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Automating Insurance: Pipe Dream or Inescapable Progress?

10/14/2016 9:55 AM

Reading along this morning I run across Steven Findlay's "Open Enrollment 2016… Can the Exchanges Be Saved? And Other Trending Questions" on The Healthcare Blog.  I don't know and don't care (neither should you) about the healthcare exchanges, It was a bad idea then and it's a bad idea now, but he shares some interesting statistics.

  1. Premiums rose on average a modest 3% in 2016—to just over $18,000 for family coverage.
  2. Workers paid 29% of that.
  3. Employers continue to shift out-of-pocket (OOP) costs to consumers (That's how they keep the premiums down).
  4. The average deductible is almost $1,500.
So while premiums are slowly rising, deductibles are skyrocketing, making using your insurance prohibitively expensive.  Basically people with high deductible plans are just giving money to insurance companies because they can't afford healthcare now any more than they could before they had health insurance.

Then I came across another article on LinkedIn by the New Economy Editor Caroline Fairchild titled "These startup founders think they can replace 5.1 million jobs. Do you believe them?" talking to people like Airbnb Co-Founder Brian Chesky, Uber Regional Manager Rachel Holt, Thumbtack Founder Marco Zappacosta.  That got me to thinking about replacing jobs at the insurance company.

The startup founders have it wrong though.  They aren't really automating much of anything but the access to information: they give you a list of people doing what you need to have done in the area you want to have it done in.  The actual making of beds, washing of towels and driving of cars or hammering of nails still needs to be done.  This isn't true automation.  If we automate those processes all those things just happen, without needing humans.

So i did a search for insurance automation trying to find an article I glanced at this morning in my feed.  I didn't find it but the search returned 448,617 results including "4 Ways Robotic Process Automation is Disrupting the Insurance Market" and "Replacing insurance staff with automation."  Lots of somebodies are thinking about this. the general consensus is that by 2025-2035 we will have semi-automated insurance.  

Since you can see the conclusion we are driving toward let's look at how much of the healthcare dollar goes toward simply paying for medical care:
  1. Medical coding: 5% 
  2. Transmission to the insurance company and adjudication: 5% 
  3. Billing department at the practice: 10% 
  4. Insurance overhead and profit (ACA mandated): 20%
That doesn't include installing and configuring an electronic medical records management system (EMR) to get the practitioners notes to the medical coder efficiently.  That costs hundreds of millions of dollars per hospital and the average private practice specialist spends a little over $32,000 per year per doctor.  Let's say that is worth another 5%. If we add that all up we get a whopping 45% of every dollar spent on medicine goes to some non-medical related number crunching company.

We don't necessarily believe that 45% of your hard earned healthcare dollars are completely wasted, but let's face facts, at least 1/3 of them are just flushed down the toilet and don't contribute to making you more healthy at all.  

So in 2025-2035 we can automate this whole process and reduce the costs by 35-45%?  Let's start a plan to do it today.  If we had an insurance company who produced an EMR free for doctors to use that was capable of documenting the patient encounter, that insurance company would already have everything it needs to pay the claim.  If that insurance company gave the doctor the information on what procedures were covered and for how much for the patient in front of him or her, there would never be denied claims, and therefore no need for a billing department.  If that insurance company charged a flat subscription fee for managing the data (that is all they really do) like, say, a Netflix does, and for a similar fee maybe $10 per month, we have just come up with an idea that cuts the cost of healthcare by 35-45%.  If your family is average you could save $8,100 on your insurance bill in 2017.  This ins't an advertisement, we don't (yet) sell insurance.  

If you follow my chicken scratchings and ramblings on my blogs, you know where I'm going next.  Sentia Health has written this application and it comes with a built in health and wellness program, patient self scheduling, secure email with your doctor, automated questionnaires that you can take at home, and a ton of other features.  Click the link and download the demonstration slide deck.  All we need to get started is a little funding to pay claims.  Get the word out, repost this.  Share it with your entire network.  There is a better way.

I don't think we need to wait on 2025-2035.  I think the future is here now.  

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