Paper-to-Electronic Processing in Healthcare

by Bob Meara, November 24, 2009
Vendor Reviews
North America

Abstract

Paper remains stubbornly commonplace in US healthcare payments. Available paper-to-electronic processing solutions invite US $11 billion in cost savings, but adoption remains elusive.

Electronic processing is present in most, if not every, step of the healthcare revenue cycle management (RCM) process in varying degrees. The steps of payer payment and payment reconciliation/posting are some of the worst offenders. Payer-to-provider processing is estimated to cost the U.S. economy a staggering $22 billion in 2009.

In a new report, Paper-to-Electronic Processing in Healthcare, Celent looks into the paper intensive U.S. healthcare payments system, the multiple solutions available to address the problem and the dynamics surrounding their slow provider adoption.

Fully electronic payments (EFTs) and 835s (electronic remittance advices) have made some inroads in displacing paper, opening the door for significant cost reduction. Given projected adoption rates, enhanced processing (i.e., capture, normalization, reconciliation, and posting) of electronic data has the opportunity to eliminate $3.8 billion of the $22 billion in total processing costs in 2009. With increased availability of electronic data, the potential cost savings are estimated to almost double to $7 billion by 2014.

However, over $11 billion in paper check/EOB processing costs could be eliminated if processing solutions were used to convert remaining paper to electronic data. These costs represent a market opportunity for banks and/or technology vendors in the image capture and data extraction space. The potential for paper-to-electronic cost reductions will diminish, as enhanced processing of 835s and EFTs obviates the need for paper conversion technologies over time.


"Despite the opportunity, all is not rosy for players in the healthcare paper-to-electronic conversion space," says Bob Meara, senior analyst with Celent's Banking group and coauthor of the report. "Solutions are not highly differentiated, and banks and vendors are chasing a declining market (albeit a slowly declining one), with providers being slow to adopt."

"Healthcare reform legislation has the potential to move payers to a standardized, all-electronic solution, which could hasten the decline of paper-to-electronic solutions,” adds Red Gillen, senior analyst with Celent's Banking group and coauthor of the report.

The report examines the pain of paper in US healthcare. It also looks at solution providers addressing the problem and the dynamics surrounding its slow adoption. The report provides profiles of eight solution providers spanning banks, RCM vendors, and healthcare claims clearinghouses offering EOB/P-to-835 conversion options.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

5

Why This Matters: The Pain of Paper

7

 

A Quick Review: The RCM Process

7

 

Enter the Pain

9

 

The Hefty Weight of Paper

11

Why the Wait About Going Electronic?

13

Solutions for Paper-to-Electronic Processing

16

 

Early Approaches

16

 

Toward a More Complete Solution

20

RCM Solution Provider Taxonomy

24

Solution Provider Snapshots

34

 

CareMedic

36

 

Emdeon

37

 

Fifth Third Bank

38

 

Bank of America/HealthLogic

40

 

ImageScan

42

 

Instamed

43

 

JPMorgan Chase

45

 

BNY Mellon

47

 

Revenue Management Solutions (RMS)

48

 

USBank

49

 

WAUSAU

50

Conclusion

52

Leveraging Celent’s Expertise

54

 

Analyst Access

54

 

Support for Banks

54

 

Support for Vendors

55

Related Celent Research

56

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