All together, or together separately?

Recently, we heard about a company that plans to centralize its disparate proposal units into a single group. While such initiatives are not new in health care – we have seen centralization of claims, call centers, and other functions – it’s useful to examine the reasons behind such moves to help ensure that the organization will be successful in achieving its objectives.

Manyyears ago, I worked on a project to move several local health plan functions into a regional service center. The service center was to combine claims processing, enrollment and billing, and member and provider call center services under one roof. The objectives were to:

  • standardize process
  • standardize information systems
  • achieve economies of scale

Standardizing information systems was difficult, but doable – all of the individual systems were converted to the reference system before the health plan’s functions were moved to the regional center. Achieving economies of scale was possible, and done to a great extent – through a shared, standardized facility, shared resource functions (human resources, training, systems support, etc.), and standardization of job types.

Standardization of process – no.

See, each health plan’s functions were “together separately.” Each, as a separate, unified, and integrated subgroup at a local plan, had its own way of going about processes for adjudicating claims, enrolling members, reconciling billing, or answering phone calls. When the function was moved to the regional service center – “all together” – everyone assumed that the process would be that ideal, conceptual process that the service center’s leaders had imagined.

Except that it didn’t happen.

These processes were inextricably driven and supplemented by the knowledge of the people who originally created and operated them; by the connections each process had with other processes that remained at the local health plan; and by the conventions that existed between the health plan and its external stakeholders, including the plan’s members and providers, state regulators, community agencies and advocates. Picking up the process and moving it does not automatically preserve those things. It instead destroys knowledge (the people did not move); breaks connections (the local plan employee had the relationship, the regional employee does not); and forgets conventions (the regional center has no idea what the norms really were).

So, the regional center scrambled – to recover from the ensuing chaos.

I am not against centralizing a function. It is possible to preserve the useful parts of the knowledge and relationships; while pruning those things that are not benefiting anyone in the system. Doing so is critical to realizing the objectives; as in those set out for the regional service center. None of it is easy,  because it concerns the soft parts of the process – things that do not appear in a flowchart or procedure. It’s about knowing whether a particular decision maker prefers email or a phone call; or whether, contrary to contract, there is an informal agreement that a report to a regulator will be formatted in a particular way.

Returning to the original issue – the consolidation of proposal centers into a single unit – similar problems will arise. Such a center will serve multiple lines of business with differing stakeholder expectations, different problems to solve, and existing threads of relationships with subject matter experts that need to be understood and preserved, changed, or discarded as best suits the vision.

Centralizing, then, means understanding all of the elements that cause the functions to be productive.



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