News Feature

Why Hygeia Travel Health Uses Two Teams to Select Its IT Projects

By Ben Worthen

July 15, 2001 — CIO — YOU MAY NEVER HAVE HEARD of Hygeia Travel Health. The Toronto-based health insurance company’s clients are the insurers of foreign tourists to the United States and Canada. Say a sightseeing Spaniard falls and needs hip replacement surgery. Hygeia works with the traveler’s home-country health insurance provider, finding a local doctor and handling the paperwork. But while Hygeia may not be a company most Americans have occasion to learn about firsthand, it does have a lot to teach CIOs about evaluating IT projects. Last year, the company developed a structured process to help it analyze and select from among multiple investment alternatives, and it has already used it successfully on 27 projects.

The travel health market has grown radically during the past few years, and Hygeia has grown along with it. Hygeia is basically a middleman between a foreign HMO and a network of American doctors and hospitals. Any HMO has a network of doctors who, in return for a guaranteed customer base, give the HMO discounted rates. Hygeia basically does the same thing. It has a network of American doctors to whom it guarantees a customer base of sick travelers?a profitable clientele, since most require only minor treatment and never come back for follow-up visits. Hygeia then passes the savings along to the foreign HMO, which would otherwise be forced to pay full price to a doctor not on its plan.

In 2000 the privately held 6-year-old company, which has 52 employees, grew 300 percent. This year, CIO Rod Hamilton expects growth of another 300 percent to 500 percent. "Last year it was a good ’wow’ situation," he says. "We were able to cope with it. It’s not ’wow’ now. This is a frightening situation."

Case in point: Hygeia had a relatively easy time hand-processing the 20,000-plus claims submitted in 2000. But in 2001 that number will grow by 300 percent, and within five years, says Hamilton, it should reach millions.

With the company growing so quickly, each business project has to be successful either in raising revenue, cutting costs or substantially increasing Hygeia’s standing with its customers, says Hygeia CEO Virgil Bretz. Last summer Hygeia developed a process through which every project?whether it’s a new e-commerce system or simply a change to the website?is evaluated.

The process itself is relatively straightforward. The project evaluation committee, consisting of six senior executives, splits into two groups. One group includes CIO Hamilton, along with the heads of operations and research and development, and analyzes the costs of every project. The other group consists of the two chief marketing officers (for insurance providers and payers) and the head of business development, and they analyze the expected benefits. The groups are permanent, and to stay objective, they don’t discuss a project until both sides have evaluated it. The results are then shared, both on a spreadsheet and in conversation. Projects are then approved, passed over or tabled for future consideration.