The average consumer might not know it, but health plans are often mired in complexity and inefficiency as they struggle to configure and deploy new offerings. A surprising number of plans rely on spreadsheet-based systems to manage their plan benefit packages — a surefire formula for driving up labor costs and making errors. Some have spent tens of millions of dollars trying and failing to automate these processes.

In this podcast interview, Simplify Healthcare CEO, Mohammed Vaid has shared his perspective on this problem and its solution.

(0:13) What are some of the main inefficiencies that you see with health plans?

Mohammed Vaid: So, as you know, you’ve been in the business for a while in the healthcare payer space. And you know, it, there are some very specific inefficiencies in the benefits and the provider area. But before we go there, David one of the things that I just wanted to maybe highlight is, if I were to look at any healthcare payer today, right, and if you were to ask their CEO, CFO COO, what are some of the biggest things that they worry about? And invariably, it is, how do they grow? How do they increase the growth from where they are at today? How do they reduce administrative costs, how do they ensure that they are being compliant with all the regulations and how do they reduce the risk of any penalties? Right. So, around this specific, these are kind of the three pillars right around which a lot of healthcare payers are focusing their time and energy. And when you start peeling the onion, if you will, a little bit, you find that what seems to hinder them or what is challenging in achieving this growth, risk compliance and reducing admin cost objective lies in a couple of very specific areas. One is in benefits. The other is in provider data and provider contracting. So if we talk about benefit products, benefit plan management, you know, when we talk about a healthcare payer, the one of the biggest things that they are selling is a benefit product right there. Of course A network but then we are also selling a benefit product, which is really what the consumer or the member essentially interacts with the entire process all the way from developing the product to implementing it. And when I say implementing it, you know, you and I both know as consumers of health care as well, that you know, you interact with the healthcare payer in so many different ways you go in and you are submitting a claim or you go into their website and try to determine what your benefits are, or you call their customer service number and you’re attempting to figure out whether something is covered or not, what kind of copay is applicable, so on and so forth. On the provider side, they are doing the same thing, where they are calling these different channels, trying to find out benefit information. Internally within the payer space, operationally, all of this is being done for the most part at most payers manually. The entire handoff process is still driven by Excel Grids, Word documents, emails, change logs being written by hand, color coding tracking changes. And if you just look at the amount of manual work that people are putting in, and the amount of data that is being replicated across the enterprise, it doesn’t surprise me that the number of issues that exist today, when it comes to achieving benefits, data consistency, it is just exorbitant. And as a result of that, you know, when you talk about a plan meeting or beating their growth numbers, they’re always restricted by speed to market issues by beating the competition you from a price point perspective, because of the manual nature of this entire business process.

(3:45) Now, Mohammed, it sounds like you've got it you have it pretty well nailed down in terms of you know, some of the issues that are coming out and how it sounds like you weren't finished. I'll get back to you in a second. But, you know, are these problems well recognized by the payers or is this something that they wouldn't necessarily recognize or just sort of accept as, as just part of how business is done?

Mohammed Vaid: I think I think it is really the latter. And I think, you know, part of it is that is the problem is known. Yes, it is known, right. But is this something that a CXO level person wakes up in the morning worrying about? Probably not? You know, we feel that, right, because it’s the nature, right, it’s still functioning, even in the manual way. It is still happening, right. And the other part of the problem is that you know, the payers that have gone down the path of automating some of this have burned through $75 million, $125 million, spent four years on it five years, and have still not been able to achieve the net outcome. As a result of that, I think you know, there is that little bit of, you know, the sunshine has to jump in, and you know, And do something about it, because it is still working. Right. And there is a level of accepting status quo, you know, to a certain extent.

(5:06) Right now that makes that makes that has its own logic to it. I mean, would you say that it's become more of an issue recently? Is there anything in the in the payer operations or approach in the market that makes these inefficiencies more of a problem for the health plans?

