Here's a prophecy guaranteed to make healthcare CIOs and their staffs wake up in a midsummer night's cold-sweat: a triptych of regulations, when taken together, will require payers to transform almost all IT systems and architecture.
That's according to the esteemed McKinsey Quarterly, which describes the triumvirate – healthcare reform, stimulus package healthcare IT mandates, and ICD-10 – as sparking a “seismic shift in the U.S. healthcare industry,” because of which “CIOs will need to transform more than 90 percent of a typical payer’s IT architecture and to help other executives make the corresponding changes in their business processes.”
[Related: Three of the many ways ICD-10 will permeate your health IT. See also: Understated aspects of ICD-10, part 3.]
McKinsey, of course, is not the first to say that ICD-10, in conjunction with all the reforms and other mandates that payers, providers, and clearinghouses are facing will create sweeping changes in the industry.
Earlier this year, Deloitte published a Top 10 list for ICD-10 and, in so doing, joined the cacophony of experts and pundits likening ICD-10 to Y2K in scope and expense. Since, a number of studies have surfaced examining where ICD-10 fits into healthcare organizations' priority lists, and some industry heavyweights have called on CMS to pull the new code sets under Meaningful Use.
The McKinsey authors, however, consider the scope of all three elements together in an article titled The new IT landscape for health insurers. (Free registration required.)
“Each of these forces will alter the way health care payers deliver services to patients and process the large flows of payments at the heart of the business. IT systems are central to both,” McKinsey added. “Across the industry, most of the payers’ IT functions are not fully prepared to assume the enormous challenges posed by the required changes. Payers face stark choices.”
When it comes to ICD-10, Capgemini found that even though payers are leading the pack, as they move from assessment into actual remediation, many are facing a more expensive and challenging transition than they thought at first blush. As such, some payers are re-adjusting their expectations downward from innovative to pragmatic, and are simply looking to comply in the short-term while hoping to reap any business value and competitive advantage further down the road.
[Reader poll: Which ICD-10 related cost is of most concern to you? Come by ICD10Watch to vote, please!]
Stark choices, indeed. The options that McKinsey presents for unprepared payers are either upgrading processes and systems to comply with new requirements, or the tack of new operating models that essentially rely on partners to provide IT capabilities – such as outsourcing or tapping into one of the emerging cloud-based HIPAA 5010 and ICD-10 compliance offerings.
Now, that may appear as a fork in the road, but in practice it will likely more closely resemble a traffic circle with avenues leading in multiple directions, depending on particular departments and functions.
Either way, though, “how payers choose to address these questions will determine not only the success of individual companies,” McKensie suggested, “but also the shape of the entire industry as it faces disruptive regulatory change."
Tom Sullivan blogs regularly at ICD10Watch.com.
