Traditional core platforms are outdated and composite solutions are the answer

Dec. 17, 2014

Having spent 20 years now writing core administration software solutions for both traditional (BCBS, Cigna, Aetna, etc.) payers and many non-traditional (or hybrid) payers, I have reached a point where I see the concept of a “core payer system” as outdated.

When we first developed the QMACS platform back in 1994-1995, the concept of a Windows-based platform with a SQL Server database for a core administration solution was novel and largely perceived as naive.  At the time, Microsoft dominated the desktop market but was not a dominant force in back office enterprise software.  Its growth into a dominant force in this area affirmed our decision and after a few rough years of having to convince customers that the platform was solid, the platform became a sales advantage rather than a distraction.

As our QMACS platform became more popular in the market, we saw more success competing against the established, prevalent platforms of the time; Amisys (owned by several entities – HBO, then McKesson, now DST), Facets – acquired by TriZetto in 2000 timeframe), CSC’s various solutions, etc.   Our product “felt” newer and indeed was built upon a much newer platform.  Over time, some of our competition likewise embraced the platform but rarely did they address any fundamental changes in their architecture to take full advantage of the new technologies.

QNXT, the successor to QMACS incorporated the move into Microsoft’s .NET platform and the Browser front end replaced the traditional Windows UI.

The move to the browser was aggressive and frankly, painful for the first few releases as the underlying constructs of the application had to be rebuilt over time to effectively function in a stateless environment, something many early adopters of the 3.x versions of QNXT can attest.

Today, there are several players selling core administration solutions and we often are asked when Invidasys is going to offer its own end-to-end core administration solution.

I appreciate the request and the implied confidence that our team can build such a complex product.  However, the simple answer to that question is… never.Our perspective on the market is that all-encompassing core administration solutions are outdated.

I have had the privilege to see “inside” dozens if not hundreds of health care risk takers (payers is a bit of a restrictive term) and one common theme is that there is no all-encompassing solution in any of those environments.  The predominant “Core” platforms today are essentially claims adjudication engines.  The core engines are designed to process claims electronic in high volume and in relatively short daily windows of time.  While most support some form of ‘real-time’ for all practical purposes, they have a window of three to four hours or less every day to process whatever claims are available.

To achieve the required performance, all information is largely consolidated into a single large database with typically over a thousand tables.  This database contains everything the adjudication engine needs including; membership, enrollments, benefit plans, contracts, providers, networks, authorizations, claim rules, lines of business, sponsors, accumulators, etc.

While this allows for some extreme performance of the actual adjudication process, it comes at a heavy price.  The costs to perform version upgrades to the software generally costs north of $500K for smaller plans and I know of several larger plans that spend over $5MM on upgrades. The real kicker, in almost all cases; the cost of the upgrade is rarely offset by incremental improvements provided which tend to be targeted at select clients.

One could argue that spending seven figures on an upgrade that provides no incremental improvements seems like a valueless endeavor.  The core admin vendors force the value by creating significant added maintenance expense if you don’t stay within two releases of the current product.

So, the plan stays relatively current on the core platform and then sees the market moving much faster than they are able to technology-wise, and a significant portion of the “investment” in IT is spent on maintaining what is essentially, a legacy platform.

Contrast the core admin space with the mobile app markets.  There are thousands of vendors offering millions of choices that all operate independently within a unified platform.  Is health care IT that different?  We don’t think so.

Why? Because the right composite applications that target specific functions within a health plan can play nice with other applications. That means, if you like your provider system, you can keep it, and you’ll be able to get the hooks to plug into it as needed. It’s important to note that we are not talking about data replication; redundant data is commonplace to payers today because every system is an island unto itself.

The other benefit to composite applications is the time. A core system replacement project is typically a 12-18 month project for a smaller plan and 24-36 months for a larger plan…that’s IF the project finishes on time. The right composite applications can be implemented in two to four months. So, you can put in one compound solution over an 18-month period that retools your entire operation, or choose to target specific segments of your operation in three to four month increments.

The composite approach that builds on stand-alone components one department at a time with a short delivery windows seems to provide a better return in a much shorter windows with significantly reduced risk.

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