Mohammed Vaid: No, I mean, I think you know, there are certainly some key drivers, right. So we’ve been in this business since 2008. And I would say that since 2015, we have seen a significant uptake in the amount of RFPs that have come in in this area, the amount of engagement that payers are showing some even putting dollars on the table. And really, I think part of it is that people are the payers, and you know, the executive leadership teams are coming to a recognition of the fact that the benefit product complexity is increasing, right? Consumers are becoming more and more demanding. They are looking at, you know, additional flavors of product offerings, the market is becoming more competitive, the large group employers are becoming more and more demanding, right, in terms of whether they are fully funded or whether they are, you know, self-funded, either way, they are all looking at the next level of innovation on the benefit product side. And I think that has certainly resulted in, you know, this renewed focus that the current method of operation is really not sustainable, right. So, I asked one of the payers right that, you know, what if your sales team came in this year, and said that they’re going to grow the business by 20%. They’d be like; we’d break, it’s just not possible. Operationally I cannot add any more people into the mix because we are already maxed out, and if we add more people, we will make more mistakes, right. So we are tapping out at this point. And we have to figure out a way of automating this. So my existing team can do a lot more than what they’re doing right now.

(5:38) So I want to come back to what you said earlier about some companies trying to go down the path of automation and spending. I mean, you quoted $75 to $100 million dollars, just walk me through how that happens, and why it doesn't work.

Mohammed Vaid: So, you know, several so whenever you talk of automating a business process, right, because this is what it is correct. You have an Excel grid starting at the top, someone figuring out what the product needs to be. Then it goes to the claims guy, right, who configures it in the claim system goes to the marketing communication team. You know, they start generating your ANOC and your EOC and your Summary of Benefits and your SBCs and all these regulatory documents, all being done manually or via some glorified mail merge document generation tool. Some people go in and populate the portals, you know, with this content, all of this stuff is being done manually. And it’s all a business process at the end of the day. So two approaches that most of these levels are case studies that I have seen personally, right? So I’m not just talking off the cuff. These are personal experiences. And really, what has happened is that either the plan, IT team goes in and says, we are going to build something from scratch, because you know what, we are so unique, that no solution in the market is going to address our specific business process. So that’s one leg. And then the second leg is, other plans will say, oh, we’ll take a business process management tool, BPM tools, they have worked in the banks, they’ve worked in the financial sector. Why would it not work in the healthcare payer space, right? We’ll take them, we’ll start configuring them right, and some of the blue-chip consulting companies will come in, they’re going to help us they’re going to build best practices. Guess what? The healthcare payer world is very different. The benefit product space that we are talking about is heavily regulated. But then it is also having a lot of pressure from internal teams, external partners; in terms of what needs to be defined, there are actuarial considerations. And then there is the inherent complexity of the entire business process of managing the sale and the quote to card workflow, if you will, right. And it’s really the conventional software development lifecycle mentality that really cannot handle that dynamism of the change, because every time you know, I’ve seen this, by the time you are completing the build of a certain release, it’s already outdated because there is a new regulation or a new business need that has cropped up. And now, a developer needs to go in and make changes again, right. It is just not sustainable to maintain that space right. Some plan with deeper pockets may afford it, right just reinforces somehow, and they can get by it by spending the hundred and $50 million and automating a piece of their business. But for the rest of the market, right, I would say 95% of the market, you really cannot even afford that.

(10:14) So it sounds like, you know, some pretty serious issues, a lot of money down the drain traditional approaches not really working. And so, I mean, what do you say to somebody about actual promising ways to address these issues? Are they just completely intractable? Or, you know, what's, what's the sort of rational and enlightened way to go after it.

