Are you getting enough value from your business process outsourcing arrangement these days, or is the relationship beginning to go stale?

An important recent development in the health industry has been the increase in both IT outsourcing and business process outsourcing. It would be difficult to find a company anywhere in the healthcare ecosystem not using outsourcing in some form. But as with any business or IT capability, the bar of expectations keeps being raised. Outsourcing providers and their clients alike need to be looking for ways to increase the value they achieve and deliver together.

Health companies have come to expect the cost savings, improved efficiencies and decreased compliance risks that accompany a solid BPO relationship. But those benefits are just table stakes now. Use offshore labor for data entry or resolution of simple claim edits? Been there. Outsource basic back-office functionality? Done that.

Staying ahead of the game today requires working at a higher level of insight and performance. A new generation of BPO solutions is drawing on the power of the best service providers to deploy analytics that can extract actionable business insights from the immense stores of transactional data they accumulate during long-term client engagements. Health companies can use those insights to generate higher-impact business outcomes-results ranging from accelerated speed to market to enhanced innovativeness, stronger customer loyalty and top-line growth.

Embedding analytics successfully in a BPO solution depends on several factors, including ongoing alignment to business goals, having the right incentives in place and making sure the provider has sufficient visibility across an entire function or process.

Climbing the ladder
Several industry trends are leading to a new generation of health BPO solutions. One is that companies are becoming comfortable outsourcing more mission- critical functions and activities. As companies see external providers perform an increasing number of business functions better than they can themselves, they are looking for ways to leverage that success more broadly across their organizations.

Another important trend is the amount of data being generated across the healthcare ecosystem. Companies know that this data holds important keys to improving operations, developing innovative products and serving customers more effectively. But few of them have the resources or capabilities to spin their data-straw into insight-gold.

A final relevant trend is the increased sophistication and applicability of analytics solutions, and the growing realization by companies that they are not tapping into all the possibilities analytics presents them.

Many organizations are getting better at generating clean and integrated data; some others are able to define distinctive customer segments with that data. But those are only the bottom rungs of what the authors of the book Analytics at Work call the "ladder of analytical applications." As companies move up the ladder, they leverage more sophisticated analytics solutions to get greater value-applications that can help devise different responses for customer segments, predict responses more accurately, and then to actually embed different actions and corporate responses into a business process itself. Ultimately, companies can use analytics to adapt and optimize processes and respond to real-time needs.

At each rung of the analytical applications ladder, BPO presents an environment that can lead to distinctive value because BPO analytics begins on what is already a strong foundation of functional healthcare expertise, along with comprehensive data about a business process and how it is performing.

Analytics at work in healthcare
In the health industry, analytics solutions vary across marketing, clinical, operational and financial domains. In some functional domains, analytics solutions can result in continuous improvement of business processes, or even embed differentiated actions in the processes themselves. In other areas such as clinical research, analytics is more likely to provide assistance to human decision making. Here are several examples of BPO analytics solutions in the health industry at different rungs of the analytics ladder.

1. Improving data quality
One health organization found that its automated eligibility team was processing about 250,000 "fallouts" per month-system errors amounting to about 2.5 percent of overall automated enrollment volume. Average time to resolve those fallouts was five business days, a significant drag on efficiency and service.

The organization's BPO provider applied analytics to identify errors within the mass of transaction data. The team leveraged their operational expertise to segment the transactions and identify key error trends along with the system components responsible. By addressing the root causes of the fallouts through system fixes and by making changes to upstream data entry procedures, the organization eliminated 25 percent of the bad transactions at their source-about a $1 million savings.

2. Understanding and attracting customers
Another suite of solutions that moves BPO deeper in the value chain focuses on consumer analytics. Succeeding in an environment of increased consumer power and choice is a major challenge in the health industry. As a recent Accenture research report notes, there has been a "seismic shift in power to the customer" in the health insurance market and insurers "will need to invent new healthcare solutions for competitive success."

To take a more specific example, recent healthcare reforms mean that individuals will soon have the opportunity to buy health insurance through health insurance exchanges. Payer firms can use consumer analytics tools to understand and attract these customers and then target health management programs as they are enrolled. In this challenging era of healthcare, a BPO solution that can take the next step up the analytics ladder and predict a consumer's response, and also realign resources to handle customer interactions more effectively, can create a distinct competitive advantage.

3. Predicting and preventing
BPO solutions at the top rung of the analytics ladder can leverage predictive capabilities to optimize process responses continuously, in real time. One such BPO solution is designed to eliminate manual work within a health insurer's claims operation. The solution leverages machine learning to detect patterns in claims data and then take action on segmented queues of claims. The solution also goes a step further and systematically adjusts to trends in the data, predicting sources of errors and directing actions in real time, thus continuously improving the process and the benefits delivered.

A pilot of the solution was able to reduce preventable financial rework for a company from 40 percent to 50 percent of the time. The results showed that prevented errors through the predictive analytics solution would:

• Reduce administrative costs associated with claims rework by 10 percent to 20 percent.
  
  
• Reduce medical costs savings by 5 percent to 15 percent of all recoveries by preventing overpayments (e.g., paying duplicate claims).
  
  
• Improve provider and member satisfaction by increasing first-time payment accuracy.
  
  

Making BPO analytics happen
The new generation of BPO in the health industry is business-outcome driven. Thus, the most important set of questions health executives need to ask is: What are our business goals, and is the relationship with our BPO partner set up to drive those goals? Are the proper incentives in place to produce the desired outcomes? Cost savings and operational efficiencies are vital, but what else is the relationship providing in terms of helping the organization leverage information to serve customers better and drive new and innovative solutions?

Another important success factor is having access to data and workflows across an entire process. Health organizations are now becoming more comfortable with outsourcing a process from end-to-end because of the synergies that result from a holistic approach, eliminating the inefficiencies of having different parts of the same process run by different providers.

Winning the new game
BPO in the health industry is a new game with new rules. Regulatory demands on price and performance are rising, competition is increasing and companies are coping with a changing sense of who the healthcare "consumer" is.

Today's BPO market demands that providers deliver value by synthesizing massive amounts of data, analyzing it and then applying industry experience to drive improved outcomes. Organizations that get the most value from BPO choose providers that bring sophisticated analytics and industry knowledge to the relationship, and they enable their partners to go broader and deeper to deliver insights and innovative solutions.

1 Thomas H. Davenport, Jeanne G. Harris and Robert Morison, Analytics at Work: Smarter Decisions, Better Results (Harvard Business Press, 2010). (Back to .)

2 " The 7 Things Your Health Insurance Customers Are Not Telling You ," Accenture, 2011. (Back to .)

About the authors
Rich Hunter is a senior executive and the global lead for Accenture's BPO offerings in Health & Public Service.

Leana Fowler is a senior executive in Management Consulting and leads the Payment Integrity offering in Health & Public Service.

Ann Kieffaber is a senior executive and the lead for Accenture's Health Analytics offering.