Shifting Stakeholders and Change Agents in Healthcare Transaction Processing

August 22, 2007


San Francisco, CA, USA August 22, 2007

Despite the glacial pace of change in healthcare transaction handling, the status quo will gradually give way to a new order.

The current modus operandi in healthcare transaction handling is unsustainable, plagued by the inefficiencies born from highly fragmented stakeholders with conflicting interests and thousands of proprietary formats. Change is a must.

In the second report of its new Healthcare Banking research service, , Celent discusses how some change agents are emerging from the status quo, while newcomers and outsiders are bringing new models. These players will differ notably from their predecessors in that they will enable cooperation across stakeholders and build business models based on aligning costs and benefits. They will reduce the current lack of transaction transparency and improve the current environment of distrust and lack of cooperation. The new order is manifesting itself in various manners, from the operational (e.g., the gradual shift to electronic remittances and ACH) to the organizational (e.g., partnerships spanning the revenue cycle).

"The third party players, which are showing themselves to be the change agents today, will become leaders. Because they understand the necessity to shift from an infrastructure that handles thousands of payers (third parties) to one that can handle millions of payers (consumers), from an exchange that handles claims and payment documents to one that handles clinical information such as electronic health records and diagnostic results, and from a batch processing platform to a real time one," says Alenka Grealish, coauthor of the report and Managing Director of the Banking team.

Celent estimates that there were around 3.4 billion claims, translating into approximately 1.1 billion payments in 2006. Nearly half (45%) of the 3.4 billion claims were submitted by providers in nonstandard format, while approximately 65% of the remittances were paper. Over the next five years, the use of standard formats and e-remittances will ever so incrementally grow. By 2012, Celent expects that the use of nonstandard claim formats will have dropped to 15%, and the use of e-remittances will rise to 62%, though the use of a common 835 standard is unlikely.

"Among financial institutions, the leaders will be those that facilitate the migration away from paper to electronic and develop innovative receivables financing. Financial institutions must remember that while the number of providers is greater, payers control a larger number of these transactions. Forward-thinking ones must combine their provider-focused extended lockbox offerings with payer-focused solutions that allow paper to be eliminated at its source rather than merely imaged after the fact," comments Madhavi Mantha, coauthor of the report and senior analyst.

The report is 55 pages and contains 21 figures and seven tables (with an additional eight pages, four figures, and two tables of background material contained in an Appendix).

A table of contents is available online. Eight change agents are profiled: athenahealth, the Bank of New York Mellon, InstaMed, MedAvant, MisysPayerpath, Payformance, PNC Bank, and RMS.

Members of Celent's Healthcare Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.  

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 operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

San Francisco, CA, USA August 22, 2007

Executive Summary 03
Setting the Stage 05
  Transaction Volume 06
  Exceptions the Norm 07
  Standards But No Standards 09
Stakeholders 11
  Gradual Morphing of Stakeholders 12
  Acquisitions and Partnerships Triggering Change 13
Change Agents 15
athenahealth 20
The Bank of New York Mellon 23
InstaMed 27
MedAvant Healthcare Solutions 29
Misys Payerpath 32
Payformance 35
PNC 38
RMS 41
Breaking the Mold Through Cooperation 44
  Cooperation: Road to True Standards 44
  From the New Mold: e-Prescriptions 45
  Making an Uber Exchange Work: Lessons from Australia 49
Glimmers of a New Order 53
Appendix: Overview of the Healthcare Market 56
  Glossary 57
  Healthcare Expenditure Trends 59
  Complexities of Healthcare Processes 59


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