Advanced Operating Model Research Insights: Healthcare Operations

Advanced Operating Models
Research Insights
HEALTHCARE OPERATIONS
v1.0 (August 2014)

Contents
Survey demographics 3
Executive summary 4
Key challenges 6,7
Functions’ impact on challenges 9,10
Functions’ maturity levels 12
Preparedness level to achieve process maturity
Overall ability to transform 18
Impact of operating model initiatives 20
Conclusion
14,15,16
21
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
PROCESS • ANALYTICS • TECHNOLOGY © 2014 Copyright Genpact. All Rights Reserved. 2

METHODOLOGY
Sample of over 900 senior executives across industries, over
40 from healthcare payers in North America
Regions Size* Functions
10%
25%
65%
Procurement
13%
Finance 17%
Risk 15%
Marketing
15%
40%
Operations
16%
84%
5001-10000
16%
98% of healthcare
operations respondents
are from North America
*Company size defined by number of employees
13% of operations
respondents from
healthcare companies
84%
10000+
87% of healthcare operations
respondents are from larger
companies (size > 10000
employees)
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm. The respondents were selected
on the basis of their ability to make or materially influence operating model decisions, and likely range from senior executives to top
management.
n=912

EXECUTIVE SUMMARY ► OPERATIONS ► HEALTHCARE
Transforming healthcare operating models: what are the imperatives
and means for large players headquartered in developed markets?
Management agenda
• Compliance, customer
satisfaction and cost
three most important
challenges for
healthcare companies
today
• Least pressing
challenges are capital
and asset intensity,
agility and adaptability,
and risk management
Advanced operations can address imperatives
• Claims processing and adjudication seen as
important in solving them followed by claims recovery
and payment integrity
• Claims processing and adjudication also considered
most mature – and ready to evolve further
• Analytics function seen as comparatively less mature
• Many executives believe advanced organizational
structures (shared services, business process
outsourcing) have material impact on operations;
technology is cited by fewer, but associated with
slightly more monetary impact

INSIGHTS NARRATIVE ► CHALLENGES
What are the most pressing
company challenges?
How can functions and related
operations address them?
Which functions are most
effective at it?
Are those functions mature?
Are those functions ready to
transform further?
Can new operating models of
those functions help them
transform? Which ones?
When will the transformation
start? What can the impact of
that transformation be?

CHALLENGES ► HEALTHCARE ► BY FUNCTION
Compliance, customer satisfaction and cost seen as the
biggest challenges for healthcare companies
Ensure compliance
to regulations
Increase customer
satisfaction
Reduce capital and
asset intensity
Manage
risk
Increase growth and
scalability
Enable company’s
innovation
Enable agility and
adaptability
Reduce
costs
0 10 20 30 40 50 60 70
n=55 healthcare executives
% of respondents from
various functions stating
challenge as among the
'Top 3‘ for their company
Overall
Operations

OPERATIONS ►HEALTHCARE► CHALLENGES
Healthcare executives see regulatory compliance, customer
satisfaction and cost as top 3 challenges
Importance of the challenge (% of respondents from healthcare companies stating that the
challenge is among the ‘Top 3‘ for their company )
0 10 20 30 40 50 60 70
Ensure compliance to regulations
Increase customer satisfaction
Manage risk
Reduce costs
Increase growth and scalability
Enable company’s innovation
Enable agility and adaptability
Reduce capital and asset intensity
n=41 respondents from healthcare companies
DIRECTIONAL
Least pressing
challenges are
capital and
asset intensity,
agility and
adaptability,
and risk
management

OPERATIONS ► HEALTHCARE ► FUNCTION IMPACT
company challenges?
effective at it?
transform further?

Claims processing and adjudication seen by most as having
impact on multiple important challenges
Ensure
compliance
to regulations
Reduce
costs
Increase
customer
satisfaction
65 58 51
Magnitude of
challenge1
Customer service
Enrollment and policy management
19 96
36
59 46
36
Claims processing and adjudication 78 75
68
68
Claims recovery and payment integrity
56 63
64 Provider network management 42 67
59
Business intelligence and analytics
44 63
73 DIRECTIONAL
n=41 healthcare operations executives
% of respondents stating
function can have material
impact on addressing challenge
1 % of respondents from healthcare across all functions (n=55)
stating it is one of the top 3 challenges in their company

Claims processing important in solving many of the most pressing
challenges followed by claims recovery and payment integrity
Function Impact Index* combining stated importance of challenges and ability of a function to
address them
Claims processing and adjudication 129
푛 푥푖푗푦푗, where 푥푖푗 is the %
Provider network management
Customer service
* Impact of a function on company’s challenges is defined as 푓 푥푖 = 푗
of respondents who believe that improvement in the function 푥푖 will have a material impact on
the challenge 푦푗; 푦푗 is the % of respondents citing the challenge as among the 'Top 3'
86
84
105
102
96

INSIGHTS NARRATIVE ► OPERATIONS ► HEALTHCARE ► MATURITY
company challenges?
effective at it?
transform further?

