To change the health care system, WellPoint’s tech innovation needs to be paired with process transformation.

Many unsustainable aspects of our health care system can be improved with technology. Opportunities abound with evidence-based medicine, population health analytics, in-home monitoring, as well as with data-driven incentive systems. Organizations like WellPoint can strategically capitalize on the inevitable disruption — or be left behind by competitors that do.

WellPoint’s laudable efforts to use technology to improve health outcomes and lower costs recognize the physician context and use an incremental approach designed to build the credibility required to launch the company’s new provider payment system. They conducted “nearly a dozen pilots with physicians” and focused on “three to five things…to get the Enhanced Personal Health Care program off the ground.” All bode well for achieving significant cost reductions for WellPoint (“20% if successful”) and for earnings increases for physicians (up to “50%”), not to mention the promise of enhanced health care outcomes for WellPoint’s subscribers.

Even if WellPoint had the perfect technology, however, the challenge of organizational change would be daunting. WellPoint is attempting to introduce new technology and revamp deeply entrenched compensation systems that reflect diverse incentive structures. Despite trying to minimize the program’s scope, WellPoint still had to integrate data from “14 separate health plans with inconsistent approaches to defining similar types of data.”

This is not unusual — I suspect the new provider payment system uncovered many system integrations put together with duct tape under tight acquisition deadlines. The organizational problem was complicated further by tight deadlines that prevented the IT team from mastering these issues. Ideally, the company would have had the time to decouple certain technology issues from the rest of the program and effectively address them before rolling out reports to providers.

But the reality is that the program team was under significant pressures to simultaneously meet deadlines, adopt a new software development approach (new for them at least — Agile is now a well-recognized approach in the software field), overcome data integration challenges and create a novel product for use by external stakeholders. Given the complexity of the undertaking, it is not reasonable or cost effective to expect IT to become experts in the intricacies of the insurer–provider relationship.

An alternative approach would be to focus IT on areas in which their expertise can be most effective — such as providing technological infrastructure, harmonizing systems and data, and creating components for use by domain experts. Timely, quality data is fundamental to the success of the new system, and IT has exclusive knowledge about the strengths and limitations of WellPoint data. Conversely, IT does not have idiosyncratic capability in the reporting tool. Furthermore, this approach builds off the existing expertise that the internal IT group has in building deliverables for internal customers and avoids introducing the new dynamic of building deliverables for external customers.

What should WellPoint do next? The team should replace the current project approach with a process approach that addresses three distinct perspectives— information technology, business processes, and human elements.

First, the current approach aims at delivering a reporting tool that meets external needs on an ongoing basis. Even if it were perfect at the start, the tool will need to evolve. Processes need to be put in place to develop this information technology —the Agile approach is just the beginning. Future acquisitions, adoption of new medical or administrative systems, integration of interesting external data, etc., will all present new opportunities and require iteration.

Second, WellPoint should plan for changes beyond information technology, as experience with the shared-savings model suggests refinements, such as collecting and integrating lessons learned from physicians into the reporting tool. Even if the changes themselves are not yet known, the expectation of change is known. Business change is itself a process that can undergo change.

Third, as the data and reports become more functional and transition from being novel to routine, WellPoint will need to continue to encourage adoption and use of information in decision making by physicians and ensure that data collection and dissemination by the 14 regional businesses abide by a common set of goals and language. In the history of IT, shelfware is all too common; many current analytics initiatives will unfortunately meet the same fate. To achieve the profound potential of this initiative, processes to nurture the use of analytics and provide feedback on data-based decision making will help avoid ruts.

Analytics of the future will be increasingly real time and require iterative, incremental approaches well-suited to an Agile approach. This approach is not a panacea; however, by incorporating learnings from both the advantages and disadvantages of Agile software development practices, WellPoint can build an ongoing process around their information systems, business processes and people. A possible 20% cost reduction may have been a siren’s song; instead, WellPoint should target 2–3% reduction with each iteration and plan to iterate continuously. Each iteration would demonstrate efficacy, add experience, and build credibility with the critical physician population.

For more about WellPoint's efforts, see the case study "Preparing Analytics For a Strategic Role," which looks at WellPoint's shift to a new provider payment system.