CIO — Six months into his job as CIO at Humana, one of the nation’s largest health insurers, Bruce Goodman was called into a meeting with the company’s top executives. It was at this meeting that Goodman realized he had struck gold with his new job. Humana, which
insures about 6.4 million people in 18 states, was forming a committee to "envision a new business model" for health care. Managed care had failed, and it was time to replace it.
In Hollywood, such an overhaul requires Denzel Washington to hold a hospital hostage. In real life, fixing health care requires something else entirely?the CIO. Goodman had not been invited to the meeting to play a supporting role. And neither had IT. In the bid to cure health care’s woes, IT is the new business model.
At its heart, the new approach relies on CRM technology to customize health plans for consumers. Insurers use Web-enabled software to profile individuals’ medical spending needs and then put them into different plans. Under the new plans, instead of having money taken out of their paychecks, employees accept a high deductible or allowance, say, $2,000 or $3,000 per year, out of which they pay for their own health care. If expenses are incurred after the allowance is burned, the insured will have to pay for the additional care but only up to a certain cap, say $5,000. After that point, health care is covered under the old managed care model.
Consumers can choose what kind of plan they want and how much they intend to spend for it. For instance, someone who is healthy and doesn’t need expensive medications would be steered to a less expensive plan with a lower allowance, while an individual with a chronic condition who requires specialized care and medicine would need a more expensive plan.
Theoretically, this health-care model will make employees better consumers. They’ll try to get the best care for their dollar. At the same time it will reduce cost for the employers and insurers, as many healthy people are overinsured. Because of the potential to contain cost, most of the nation’s largest health insurers, including Aetna, Cigna, Humana and the UnitedHealth Group have either rolled out a version of this new model or expect to do so this year. A number of startup companies are also competing in this space.
"We’re changing, revolutionizing health care, and technology will get us there," says Goodman, who came to the Louisville, Ky.-based insurer in June 1999. "Managed care is not doing what it needs to. These [new types of health insurance] will make it go away."
