In the first instalment of this blog series, I wanted to explain the size and scope of the current API boom, and to explain the necessity of API Management as a product rather than just an idea. This time around, I have chosen to discuss a use case in which an insurance provider (payer) leveraged API Management to create an API Economy, one that fostered growth amidst a changing healthcare landscape.
I like this use case because it showcases the true power of creating APIs with a sense of treating an API as a product. A product has a life-cycle, and generally speaking is required to have some benefit such as acquiring new customers, retaining existing customers or increasing satisfaction of new and existing customers. Each of these has one of three economic gains – increasing access to a customer’s wallet, plain old revenue from sale of services or reduction of back-end costs.
A leading healthcare payer in New York City was facing a dual problem. On one hand it saw a new opportunity to expand its member base and provide Medicare coverage to citizens in New York City under the Affordable Care Act (ACA). On the other hand, the insurance carrier was looking at IT Systems designed to serve the Medicare population in the pre-ACA era. What the ACA did was not only increase Medicare coverage but also instituted provisioning of either state or federal Health Information Exchanges (known as HIEs). The HIE served as a ‘tool’ for a citizen to shop for suitable healthcare insurance plans from all payers in the vicinity. (Additionally, New York State has its own HIE, whereas a state like New Jersey uses the Federal HIE.) This transformation, driven externally by a new healthcare paradigm, meant that there was potential to gain new, tech-conscious members from the HIE channel, members who use mobile devices such as smartphones or tablets and who are text messaging savvy, all of which are member engagement profiles that are far removed from that of the traditional Medicare member.
This specific payer was certainly looking at revamping some of its member engagement business processes. It also, and somewhat more importantly, needed to very rapidly identify a mechanism to revamp the necessary part of its IT Systems to cater to the need of the hour. Failure to advance both business and accompanying IT capabilities ahead of the competitors meant the company could fail to gain new members and also suffer a loss of those already enrolled.
Bring in the Big Guns
Over 80 percent of the payer’s claims were processed electronically. The associates on outcalls, however, recorded meetings on paper, returned to the office and keyed in the data. As with most data-entry work, this system was prone to errors that raise costs and delay processing. Bringing this aspect of the business online was a key challenge to providing better, more timely care for members.
A number of approaches were considered to solve the puzzle, which required creating experience tools for new members and field sales associates such as portals and apps on iPads or smartphones, apps which were required to function in offline mode. Clearly every tool or app needed to have the necessary bells and whistles:
- Data synchronization
- Alerts and notifications
- Contact preferences
- Claims services
All the while staying secure and boosting member service.
The payer’s initial design, comprised of transmitting member information over cost-effective public networks, raised a number of security questions. The highly sensitive data carried with it stringent HIPAA patient privacy requirements entailing encryption over the wire. There were also questions around safely traversing the corporate firewall in order to access its internal applications, which were exposed as API-based Web services. The IT group considered a VPN-based approach but didn’t think it streamlined enough. They would have been happy with something that would “just work”, but the solution was neither secure nor stable nor scalable.
The payer’s IT group sought help from Prolifics, who looked at various approaches that would provide a secure way for associates to manage members electronically in real time from any location. Working with Prolifics, the IT group was able to greatly enhance the payer’s business agility by leveraging API Management as the application integration framework. The outcome was a mobile application for the Apple® iPad® that could interactively assess and record the healthcare needs of members in their homes or other places of care. Although this approach facilitated mobility, if they couldn’t connect back to the datacenter where the systems of record resided, ultimately the iPad offered little more than a way to create islands of information. Prolifics built a bridge to those islands.
This project was under the gun from the get-go, but Prolifics had API Management up and running in less than a week, providing the API security and data routing as required, effectively firewalling the core Enterprise Service Bus (ESB) while guarding it against intrusion with strict API authentication, authorization and comprehensive threat protection. In a nutshell, Prolifics provided externalized business functions as APIs with robust protection on a tight deadline.
Benefits for Associates and Members
The iPad application allows the payer to improve its health care coverage and member services, while increasing the effectiveness and efficiency of its Medicaid program. At the same time, the payer is helping New York City to manage the health care needs of its citizens, while keeping it more affordable for taxpayers. The API-based solution that connects the app to internal systems is key to advancing the efficiency and capability of associates, allowing them to reduce time spent on administrative tasks and increase time spent with members. And with real time information gathered from members, the payer’s time to decision making has been greatly reduced. Going forward, the payer is looking at extending the solution to business partners, which include radiologists, test and lab services, and hospitals that would then be able to submit claims directly to the payer, further streamlining and simplifying the claims processes.
Value of API Management for this Project
One aspect of this project should be familiar to anyone with enough interest to have read this far – it didn’t progress smoothly to the end and there was a need to bring in external expertise. Although API Management was not the chosen implementation tool for the new set of products, it served well for the payer to use it as the ‘tool of choice’ and lived up to its promise of realizing business agility. API Management was aligned with Customer Experience Management and improved business performance on two KPIs – new member acquisition and member retention – and served to provide clear and direct economic benefit.
Future Blog Topics
- How to Monetize APIs
- API Management Strategies
- How to implement API Management
Past Blog Topics
More API Economy Resources
Below are more resources that I've written/participated in about API management:
- The API Economy (White Paper)
- Two-Speed Integration Evolution: From Monkeys to Man (Google Hangouts Discussion)
Rick Parimi, MS and BS in Computer Science, has nearly two decades of experience in multiple industries - Banking and Financial Services, Manufacturing & Supply Chain, Telecommunications and Healthcare. Having consistently served Fortune 500 companies, Rick started his career as a technologist (IBM & Oracle) and has subsequently produced seven software patents for IBM, authored a number of publications, served as engagement manager and enterprise architect and, in recent years, has acquired niche but comprehensive experience in Healthcare (Payor, PBMs, Provider).
Rick’s passion is strategy planning for revenue (PnL) increase and gaining market share, both short-term and long-term, with specific focus on business cases and business innovation. Rick particularly enjoys corporate strategy and discerning the competitive landscape in the healthcare industry with special focus on M&A in healthcare. Rick is a member New York Academy of Sciences, and is pursuing MBA from NYU Stern School of Business (2014 - 2015) - General Management with specialization in Corporate Finance, Strategy and Management of Technology & Operations.