Growth With Efficiency

Louisville, Ky.-based Humana, Inc. ($4.7 billion in assets), one of the nation's largest publicly traded health benefits companies, has a history of using technology innovatively while keeping a tight rein on escalating medical costs. As the company's top technology officer, Bruce Goodman is charged with implementing solutions that will enable Humana to meet the challenges of customer-directed healthcare, regulations such as HIPAA, and ever-increasing healthcare costs.

Bruce Goodman, SVP, Chief Services and Information Officer, Humana

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I&T: What are some of the main issues you will be facing over the next 12 months?

Goodman: A major issue is how to use technology to enhance Humana's top line growth while we continue to drive down administrative and medical costs. We'll do this through innovative products, process reengineering, and continuing to align our IT goals with the strategic goals of the enterprise. Another challenge I'm facing is how to best deliver tools, capabilities, and information on our Web site that give consumers and our other stakeholders a value-added, integrated experience.

I&T: How successful has Humana been in driving Web adoption for both members and physicians?

Goodman: Three years ago, 80 percent of our contact from physicians and members was handled by CSRs and 20 percent used self-service-mostly IVR. Today, more than 60 percent of our contacts are redirected to self-service IVR and the Web. We've been able to drive a very high adoption rate of self-service in only a few years by adding transactional capabilities to the Web and making it easy to use. We use focus groups and usability labs to make sure that self-service is a very iterative and customer-focused process. We're also piloting real-time claims eradication at the point of service to drive Web adoption. We think that getting away from batch claims processing is key to the future.

In another example, we've teamed up with Blue Cross/Blue Shield of Florida (Jacksonville) to create a multi-payer physicians' portal called Availity. Using the portal, physicians can do claims inquiries through one common interface rather than having to log onto different systems for different insurers. The portal is two years old and we do well over a million Web transactions and almost two million EDI transactions per month.

I&T: Isn't it unusual for Humana to team up with a Blue Cross/Blue Shield organization?

Goodman: Even though Blue Cross/Blue Shield and Humana are pretty fierce competitors in Florida, we didn't see any competitive disadvantage in making doctors' lives easier and improving self-service adoption. We're looking at expanding this portal to other regions in cooperation with other insurers. This solution takes out hassles for physicians, and lowers administrative costs for everyone.

I&T: How is Humana moving its members toward consumer-directed healthcare?

Goodman: Trends for medical costs are running double digits-even as high as 15 percent per year. We've been able to reduce that percentage to 5 percent with SmartSuite, our Web-enabled consumer-directed health plan that allows members to choose a plan that best meets their needs. SmartSuite's Health Plan Wizard allows a family to custom design their plan based on their prior health history and project what their out-of-pocket expenses will be. Consumers can see the tradeoff between a high premium and their exposure. The Wizard will even calculate the amount you should put in you flexible spending account and tell you the tax implications of your FSA choice.

We also have tools on the Web site that allow members to compare the cost versus quality of different hospitals. It's pretty sophisticated. We have about 200,000 members using our consumer-choice products, and a good number of those have gone through the Wizard.

I&T: What are Humana's plans for flexible spending and health savings accounts?

Goodman: For flexible spending accounts, we're looking at different options, including partnering with a vendor. We're also looking at the best way to manage health spending accounts. Perhaps it makes sense to partner with an investment company since these accounts have a 401(k)-type flavor to them. Maybe we'll do the front end and leave the funds to somebody else and provide members with an integrated experience via the Web. But that's still in the early planning stages.

I&T: With these challenges and the move to consumer-directed healthcare, have you had to reskill your IT staff?

Goodman: I've been here five years, and the motto was always "build, build, build." But to move quickly in the healthcare benefits space, you've got to be a systems integrator. Today the motto is: "partner before buying, buy before build." To get products to market quickly, we've turned a lot of our IT staff into systems integrators who are adept at dealing with vendors and strategic partners. We've also restructured our IT organization and hired folks who were good at strategic alliances and process reengineering. Process reengineering and IT go hand-in-hand in delivering a positive customer experience and driving out costs. We've had to get the IT people to work with the process people as a team to not just automate the existing processes, but to change the process and perhaps eliminate some needs for automation, and focusing on technology only where it makes sense.

I&T: Where does Humana stand in terms of HIPAA compliance?

Goodman: We were ready in October, and continue to do what we have to in terms of privacy and security. We had, and continue to have, quite a few people dedicated to HIPAA. We've built an e-hub as a front-end gauge to our legacy systems so we don't have to make major changes to every one of our claims systems to meet the requirements. HIPAA is quite manageable, and we're optimistic that the standardization it's mandating will be useful in creating multi-payer portals. Being able to standardize transactions within the medical community should give us a lift in terms of more automation, better turnaround in prompt pay for doctors and reduced administrative costs.

I&T: What are you doing to help Humana drive costs out of its internal organization?

Goodman: One of our major IT initiatives is to move our mainframe-based administrative and claims core legacy systems to a single platform. We're working with EDS (Plano, Texas) on a system called Metavance that will eliminate redundant activities. It's a more modern system that's table driven, modular, and runs on a relational database. It will give us much better response time, as well as enabling us to bring products to market quickly. Having a core system that is very responsive to new opportunities such as consumer choice products and Medicare legislation is really a plus. In addition, the new system will cost less to maintain than the old systems. It has a higher first-pass rate than some of our older systems, meaning that claims go through paid without human intervention. Electronic claims receipt and processing is another way we drive down costs.

I&T: How do you ensure that Humana continues to exceed consumer demands?

Goodman: We're very proactive in our IT operation and we participate very well with the business units. As chief service officer, I actually run the claims and call centers. That set-up enables us to integrate IT very closely with customer service delivery. We also work closely with our innovation center, product development, and sales and marketing organizations to understand what we are really trying to do for the consumer, how we can add value, and then work those issues in terms of technology enablement.

I&T: How do you manage the work/life balance of employees?

Goodman: We try to tell people to be balanced, but we certainly have our peak periods of the year. A typical exempt employee probably puts in 10 to 20 percent of uncompensated overtime. Our employees work long hours, but our turnover is very low. People are very excited because of the rewards they get-they are making a difference in terms of the whole healthcare industry. They are working on state-of-the-art capabilities and reaping the rewards of being in a fast-moving, innovative environment where they can learn a lot.