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The healthcare delivery system traditionally has adhered to a fee-for-service model. Physicians are paid based on quantity, not quality, of treatments, which some observers say has led to a decline in the value of care and a rise in healthcare costs.

Horizon Blue Cross Blue Shield of New Jersey, recognizing that this system was financially unsustainable and didn't reward care quality, decided to turn the old model on its head. Its efforts to move to a fee-for-value model followed the launch of the Affordable Care Act (ACA) and the start of healthcare reform. The organization's CIO, Doug Blackwell, calls the effort a strategy to hit the "triple aim."

"It's really getting into three different components," Blackwell explained. "The first is the overall improvement in the quality of healthcare, the second is improvement in the total cost of care, and the third is enhancing the patient experience."

The ACA kick-started healthcare reform by providing various benefits and capabilities to customers, Blackwell said. Eventually, though, the Newark, N.J.-based insurer was left asking a pivotal question: Where to go from there?

Its answer: Horizon's Health Care Value Strategy, an enterprise-wide initiative designed to achieve the triple-aim goal and to provide technical and nontechnical capabilities that improve healthcare delivery while lowering costs for patients.

Horizon's innovation efforts began in 2011, when it adopted a startup approach to launch and scale programs and products aligned with its pay-for-value strategy. These programs and services included patient-centered medical homes, accountable care organizations, and episodes-of-care models.

The Health Care Value Strategy officially started in early 2013, with the goal of culminating in time for the 2016 open enrollment period for health insurance. All 5,000 employees at Horizon were trained for the project.

New Technologies: Buy, Build, Partner

Business and IT leaders were faced with the task of determining which types of technologies would be used to support the pay-for-performance model, provide customers with better information to make healthcare decisions, and improve their experience.

"All systems across the board needed to be addressed," said Blackwell, noting that the strategy affected every aspect of product development. More than 80 business processes were created or modified as part of the project, which transformed systems for enrollment, claims processing, billing, customer service, provider portals, sales, and benefit monitoring.

When adopting new technologies, "very rarely do we build everything ourselves," said Blackwell. "We typically partner or go to a third party." The decision to buy or build depends on in-house capabilities, but all integration is done internally.

For this project, Horizon employed a buy, build, and partner approach. It focused on five key areas: information sharing and analytics, clinical excellence, organizational alignment with provider partners, patient engagement, and improved member experience.

Improving on analytics capabilities was crucial. The goal was to distribute high-quality, real-time information to members and doctors, who could use it to quickly and effectively treat members.

For this, Horizon enhanced its Teradata platform and added Tableau for visualization. It also built extensive data warehouses to centralize claims information, which could be used to understand the needs of the member population and determine how to care for them.

"Rich data warehousing and analytics capabilities were, first and foremost, critical for us to establish," said Bud Baumann, IT business solutions officer at Horizon.

Clinical excellence is also core to the pay-for-value process. Horizon improved its ability to measure patient care through chronic care management and utilization management. The process involved improving its care management platform, EXL Healthcare's CareRadius Suite, and integrating its Care Affiliate product with NaviNet, Horizon's multipayer provider portal.

To build organizational alignment with provider partners, Horizon uses performance-driven reimbursement and financial risk management, employing SAS Enterprise Business Intelligence, Teradata, and Informatica custom development. For outcome-based payment, information is shared via Microsoft .NET apps, NaviNet, and IBM WebSphere-based Web service integration.

A major part of the project consisted of revamping the organization's Doctor Hospital Finder, which was "messy and unclear" before the project started, said Blackwell. The insurer aimed to make it easier for patients to understand which healthcare providers were part of their plans so they could make more informed decisions. This involved strong use of the Axure prototyping tool, which allowed early-stage versions of the app to be tested among members so Horizon could receive feedback.

Cross-Company Collaboration

The project involved close collaboration between the business and IT divisions. Baumann sits between the two and helps the business launch tech projects to solve enterprise problems. Also influential in this initiative was Naveen Paladugu, director in the Strategic Initiatives Group at Horizon.

Projects such as redesigning Horizon's provider portal and improving cost transparency have resulted from the collaboration between business and IT. When the business has a strategy it wants to execute, it approaches IT to implement a technology solution, Paladugu said.

Bud Baumann, IT Business Solutions Officer, Horizon Blue Cross Blue Shield of New Jersey

"This was a very complex and very challenging business and technology effort," Baumann said. There are several steps to executing a strategy of this magnitude, one of which involved monitoring earlier investments to see what needed to change.

"We constantly take the feedback around how well those programs work, which feeds into the Strategic Initiatives Group," he said. "We have a very strong Voice of the Customer program, where we poll members on a constant basis around what's working and what's not working."

The teams faced obstacles with communication, pressure to deliver on tight deadlines, and the stress of aligning resources so there were enough of them to dedicate to each task within the broader Health Care Value Strategy initiative.

"For us to be successful, it was really about alignment," said Baumann. "If you're going to break this up and have as many different work streams, it's important to have project managers to drive, to stick to plans, be flexible, and highlight risk early."

Over the course of the project, Horizon appointed executive steering committees and project steering committees, which regularly met over a two-year period. There were few surprises in building the technology despite the program's size, said Baumann, as a result of the leadership and risk mitigation.

"You don't attack this as one big major program; you break [it] up into smaller projects," Baumann said. That way leaders can see iterative deliverables throughout the process, see progress along the way, and rely on the structure of dedicated teams to drive accountability.

Advice for CIOs

"Good luck," joked Blackwell when asked if he had advice for CIOs hoping to start a similar project.

In seriousness, he acknowledged the importance of collaboration between business and IT to launch the Health Care Value Strategy.

"The key is the tight integration between the folks like [Paladugu], who are thinking of business strategy and where things need to go, as well as our IT partners, helping them co-develop IT strategy and business strategy simultaneously," Blackwell said.

He also advocates support from the top. "Our CEO, Bob Marino, was personally involved in every aspect of this new development, these products, the strategy, working closely with all the different divisions of the organization."

Accountability is also critical, added Paladugu. The business and IT divisions each typically have several people calling the shots, sometimes confusing or contradicting each other. Appointing a singular leader for each side, and having these people assign responsibilities, ensured that all divisions were working toward the same goals.

What's on the Horizon

Executives can't definitively say how successful the Health Care Value Strategy has been, but so far its results are promising. "It's very early on," said Blackwell. While he couldn't describe how the strategy has affected cost, he noted premium costs are lower and, in many cases, there are lower copays or no deductibles for customers.

Following the deployment of the Health Care Value Strategy, Horizon has two major ongoing projects. The first is the implementation of a private health information exchange called the Horizon Data Services Platform. Unlike publicly provided HIEs, this launch is Horizon's own implementation. Blackwell described a longitudinal patient record, which involves integration between electronic medical records and hospital systems to provide common information to members and physicians. The team is building a highway for information to pass and layering analytics to consolidate data and conduct retrospective and prospective analysis.

The health insurer is also working to revamp its entire digital strategy, Blackwell noted, something that all types of businesses are doing, not just insurance companies. Horizon is in the middle of this transformation, which has been ongoing for about one year. "Toward the end of this year," Blackwell said, "we'll start to roll out those enhanced capabilities using a digital platform, using mobile, and taking advantage of preference management and some of the other new things that are out there today."