Healthcare Payer Analytics: A Brief Look at the IT Vendor Landscape

Nancy FabozziThis article is the third and final installment of the Healthcare Payer Analytics series by Nancy Fabozzi. Review Part I and Part II.

Frost & Sullivan has recently conducted research with top healthcare payer organizations to address key trends impacting the market for analytics solutions used by payers. By “analytics solutions,” we are specifically referring to three types – 1) platform or core IT applications generally used for heavy—lifting or “big data” functions; 2) point solutions that are usually business-case oriented; and 3) services which refer to the use of external vendors used to perform analytics functions (e.g., business process outsourcing).

In the first article highlighting top line research findings (published December 2013), we identified the top three drivers for payers’ increasing interest in deploying analytics solutions, namely the need to manage new levels of risk resulting from ACA; increased responsibilities to report on national quality initiatives including HEDIS and Star Ratings; and the need to identify and drill down on cost drivers at the condition, member, physician and hospital level.

The second article, which ran in January 2014, addressed the top three analytics challenges for payers as identified by our panel of experts, specifically, data Integration, data governance and access to clinical data from providers.

In this third and final installment of our series, we’ll take a look at some characteristics of the vendor landscape, including select analytics vendors identified by survey respondents.

Select Vendors Serving the Payer Analytics Market
Numerous vendors serve the analytics market on both the payer and provider side. As with healthcare providers and many other businesses, payers often deploy a variety of IT vendors to meet different business needs. When we asked respondents to identify the total number of analytics platform, point, or services vendors deployed by their organization, almost half said they use between 2 and 5 vendors while 15 percent said they use only one core vendor. Breaking out the number of vendors by type of solution, respondents identified a slightly higher number of vendors for platform solutions and services as opposed to point solutions, which we consider to be more narrowly focused applications. This situation could change as the number of niche analytics vendors continues to multiply to address specific functions associated with patient engagement and population health. While some of these niche applications will undoubtedly be provided by established vendors already serving the market, look for new and nimble companies to come into the payer analytics space as well. This is inevitable given the level of need.

So who are the established vendors our respondents identified? While the following is certainly not an exhaustive or robust list of market players, we would like to highlight a few of the companies mentioned by our expert panel. As for platform analytics solutions, IBM, TriZetto, Verisk Health, ZeOmega, QlikView, Optum, SAS, Teradata, Inovalon (formerly MedAssurant), and Ab Initio were mentioned. Point solution vendors of note included SAS, Optum, MEDai, 3M, and the ever-popular “homegrown”. Mentions for analytics services vendors included MEDai, Optum, Teradata, Truven’s CareAnalyzer (wining big for HEDIS), and Verisk Health. Interestingly, Optum was the only vendor mentioned across each solution category, which is perhaps indicative of this vendor’s unique breadth and reach across the payer space.

Most Payers See Value in Analytics Solutions and Plan to Increase Investments for 2014
As we mentioned in the December 2013 article, our research indicates that payers will be devoting more financial resources to analytics solutions. More than half of our expert panel, which consisted of 20 executives from payer organizations across the US, said that they plan to increase investments in analytics solutions in 2014. The amount of investments will obviously vary depending on the size of the organization, but around half of respondents said that their 2014 investments will be in the $2 million to $4 million range. When we asked our panel to categorize the ROI for their previous (2013) analytics solutions, around two-thirds said that their expectations were met or exceeded, indicating a high degree of satisfaction.

Nancy has extensive experience conducting strategic healthcare market research for leading global management consultancies, healthcare corporations, and provider organizations. In her current role as Principal Analyst for Frost & Sullivan’s Connected Health practice, Nancy focuses on U.S. healthcare reform and the digital transformation of healthcare, including clinical and financial IT solutions used by healthcare payers, providers, and consumers. To learn more about Frost & Sullivan’s Connected Health research program, please click here or email Nancy.