OPERATIONS ► HEALTHCARE ► MATURITY
Claims processing and adjudication considered most mature
function among healthcare operations; analytics least mature
% respondents stating the maturity of the functions in their organizations DIRECTIONAL
Claims processing and adjudication
Very mature Mature Somewhat mature/Immature
70 30
Claims recovery and payment integrity 55 34 11
42 47 11
16
50 34
Customer service
49 34 17
Business intelligence and analytics 23 46 31

INSIGHTS NARRATIVE ► OPERATIONS ► HEALTHCARE ► PREPAREDNESS
company challenges?
effective at it?
transform further?

OPERATIONS ► HEALTHCARE ► PREPAREDNESS
Most functions seen as prepared to increase their maturity
% respondents stating the preparedness of their organization to mature a function DIRECTIONAL
Fully prepared Prepared Somewhat prepared/ Not prepared
25 75
40 60
31 66 3
31 64 5
Customer service
Provider network management 35 59 6
Business intelligence and analytics 29 64 7

OPERATIONS ► HEALTHCARE ► OVERALL ABILITY TO IMPACT
Significant gap between traditional process operations and
analytics groups
Ensure
compliance
to regulations
% of respondents assessing
maturity and preparedness
Reduce
costs
Increase
customer
satisfaction
65 58 51
Magnitude of
challenge1
Customer service
19 96
36
59 46
36
Claims processing and adjudication 78 75
68
68
Claims recovery and payment integrity 56 63
64
Provider network management 42 67
59
Business intelligence and analytics 44 63
73
% of respondents stating function
can have material impact on
addressing challenge
DIRECTIONAL
Maturity of
process
Prepared to
mature
Very mature or mature Fully prepared or prepared
Somewhat mature or Immature
Somewhat prepared or not prepared
1 % of respondents from healthcare across all functions (n=55)
stating it is one of the top 3 challenges in their company

OPERATIONS ► HEALTHCARE ► OVERALL ABILITY TO IMPACT
Claims operations seen as most important of the healthcare
operations and also most prepared to evolve
100
95
90
85
80
75
70
65
60
55
Size of the bubble proportional to impact
of function on many strategic challenges
Customer service
Claims recovery and payment Integrity
55 60 65 70 75 80 85 90 95 100
PREPAREDNESS
% of companies stated as very prepared or
prepared to mature in specified functions
% of companies stated as very mature or mature in the specified functions
MATURITY
DIRECTIONAL

INSIGHTS NARRATIVE ► OPERATIONS ► HEALTHCARE ► OPERATING MODELS
company challenges?
effective at it?
transform further?

OPERATIONS ► HEALTHCARE ► OPERATING MODEL INITIATIVES
Many state advanced organizational structures (business
process outsourcing or shared services) have material impact
% of respondents stating the initiative can
have a material impact on the function
Business
process
re-engineering
Radically
improved
use of
technology
Impact
Index*
BPO or
SSC or
hybrid1
46 68 129
41 63 105
51 39
41
32 49
102
96
66 86
53
39
53
39
53
53
37
53
49
DIRECTIONAL
46
49
39 51 84
53
46
Customer service
* Function Impact Index combining stated importance of
challenges and stated ability of a function to address them
1 BPO – Business Process Outsourcing, SSC – Shared Services

INSIGHTS NARRATIVE ► OPERATIONS ► HEALTHCARE ► OPERATING MODEL IMPACT
company challenges?
effective at it?
transform further?