Mohammed Vaid: Thoroughly. I think, you know, subject matter expertise is the key out here. You really want to pick a solution that is tailored towards the specific healthcare payer needs. And I think the biggest question that, you know, we would ask and you know, we have a couple of white papers on it as well. But, you know, I think the biggest thing that I’ve been I engaged in over the Right, and I’m like, Look, you know, whether you select us or whether you select someone else, look at making sure that what level of configuration in the system can be done by your business users? If the answer is that your business user can go in and configure a new business rule, they can modify the workflow themselves. They can go in and create incremental build your processes, right, where no two areas have to rekey or reinterpret the same information again. If that entire process can be handled via the business teams with minimal engagement or dependency on the development staff, if that is something that can be accomplished by a solution, you have a winner at hand. Because some of these solutions will you know, other than the money, it takes four years, five years to actually implement. And by then, you know, the entire landscape of the industry has changed, right? So we also want to look at solutions that can be implemented in three months in six months, get some successes under your belt, and then move forward, you know, in an iterative fashion to the next step, right. And I think it’s just the ability and the only way you can iteratively build if you have the ability to configure versus sitting there in developing for the specs of the healthcare payers.

(12:21) Now, to what extent have more enlightened approaches like this been implemented? Are there success stories out there already?

Mohammed Vaid: Yes. And I think, you know, this is really where I will sound a little bit like tooting my own horn out here, right. But, I mean, I think you know, that is one of the things that you know, we feel that you know, we have differentiated ourselves, you know, to a considerable extent, in terms of the successes that have been achieved right. Clearly, you know, there is a platform you know, that we have built, which essentially ground up is specific, you know, for addressing the benefit plan management needs, you know, after peers highly covered you know, for the payer space, right, not for a specific payer. Still, the payer space, and then the payers can go in there, and then configure the rules; we actually helped them during the implementation process. And we’ve had successes where within six months, you know, we’ve completed end to end implementations with migrating 20,000 plus benefit products, all within the same amount of time, and not even a fraction of the hundreds of millions of dollars, you know, that we are talking about, you know, that have been spent, it is an iterative process, right. So, some take six months, some, some will take two years, you know, to do it, but you are not going to be waiting for that, you know, for achieving the end outcome, you know, for that entire three to five year period, you are going to be achieving them a lot sooner, and that builds confidence that gets successes, you know, out of the door. Right. And I think the other part is also the entire document generation process. Because the compliance piece is just killing the payers, right and the fact that there is just so much manual intervention out there. The ability to automatically do this with business rules, generating your documents output, you know, from a single source of truth. That’s really what we are after. If you can establish a single source of truth for benefit products, load all your information once and then disseminated across the enterprise using a business rule-driven approach that I think is the formula for success.

(14:26) So what is it that Simplify Healthcare does in terms of is it more of a service? Is it a product is solution what you know, what is it integrating with? And what's the life cycle? Like, for a customer that were to work with you? Is it just sort of a three or six month process and then they're on their own? Or as you said, up to two years, depending on what they're doing, what you know, what does it feel like?

Mohammed Vaid: Sure. So you know, we do have our own product solution offering called a benefit sink. And basically, what it entails is, you know, working with the healthcare payer, understanding their most immediate critical pain point. The key again is right. You can implement as much or as little of the solution based on your specific immediate needs, right? We all understand budget cycles. We also understand that some payers, so one of the payers, for example, that we worked with their biggest pain point was loading the fastest claim system with benefit data; we automated that leg of it, and just by doing that, they had a yearly savings of like $4 million. Right. Another payer, their pain points, specifically, immediately built us a source of truth, generate documents for us, the compliance aspect is just killing us. Right? So we did that for them. And you know, that engagement, again, was about six months, you know, type of an engagement. Right now, you know, we have a particular offering for Medicare, Medicare Advantage, we call it eMedicareSync, and that we can get a plan up and running in literally, you know, two to six weeks and that way they can just make the entire CMS PBP bid submissions and auto-generate all the documents with the click of a button. And I think that’s the level of automation that we are bringing to the table. And the engagement, you know that the payers because payers are always busy, their subject matter experts are busy, and we at Simplify Healthcare really take pride in the fact that we have a team of subject matter experts, my own background, I have spent several years at the payers in their shoes. That way, nobody else is teaching us right their business, we understand their specific variances, and that’s why we can achieve the success and outcomes you know that some of our customers can see.

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