Health care reform presents opportunities for some firms

Many businesses in the U.S. are challenged with trying to figure out how to deal with, and how they will be affected by, federal health care reform.

But at the same time, the federal health care reform law is creating business opportunities for some firms.

Forbes magazine has called 2013 “The Year of Digital Health,” in part because of the federal health care law, saying “the value of the digital health revolution to health care and wellness is almost immeasurable.” There is every indication that the health care industry is in the midst of a seismic shift toward embracing new technology, and there are businesses in the Milwaukee area that are well-positioned to grow with the industry’s digital changes.

Because of early embrace of the “digital health revolution,” Connecture, API Healthcare and Health Payment Systems are three companies with considerable prospects for growth in this rapidly changing marketplace.

Connecture

In 2011, Connecture Inc. had total sales of $40 million. In 2012, that number more than doubled to $87 million. The company moved its corporate headquarters from Pewaukee to Brookfield in 2012 and added 100 new jobs over the course of the year. And they’re still growing; the number of open positions right now is at 78. Those jobs will be created in Brookfield or Atlanta, depending on where the individuals hired want to work.

Connecture provides sales automation software for the health insurance industry, and a significant amount of the company’s recent success has to do with its quick response to the passage of the Affordable Care Act (ACA).

“When Obamacare passed, the need (for our products) became clearer,” said Dan Maynard, Connecture’s president and co-founder.

One of these products that will have a direct connection to new reforms is the Health Plan Management module, StateAdvantage, which allows states to create and operate state health insurance exchanges, a major component of the reform law. In the process of establishing these exchanges, Connecture provides web-based technology for citizens to shop for their health care plan.

Developing the StateAdvantage product was a natural progression of the development of Connecture’s InsureAdvantage product, said Maynard.

“We took advantage of technology that had already been developed, and we fitted it to apply a solution for states that could be successful,” he said.

Recognizing the change and developing the technology has paid off, with roughly $25 million of its 2012 sales coming from winning state exchange awards in two of the first states to implement the exchanges, Minnesota and Maryland. Connecture will also be helping build the state exchanges in the District of Columbia.

The company also recently acquired Los Angeles-based DRX, which focuses on shopping and enrollment in Medicare, and currently powers the Medicare.gov PlanFinder. While Connecture focuses on health care for those under 65 years old, DRX focuses on those over 65.

“You almost couldn’t find a better fit,” said Maynard.

For providers serving patients of all ages, newly established spending caps on administration costs are driving the industry to explore cost-saving options like the automation provided by Connecture’s software.

“When the law passed, there was a surge because we were strong competitively in the market,” said Maynard.

Health insurance exchanges are set to be in place by the beginning of 2014, and while navigating the details specific to each state will be challenging, Connecture is beginning to test the product with the state exchanges as early as April and growth is expected to continue.

Gov. Scott Walker decided not to create a health insurance exchange for Wisconsin, which means Wisconsin residents will use an exchange set up by the federal government.

API Healthcare

Hartford-based API Healthcare Corp. is another company that has seen significant recent growth, with a 60 percent year-over-year increase in sales bookings in 2012, the company’s 30th year in operation.

API’s business is in health care-specific workforce management technology, offering a platform to manage health care employees by optimizing employee placement and automating workflow. Staff scheduling, human resources, payroll and talent management are all components of API’s products, all specific to health care and all of which are paperless.

“We take clinical data and we use that in our algorithms to help schedule people,” said chief executive officer J.P. Fingado. “We’re placing the skill of the worker with the need of the patient.”

The Affordable Care Act’s focus on reducing cost and improving quality has increased the demand for the workforce solutions the company offers, said Fingado. With the ease at which the product can measure improvement, this can result in big savings for hospitals. In one instance, said Fingado, at Ellis Hospital in New York, employing the system resulted in $720,000 in savings in six months and a 26 percent reduction in overtime expenses.

According to a 2008 study by the Healthcare Information and Management Systems Society (HIMSS), “Just 44 percent of hospitals had fully implemented electronic medical records (EMR) systems,” and “the deployment of EMR and Electronic Health Records (EHR) is even lower.”

Fingado pointed to this HIMSS study as an indicator of the huge opportunities currently available for the company and its broad, macro view of managing the health care workforce. Its software also incorporates contingent staffing agencies to deal with issues like the current nursing shortage and the added strains expected with an estimated 30 million more people coming into the health care system.

“Demand has gone through the roof,” said Fingado, who joined the company in 2008, when the company had 600 clients. That number has grown to 1,600.

API’s goal for 2013 is to grow the workforce more than 20 percent, and is planning to add 100 new jobs, many of which will be at its Hartford headquarters.

Health Payment Systems

Milwaukee-based Health Payment Systems (HPS) is another company positioned for growth, and is doing so by streamlining the health care billing and collection process.

“ACA challenges include rising costs and mandates on business,” said president and CEO Jay Fulkerson. “Removing waste in all areas of the payment of health care services is our primary business. There is no better time for employers to embrace the single payment technology offered by Health Payment Systems.”

The company’s patented core product, the SuperEOB (explanation of benefits), consolidates all health care payments into a single monthly aggregated statement similar to a credit card statement. HPS works with providers, patients and third party administrators to deliver the SuperEOB, which is one of many products in development at the young company, which was founded in 2005.

Executive vice president of business development Jim Brindley says the company is “cutting edge” and is excited about the direction it’s headed, but that bringing in new ideas in the health care industry can be difficult.

“One of the challenges that we’ve experienced has been a certain resistance in the marketplace to game changing ideas,” he said.

But as more and more providers explore new options, billing becomes an important factor in the equation as it pertains to both cost-cutting measures as well as patient satisfaction.

“One of the things that Jay (Fulkerson) has always said is that a lot of these health care providers have been so focused on the patient experience while they’re in the hospital that they have given short shrift once they leave the hospital, which is when the paper starts to fly,” said Brindley. “Think of another business that has that kind of a mess at the back end. There isn’t one.”

HPS’ products have been well received. The company says it has never lost a provider once they’ve signed up. The products bring a positive experience for the consumer as well as a benefit for the provider, said Brindley.

The company is “growing at a substantial clip,” he said, and with changes from health care reform set to come on a larger scale in the coming months, more opportunities may be on the way for HPS.

“With the health care reform initiative over the last three or four years legislatively, it seems like the wind is starting to shift to our backs,” Brindley said.

Dan Shafer, former BizTimes Milwaukee reporter.

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