OPERATIONS ► HEALTHCARE ► OPERATING MODEL IMPACT
Organizational structures (SSC/BPO1) considered impactful by many,
with significant impact. Tech impactful, but for fewer respondents
Average $ impact, bar width proportional to percent of respondents stating that the initiative
will have a material impact
OPERATIONS - ALL INDUSTRIES# OPERATIONS – HEALTHCARE
$109m
SSC, BPO, Hybrid1
$186m
BPR
$ 242m
Tech
Average
$ impact
Annual $ impact is the impact of operating model initiatives in US$
per annum including reduction of cost, capital required,
improvement of cash and revenue growth
DIRECTIONAL
$166m
$144m
BPR SSC, BPO, Hybrid
$215m
Tech
# n=365 executives responsible for industry specific operations from retail
and commercial banking, insurance, healthcare payer and life sciences
1 BPO – Business Process Outsourcing, SSC – Shared Services,
BPR – Business Process Reengineering, Tech - radically improved use of technology

In conclusion
COOs and other senior healthcare executives are
challenged to adapt to a rapidly changing business
environment in an economy that remains unpredictable.
They say that intense regulatory scrutiny, the need to
improve customer satisfaction, and cost reduction
imperatives are their most important business concerns.
This research examined how those challenges can be
tackled by three levers of operating model
transformation: technology, process re-engineering, and
advanced organizational structures. The related
transformation of operations is an untapped strategic lever
for the COO as well as the CEO.
However, it is sometimes seen as a formidable
undertaking. Few understand the “IT + analytics +
process operations” nexus sufficiently. Technological
excesses of the past (such as ERP or data warehouses)
are well documented. Some technologies are unproven,
some uses of analytics are unclear, and older technologies
are rigid and expensive to evolve. Finally, it is frequently a
struggle to scale deep analytics throughout the enterprise.
Our experience of advanced operating models,
accumulated over 15 years, clearly indicates that there are
agile and practical ways to transform.
The key is to design, transform, and run the processes that
power advanced operating models so that they closely
align with measurable business goals, thereby avoiding
saddling the company with unnecessary and often
unmanageable complexity.
This approach focuses more rigorously on the sources
of impact and deliberately disregards any practice that does
not yield material outcomes. It also takes a more objective
and holistic look at technology, analytics and organizational
practices. It leverages now-mature “system of
engagement” technologies that complement “system of
record” technologies. It treats analytics (the arc of data-to-insight-
to-action) as a process and determines how to
embed insight at scale into the fabric of other enterprise
processes; it does not take the typical approach of viewing
analytics as a task and a set of technologies. Finally, it
harnesses the process and organizational levers
available from established disciplines, such as
reengineering, shared services, outsourcing, and global
delivery.
We think that there is a smarter way to transform operating
models and address the most complex strategic challenges.
This is a way for COOs to make their enterprises more
intelligent and generate material impact.

Source: Survey of 912 senior executives conducted by LinkedIn for Genpact
PROCESS • ANALYTICS • TECHNOLOGY © 2014 Copyright Genpact. All Rights Reserved.
22
About Genpact
Genpact (NYSE: G) stands for “generating business impact.” We design, transform, and run business operations including those that are complex and
industry-specific. We believe that our approach, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, is more focused, unbiased
and agile than that of our competitors. Our solutions integrate technology, data and processes into advanced and adaptable operating models that foster
growth and facilitate better management of cost and regulations in uncertain times. The result is intelligent operations of a range of functions such as
finance, supply chain, origination and client servicing, compliance, and risk. We have hundreds of long-term clients including more than one-fourth of the
Fortune Global 500. We have rapidly grown to over 66,000 people in 25 countries with key management and corporate offices in New York City. Our global
critical mass doesn’t dilute our flexible and collaborative approach, and our management team drives client partnerships personally. We attribute much of
our success to our unique history – behind our passion for process and operational excellence is the Lean and Six Sigma heritage of a former General
Electric division that has served GE businesses for more than 16 years.
For more information, visit www.genpact.com.
Follow Genpact on Twitter, Facebook, LinkedIn, and YouTube.
© 2014 Copyright Genpact. All Rights Reserved.
Genpact Research Institute
The Genpact Research Institute is a
specialized think tank harnessing the
collective intelligence of Genpact – as
the leading business process service
provider worldwide - its ecosystem of
clients and partners, and thousands of
process operations experts. Its
mission is to advance the “art of the
possible” in our clients’ journey of
business transformation and adoption
of advanced operating models.
www.genpact.com/research-institute
Click here to download the complete research paper

Thank you
Gianni Giacomelli
CMO, SVP Product Innovation

Advanced Operating Model Research Insights: Healthcare Operations

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