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Insights
- Cloud's Unavoidable Ascendance: Payers' journey to the cloud is no longer an if, but a when. Collaborations with hyperscalers like AWS, Google Cloud, and Azure promise transformative outcomes by aligning stakeholders' interests.
- Data - Payers' Vital Currency: Payers' core operations revolve around effective data strategies. The ever-growing data deluge in healthcare demands solutions that extract actionable insights and drive pivotal business outcomes.
- Cloud Unleashes Transformation: The cloud revolutionizes payers' IT landscape. By decoupling storage and computing, it streamlines operations, empowers innovation, and enhances agility, positioning payers to leverage data-driven insights for a limitless healthcare future.
Payers and hyperscalers are working together to ensure that the healthcare ecosystem benefits from the transformation the public cloud makes possible, but it is a partnership that requires a frank assessment of the issues involved.
We are at an inflection point. For most payers, the question is no longer if they will move to the cloud, but when. There is also increased collaboration between payers and hyperscalers, among them Amazon Web Services, Google Cloud, and Microsoft Azure, to ensure that all stakeholders, including providers and members, benefit from this journey.
Not surprisingly, such efforts are not without risk, nor are they immune from the complexities of healthcare that demand a highly nuanced approach to technology and business transformations. Such efforts require a frank appraisal of issues that have shaped payers’ IT efforts in the past and the ones to come in the future.
Payers’ IT infrastructure today reflects the ongoing demand for an effective data strategy
While no two organizations are the same or have identical IT systems, the core infrastructure relied on by most payers today reflects the longstanding demand for an effective data strategy able to address two imperatives. These are: (1) the ongoing data deluge in healthcare; and (2) the direct impact this data has on important business outcomes.
Neither imperative is new. Even before the advent of IT, when teams of actuaries manually calculated premiums, payers were always dependent on data. To wit, in 2006 – the year Apache Hadoop was introduced – Clive Humby, the British mathematician, coined the phrase “data is the new oil,” a sentiment others would expand on to include that like oil, data also needed to be refined to use it effectively.
Today, when business intelligence tools are ubiquitous across industries and used to organize and visualize vast amounts of information to make informed decisions, the importance of gathering, consolidating, cleaning and effectively using data needs no introduction, nor can its relevance to practically every business function for payers be overstated.
Few industries reflect the dramatic increase in data volumes or its importance like healthcare. Nearly everyone in healthcare must share information internally and externally to do their jobs. It is literally the lifeblood of most organizations, including payers.
And it’s increasing in volume every day, whether in the form of 3D mammography images 20X larger than their 2D predecessors, video for telehealth, or the electronic health records used in practically every clinical setting. Simultaneously, gains in innovations like genomics and personalized medicine promise to create even more data, even as the number of wearables and other connected devices that relay a never-ending stream of information grows.
It was this reality that prompted RBC Capital to note last year that 30% of the world’s data was being generated by healthcare. It also predicted it will increase by an annual compound growth rate of 36% by 2025.
Just as importantly, the ability to use this data is also inextricably linked to payers’ successful completion of crucial business outcomes. These include growing customer satisfaction by creating member delight, future proofing core platforms, achieving operational excellence by transforming business processes, creating an effective analytics and machine-learning data platform able to extract actionable insights, and creating systems that protect data and inform stakeholders when threats are imminent.
Fortunately, the IT infrastructure used by most payers was created to address these imperatives. Unfortunately, in most cases it is no longer sufficient.
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Core networks, mainframe systems and on-premises data centers are no longer up to the task
Most payers rely on platforms that reflect decades old data management strategies, with monolithic mainframe systems still common. These are often tied to data warehousing solutions, often in numerous environments, later modernized with Hadoop-based infrastructure to best make use of what was then the most powerful open source big data solution.
Such systems were effective to address pivotal challenges at the time. Not only did they make it possible to effectively manage core functions like members services, claims and finance, but they also empowered payers to create and deploy operational dashboards and reports.
Today, several converging trends are pushing these assets to their limits. Portals for members and providers are generating more data than ever, payers are challenged to be more nimble, and IT teams are struggling to maintain and manage on-premises systems – including the networks that are increasingly too expensive to use when storing data at scale. Simultaneously, the demand for compute power continues to increase in the face of powerful new applications.
The cloud changes everything
The attributes of the cloud – its elasticity and almost limitless capacity offered at razor-thin margins, the ability to tap unprecedented compute power, and the inherent redundancy it delivers through a software-defined approach make it ideal for payers. With the cloud, payers can completely decouple storage and compute resources while increasing automation.
Now they can also conceptualize, create and deploy applications faster than ever before – all while consolidating data enterprise-wide in a one location where it can be cleaned, analyzed and parsed with unprecedented ease on infrastructure that costs far less to operate, maintain and safeguard.
Just as importantly, unlike on-premise environments that must be kept at peak levels at all times – something that breaks the bank – cloud platforms can be scaled up and down as needed with no CapEx investment. The cloud also serves as a blank slate that is ideally designed for interoperability and the creation of “marketplaces” where the larger ecosystem, including providers and members, can engage on an integrated platform.
A successful payer and hyperscaler partnership requires diligence
Despite these natural synergies, the partnership between payers and hyperscalers still requires significant diligence. Nor is it a simple process, as the popular “lift-and-shift” philosophy falsely conveys. Each payer’s cloud journey should reflect its unique circumstances and technology and business transformation goals. Key factors to keep in mind include:
Any cloud initiative – whether a payer choosing to move entirely to a cloud-first approach, taking the initial steps in a cloud-based data strategy or beginning to migrate data, requires a strong foundation to ensure success. Detailed, relentless planning is required. This takes time so do not wait too long to get started. The cloud is synonymous with business innovation, but it cannot be “turned on” overnight.
The major hyperscalers offer clouds designed specifically for healthcare and payers’ workflows. While even the best payer-specific clouds will require significant integration work for any deployment, starting with a healthcare-specific cloud is a must.
It is true the cloud simplifies or eliminates many day-to-day tasks associated with IT, often through automation. Many also point to the redundancy of the cloud and the significant data protection capabilities of hyperscalers no enterprise can match. But the move to the cloud also means the payer will be provisioning and managing access for hundreds of applications – a process very different from locking down an on-premises data center that is difficult for some payers.
Whether it is to avoid vendor lock-in, bring select data and workloads “inside” with a private cloud, or simply make use of the unique strengths of hyperscalers, approaching the cloud with a hybrid and multi-cloud approach in mind will ensure payers have more options in the future, and ensure greater nimbleness in mergers and acquisitions, when forming partnerships, and when entering new markets.
The complexity of healthcare today demands partners that are well-versed in, and experienced at, addressing the myriad nuances that can dramatically impact the effectiveness of any large-scale IT initiative. More specifically, payers should partner with providers that are hyperscaler “agnostic” and have completed similar projects with payers.
The active and expanding partnerships between payers and hyperscale cloud providers today promise to forever change payers’ businesses for the better while radically improving their ability to effectively act on data shared not just throughout the organization, but also with the providers they work with and the members they serve. By looking to the past, realistically appraising the present, and actively planning for the future, payers can proceed on the right cloud journey for them, with confidence.
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