Sept 19 (Askume) – UnitedHealth Group (UNH.N)
The new contract wins by Westar (WAY.O) and privately held Availity and Inovalon signal a shift in health care practices toward striking deals with multiple providers rather than relying on a single vendor, and could be the first of a signal the industry is on a path to growth. Health tech experts say the process of striking deals with multiple vendors is a time-consuming one, but the hack has sped up the process.
Change accounts for just 1% of healthcare giant UnitedHealth’s revenue, but it processes about 50% of medical claims for about 900,000 doctors, 33,000 pharmacies, 5,500 hospitals and 600 laboratories in the United States. About one-third of U.S. patient records are processed in Change in some way, according to the company.
“The industry is realizing that the risk of a single point of failure is too great in the current environment,” said Aaron Kelly, president of Change’s smaller rival Innovlon.
February Hacks
In the days and weeks following the February 21 ransomware attack, many doctors and hospitals struggled to file claims and relied on paperwork to verify coverage because their electronic systems were offline. Many have been struggling to get paid for months.
The hack directly harmed people doing business with UnitedHealth, but many providers also realized they were indirectly exposed through other software vendors. UnitedHealth estimates the hack will cost it up to $2.45 billion this year.
Wall Street analysts and technology experts say the lack of data makes it difficult to tell whether market share has changed or whether the market is growing.
Roger Connor, chief executive of the Optum Insight division that planned the changes, said in an emailed statement that the company has introduced a “very secure” technology system that customers will love.
“We’re not just trying to restore existing customers. We’re also trying to add new customers,” Connor said.
Retain customers
Involon’s Kelly said that after the hack, the company contracted with organizations that include about 344,000 different service providers, such as doctors, pharmacists and nurse practitioners. By comparison, there are more than 8 million providers across the country who use their unique National Provider Identification numbers, according to government data.
About 98% of these providers currently have long-term contracts, Kelly said.
Some “payers” that previously had exclusive contracts with Change — typically health insurance companies and other groups responsible for managing provider reimbursement — have also changed, Kelly said.
Availity, a company backed by health insurer Elven (ELV.N), launched Lifeline, a free, streamlined version of its claims processing service, in the wake of the hack. The service helps process claims for more than 300,000 providers such as doctors, hospitals and other medical facilities from 120 healthcare organizations, CEO Russ Thomas said.
As of mid-July, Lifeline had helped process an estimated $315 billion in claims following the hack, the company said.
Now it is working to retain customers permanently.
“We are meeting customers to give them all the information about what we can do for them and luckily we are successfully converting them into long-term customers,” Thomas said.
The company declined to say how many customers have become permanent subscribers.
Recently listed Vestar (WAY.O) has also accelerated the process for hospitals and doctors to turn to its software platform to manage their finances, allowing them to start working within 72 hours of signing a contract.
It also rapidly scaled up its back-end operations to handle over 30,000 suppliers connected to the company’s platform.
The company said most customers have signed up for standard two- and three-year contracts.
Connect with suppliers
Some vendors that provide software to small independent health care businesses, such as Kerio, a billing program used by privately held Tebra, and TherapyNotes, used by mental health businesses, have either abandoned the change or added additional vendors.
Tebra uses Change in its Kareo software to verify patients’ insurance eligibility, but the company has diverted about 99.7% of its traffic to other providers, said Kyle Ryan, Tebra’s chief technology officer.
Before the hack, about 10% of the company’s electronic claims went through Change, but now that number has dropped to 2%, Ryan said in an email.
Suppliers tend to add more suppliers rather than make radical changes, said Jeremy Wall, managing director at global strategy consultancy Stax.
“What we’re seeing and hearing from the market is that a large portion of people who go to another provider stay with that same provider,” Wall said.
