisa Valentine
Lisa Valentine
Connect Directly

Affordability and Service

Oxford Health Plans' CIO Steve Black believes a sweet spot exists between high-tech and high-touch.

Oxford Health Plans' (Trumbull, Conn.; $5.4 billion in revenue) CIO Steve Black believes a sweet spot exists between high-tech and high-touch. In an industry that has evolved from manual claims handling to straight through processing of claims - to the point where almost three-quarters of all transactions at Oxford are handled electronically - using technology judiciously while putting the needs of its 60,000 providers and 1.55 million members first is a balancing act at Oxford that Black believes will continue to play an important role in reducing healthcare costs.

Steve Black, chief information officer, Oxford Health Plans


I&T: What role does technology play in providing service and reducing health insurance costs for your members and providers?

Black: Oxford Health is focused on an overall affordability mission, and while we're not a technology company, the technology we employ really influences this mission in several ways. From a service perspective, technology helps us get the right information to our members, brokers and providers as quickly and effectively - and as inexpensively - as possible. We also use technology to drive internal efficiencies and work hard every single day at becoming more efficient through automation and process change. We recently completed a project to streamline our manual claim adjudication system and are working on other initiatives to enhance our customer-facing self-service capabilities, including CTI and IVR enhancements.

Oxford decided long ago that e-business and electronic capabilities were the way to go, and they have become a very, very important component in how we manage healthcare costs. We do 45 million transactions a year, and 69 percent of those are done electronically. But, ultimately, the most opportunity for using technology to reduce healthcare costs is by influencing healthcare cost trends with information management - helping our doctors get patient information and providing our members with information about their care in general.

I&T: How can information management lower healthcare costs?

Black: One area we are focused on is patient management. We look to identify our sickest members, who tend to be the most expensive patients, and provide information to them and their providers about caring for their diseases. For example, we have specific disease management outreach programs for diseases such as congestive heart failure, coronary artery disease and diabetes. The outreach includes behavior modification, such as dietary changes, as well as home monitoring designed so that these patients don't wind up in the emergency room. The good news is that we are moving in on the two biggest pieces of insurance spend - administrative costs and medical costs. We have an industry-leading medical cost ratio and a pretty darn good administrative cost ratio.

I&T: What are some of the ways that Oxford Health Plans has used technology to differentiate its consumer-driven health plans from those of its competitors?

Black: Like everyone, our basic goal is to engage members in managing their own healthcare and their healthcare dollars. But because healthcare is a very technical, clinically oriented, extremely complex thing to manage, we have chosen a middle-of-the-road technology approach; we provide a lot of information to our members electronically, but we are also there when they need us. I'll call it a high-tech/high-touch balanced approach. From the high-tech perspective, we have made transactions available to our members, and we provide quality-type information, such as morbidity numbers for hospitals and other institutions, electronically. But we think saying, "Hey, members, here is a bunch of technology - go figure it out for yourselves," is a false hope. We want to be there for our members. We've got a dedicated service team for our consumer-driven health plan members. We have the Web site, but we also have a dedicated team of people to help them out.

I&T: Oxford recently expanded its Interactive Distribution & Electronic Administration (IDEA) management system to include online quotes for small businesses. What were some of the business drivers for this new capability?

Black: The broker community is one of our key constituents - 90 percent of our business is done via brokers - and we felt that to differentiate ourselves with them we needed to be easier to do business with, particularly around the renewal process and enabling brokers to analyze healthcare plans side by side. As of March 2004, over 85 percent of small group renewals come through this application. IDEA has been an absolute breakthrough. It's like a highway - once you build it, you can deliver more things over it. We expanded it to provide more information, such as helping folks select plans by showing them the most popular plans for their group, saving them from having to go through the myriad of options. IDEA is primarily a retention tool that makes us stickier with the brokers. We make it easier to do business with us and the easier you make it for a broker to manage his block of business, the more likely they are to do business with us.

I&T: How much impact has HIPAA and other legislation had on how you do business at Oxford?

Black: Two years ago, I would have said that the impact of HIPAA was huge. And now that HIPAA is behind us, I can say that it's less huge. But what has changed is that the "whats" have become a part of how we do everything we do. As a result of legislation, we've become much more savvy and we pay more attention to how we manage security and privacy aspects at the early stages of projects and investment decisions.

I&T: Does wireless play a role in your technology initiatives?

Black: We have so many other opportunities to focus on that wireless is just not rising to the top for us. It's a value question. There are things other than wireless that will make us a better competitor in our marketplace. But as an interim step, we are making our formulary downloadable to PDAs. Although it's not wireless, it's a step in lining ourselves up with the PDAs that are popular in healthcare. One of the nice things about wireless is that once you figure out the content that you want to move along and the security and regulatory issues, deploying it won't be a big issue.

I&T: What technology initiative will grow most in terms of its slice of Oxford's budget pie?

Black: Information management is an area that we can only get better at because it helps us focus on the largest part of the healthcare spend, which is the actual cost of the healthcare itself. The administrative side probably is 10 to 15 cents of the dollar and the healthcare costs side is the remainder of that dollar. From an information perspective, we've really got to be focusing ourselves on becoming better and better at improving our capabilities and our analytical tools so that we and our constituents are able to make better healthcare decisions.

I&T: What is the most challenging aspect of your job as CIO?

Black: We're well positioned from the perspective of understanding where our business is going and making technology pretty much ubiquitous with the business. My challenge is the rate of change in our industry - I have to be a chameleon with one eye on the horizon and another eye on today and this quarter and next quarter. Balancing the short-term with the long-term in a rapidly changing business environment, day to day, week to week, month to month, is my biggest challenge.

Editor's Note: At press time in mid-April there was widespread speculation regarding a possible merger between Oxford Health Plans and WellChoice Inc. (New York). If completed, the deal would create the largest health insurer in the New York City area.

Register for Insurance & Technology Newsletters