Armed with research that concluded that $30 billion in healthcare costs could be saved annually in America if just five administrative processes were improved, Emdeon Inc. and a host of partners set out in December 2008 to take stock of industry inefficiencies. After a year of work, the U.S. Healthcare Efficiency Index is up and running, and data collection began in November.

 

The idea is "to help the industry understand the available efficiency around administrative simplification. We felt that most people don't know, for example, that 90 percent of all healthcare payments to providers are still printed and mailed in the U.S. Just look at the amount of waste and paper and cost that's associated with that," said Miriam Paramore, Emdeon senior vice president of Corporate Strategy, Government Affairs and Public Relations. She is a member of the national board of directors for the Health Information Management Systems Society.

 

Describing Emdeon as a "market leader in the exchange of health information," Paramore said the company, based in Nashville, Tenn., has historically focused on financial and administrative exchanges in healthcare, although Emdeon is expanding its focus to include clinical health-information exchange. The company's forte is revenue-cycle and payment-cycle management, and it sells a range of software and technology products for providers and payers. With a foot in both camps, Emdeon was in a unique position to facilitate a massive data-collection project like the Healthcare Efficiency Index.

 

The Index is designed to track the industry's transition from a paper-based and phone-based system to an electronic one. The five transactions tracked to measure electronic adoption and to help calculate associated cost savings are:

Participating third-party payers – and Paramore said that most large health plans nationwide are onboard – log in to a secure, password-protected portion of the index's Web site, www.ushealthcareindex.com. There, they key in 15 data elements based on their experiences with the five transactions being measured, and they are asked to estimate the monetary savings derived from electronic improvements.

 

This gives the industry something it hasn't had before: primary research rather than secondary research. Already available are industry averages from consultants and researchers with the federal Centers for Medicare and Medicaid Services, McKinsey & Co., Milliman, Gartner, Forrester Research and the like.

 

"This is an effort to be more precise, to get a better understanding from the payers' point of view of their own benchmark for EDI (electronic data interchange) or electronic commerce versus paper commerce," Paramore explained. "Then we'll have an even better measuring stick that's current."

 

The Index project is led by an independent advisory council that includes healthcare researchers and consultants and representatives of the private sector, payers and organizations such as America's Health Insurance Plans and the Council for Affordable Quality Healthcare. The council is responsible for overseeing the effort. The members developed the data-collection methodology and are charged with reporting progress. In fact, the first findings are set to be published this year in a document entitled National Progress Report on Healthcare Efficiency. "It will be an ongoing effort so that, from year to year, we can get a report card on the industry," Paramore said.

 

Another partner in the Index initiative has been the Vanderbilt University Owen Graduate School of Management. Students in the healthcare MBA program helped design the data-collection model and reached out to payers to get their input and participation in the initiative.

 

Paramore said this first-ever national reference tool to track inefficiency has "particular relevance" today, considering the national healthcare-reform debate. Both the U.S. House and Senate versions of the bill contained sections entitled "Administrative Simplification," and she said the Index has been referred to in health-reform debate and conversation. "It's becoming a helpful policy tool. These savings are nonpartisan, apolitical, just savings from doing very common-sense things like using electronic funds transfer," she said. "We hope to help the market move forward with efficiency. That's Emdeon's vision, and that's our mission that's shared by the folks who collaborate with us on this effort."

 

Emdeon is footing the bill for the effort. While Paramore called the project "an industry collaborative," there are no dues or fees to participate.

 

The next step, which will probably be taken this year, is to develop an index for the pharmacy industry, particularly to examine the use of electronic prescribing.

 

Paramore said Emdeon is also fielding calls from the dental industry, hoping for a similar index in that arena. Yet another step will be to expand the scope of the existing healthcare project by collecting data on even more transactions.