Considering the Costs of Complex Healthcare Payment Infrastructure

February 22, 2023 - Over the last two decades, the digitization of healthcare payments has created growing pains for numerous payers in the form of overly complex infrastructure.

Today, health plans and third-party administrators face the unintended consequences of adopting point solutions or integrating existing and new technologies due to mergers and acquisitions, all of which threaten their ability to compete and protect their bottom lines.

With the average organization managing more than ten vendor relationships for a single initiative, payers struggle to maintain their IT infrastructure, let alone future-proof their technology stack, due to the technical debt they carry.

“The number of systems, software, and vendors becomes significant,” says Zelis Vice President of Business Solutions Leah Silver. “The tools and resources once used for efficiency and productivity are now seen as operational burdens that create inefficiencies. The wrong combination of people, process, and technology means staff must support obsolete processes, work around multiple vendor dependencies, and manage their impact on interactions with providers and consumers.”

The unintended consequences span four major categories which present unique risks to payer business operations:

Technology bloat: Complex payment infrastructure leads to high maintenance costs, difficulty managing multiple systems, and limited visibility into operations that are not sustainable over the long run. Mergers and acquisitions often add new systems to the technology stack, which often already includes support for legacy solutions and protecting against negative impact from shadow IT.

Regulatory compliance: Systems not designed for compliance with evolving regulations mean organizations are at risk of fines and penalties due to their inability to audit their operations and mitigate issues promptly. Customizations and workarounds make unwieldy infrastructure function but undermine efforts to comply with federal and state rules and policies.

Interoperability: Inadequate data sharing can easily strain relationships with providers and diminish the member experience, on top of increasing the likelihood of data loss and preventing data-driven decision-making across the enterprise. A lack of system interoperability has the potential not only to drive up operating expenses but also to give rise to errors that damage a payer’s reputation.

Security: The greater the number and age of systems, the greater the likelihood that missed patches or updates could render a payer’s infrastructure vulnerable to a system breach or improper handling of sensitive health data and financial information. Security breaches have financial implications in the form of fines and can damage a payer’s reputation beyond repair.

“These unintended consequences not only lead to operational inefficiencies but also create risks,” Silver explains. “The more cooks in the kitchen, the higher the risk becomes.”

The urgency of consolidation

The healthcare industry has long been a target for fraud, waste, and abuse, drawing the interest and ire of federal authorities. Recently, the healthcare sector has become a target for bad actors to exploit the vulnerabilities of the industry’s critical infrastructure. Healthcare has quickly become the preferred target of ransomware attacks. What’s more, breaches of health and healthcare-related information and systems cost organizations, on average, more than $10 million to mitigate.

“Technology bloat, regulatory compliance, interoperability, and security are urgent issues that require mitigation,” Silver emphasizes. “As payers find that they have more systems and processes in place that they have to work with, that also opens them up to more opportunities for risk, security breaches, and fraud.”

However, payers managing complex payment infrastructure are not well-positioned to mitigate the sources of risk efficiently. “The more health plans and TPAs are focused on their point solutions, the less they can address bridging the gap between their business processes and their desired outputs,” adds Silver.

According to Silver, the time is ripe for payers to streamline their digital ecosystems for payments and reap the benefits of a consolidated platform.

“The smartest and clearest path forward is through consolidation, a single platform where the entire healthcare financial experience can be managed securely. The organization has access to more modernized tools and gains the ability to scale for future growth under one umbrella,” she advises.

“Streamlined processes ultimately help with a reduction of not just operational costs but also mitigating risk. A holistic solution helps prevent that and adds another layer of prevention for fraud and security and the means for swiftly and easily resolving issues. In the end, consolidation ensures the payer’s bottom line is not greatly impacted by avoidable risk.”

By replacing a complex payment infrastructure with a consolidated platform, payers can achieve new levels of efficiency and be in a position to adjust quickly.

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Zelis harnesses data-driven insights and human expertise as scale to optimize every step of the healthcare payment cycle. They partner with more than 700 payers, including the top-5 national health plans, Blues plans, regional health plans, TPAs and self-insured employers, 1.5 million providers and millions of members, enabling the healthcare industry to pay for care, with care.