How the Cloud Could Transform the Role of Health Insurers

The headline over at Forbes.com, “Could Computers Replace Health Insurers?”, certainly is an attention-grabber. Neal Patterson, CEO of healthcare IT firm Cerner, is quoted by Forbes' Matthew Herper speculating that insurance companies—at least in the healthcare sector—will eventually be acting "as intermediaries between governments and consumers, and the providers of medical care will be replaced by a new middle layer of cheap and powerful computers."

As Patterson put it: “About a third of healthcare never gets to healthcare delivery. Instead, it gets consumed in this high-friction middle. I broadly envision a new middle that is a frictionless system. Instead of taking 20 percent to 30 percent of the dollar it should be operating in single digits. This should be consuming less than a dime of our healthcare dollar.”

Patterson goes on to make an interesting observation: that part of the plight of today's healthcare delivery system is that it's a reactive model that pays and pays and pays for doctors and emergency room visits—fee for service. The system should be more of a predictive one that treats healthcare more holistically and puts intelligence into financing mechanisms. Technology can make this possible.

Patterson sees insurance companies assuming the role of managing the intelligence layer that provides healthcare practitioners a much more complete picture of patients, thus encouraging more wellness and preventative care.

Prevention and prediction is nothing new for the industry, of course. On the P&C side of the industry, many insurers have taken leading roles in research and advocacy for increasing automobile safety and fire safety.

What will be increasingly demanded within health insurance enterprises—and continue to be demanded within P&C carriers—are analytical capabilities, and thus systems, that help carriers better understand risks and prevention. There is a lot of work ahead to build these systems.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

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