Health Insurance Industry Reference Architecture

Capability maps, value streams, and strategy maps for health insurance organizations.

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Our Advice

Critical Insight

Using an industry-specific reference architecture is central, and has many benefits, to organizational priorities. It’s critical to understanding, modeling, and communicating the operating environment and the direction of the organization, but more significantly, to enabling measurable top-line organizational outcomes and the unlocking of direct value.

Impact and Result

Health Insurance Industry Reference Architecture Research & Tools

1. Accelerate the strategy design process

Leverage a validated view of the hospital ’s business capabilities to realize measurable top-line business outcomes and unlock direct value.

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Health Insurance Industry Reference Architecture

Business Capability Maps, Value Streams, and Strategy Maps for the Health Insurance Industry

Analyst Perspective

In the age of disruption, IT must end misalignment and enable value realization.

An industry reference architecture helps accelerate your strategy design process and enhances IT’s ability to align people, process, and technology with key business priorities.

Health Insurers require a unified and validated view of their capabilities that aligns product development, distribution and underwriting, policy management and servicing, and claims management to provide value to patients and stakeholders.

Health insurance organizations are a central component of the healthcare system and interact with providers and other points of care across the healthcare continuum.

Health insurers are focused on developing products and services that facilitate the payment of health costs related to illness or injury.

Depending on where you live, health insurance may be provided as single, private, or public government payers, or through a combination of private insurance and public government payers.

Jennifer Jones

Research Director, Healthcare

Info-Tech Research Group

Executive Summary

Your Challenge

Common Obstacles

Info-Tech’s Approach

Info-Tech Insight

Using an industry-specific reference architecture is central and has many benefits to organizational priorities. It’s critical to understanding, modeling, and communicating the operating environment and the direction of the organization, but more significantly, to enabling measurable top-line organizational outcomes and the unlocking of direct value.

Reference Architecture Framework

Overarching Insight

Using an industry-specific reference architecture is central and has many benefits to organizational priorities. It's critical to understanding, modelling, and communicating the operating environment and the direction of the enterprise, and more significantly, to enabling measurable top-line business outcomes and the unlocking of direct value.

Determine your organizational priority.

Many organizational priorities are dependent on an understanding of how the organization creates value and the organization's capabilities and processes.

Examine organizational opportunities through the lens of business, information/data, applications & technology

Your understanding of your organization's business capabilities, processes, (rules & logic), information/data, and architecture will identify organizational opportunities to create value through reduced costs or increased revenues and services.

Follow Info-Tech's methodology to enable organizational outcomes and unlock direct value.

Your approach indicates the scope of your modernization initiatives.

Build your organization's capability map by defining the organization's value stream and validating the industry reference architecture.

Use business capabilities to define strategic focus by defining the organization's key capabilities and developing a prioritized strategy map.

Assess key capabilities for planning priorities through a review of business processes, information, applications, and technology support of key capabilities.

Sustain capability-based strategy planning through ongoing identification and roadmapping of capability gaps.

The image is a graphic with concentric circles. At centre is Value (Revenue, Margin, Assets). The next level is separated into 4 sections: 1. Build, 2. Define, 3. Assess & Prioritize, 4. Sustain. The next level is also 4 sections: Business; Information/Data; Applications; and Technology. The next level includes a number of sections, connected to the previous areas: Governance & Risk; Business Context; Business Strategy; IT Strategy; Innovation; IT Budget; Digital Transformation; Core Application Rationalization & Modernization; IT Service Mgmt; Requirements; Data; Org Design/Operating Model. The outermost layer includes the title Industry Context.

Industry Overview: Health Insurance

Health Insurance organizations operate in an interconnected web of products and service providers that create opportunities for people to have healthy lives.

The cross-integration of healthcare is driven by the complexity required to maintain good health. Healthcare payers such as insurance companies and government institutions often pay for a portion of or all products and services. Health insurance organizations are a key component of the healthcare system and interact with hospitals, medical, dental, vision and other points of care across the healthcare continuum. Finally, both providers and patients use healthcare products to manage health.

Health insurers are focused on developing products and benefits for the payment of health costs related to illness or injury. The primary activity of health insurers is to underwrite a variety of claims and develop products and services that create opportunities for patients. Increasingly, health insurers are focused on preventative care of patient outcomes, reducing healthcare costs using predictive analytics, and early intervention data models.

Depending on where you live, insurance may be provided as single payer, private insurance, public government funds, or through a combination of private insurance and public government payers. Insurance services vary by policy holder and polices are often based on pre-defined selections by employers.

Product Development → Distribution & Underwriting → Policy Management & Servicing → Claims Management

Figure above: Value Chain for the Healthcare Industry

Business Value Realization

Business value defines the success criteria of an organization as manifested through organizational goals and outcomes, and it is interpreted from four perspectives:

Business Value Matrix

Outward
Improved capabilities Customer and market reach Profit generation Financial benefit
Service enablement Cost reduction
Inward

Value, goals, and outcomes cannot be achieved without business capabilities

Break down your business goals into strategic and achievable initiatives focused on specific value streams and business capabilities.

Business Goals & Desired Outcomes Business Initiatives Level 1 Business Capabilities Level 2 Business Capabilities
Achieved Through → Create or Improve →

Health Insurance and healthcare business capability map

The image is a business capability map, with the following categories: Product Development; Distribution & Underwriting; Policy Management & Servicing; and Claims Administration.

Business capability map defined…

In business architecture, the primary view of an organization is known as a business capability map.

A business capability defines what a business does to enable value creation, rather than how. Business capabilities:

A business capability map provides details that help the business architecture practitioner direct attention to a specific area of the business for further assessment.

Glossary of Key Concepts

A business reference architecture consists of a set of models to provide clarity and actionable insight and value. Typical techniques and terms used in developing these models are:

Term/Concept Definition
Industry Value Chain A high-level analysis of how the industry creates value for the consumer as an overall end-to-end process.
Business Capability Map The primary visual representation of the organization’s key capabilities. This model forms the basis of strategic planning discussions.
Industry Value Streams The specific set of activities an industry player undertakes to create and capture value for and from the end consumer.
Strategic Objectives A set of standard strategic objectives that most industry players will feature in their corporate plans.
Industry Strategy Map A visualization of the alignment between the organization’s strategic direction and its key capabilities.
Capability Assessments Based on people, process, information, and technology, a heat-mapping effort that analyzes the strength of each key capability.
Capability An ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and typically require a combination of organization, people, processes, and technology to achieve.

Tools and templates to compile and communicate your reference architecture work

The Health Insurance Industry Reference Architecture Template is a place for you to collect all the activity outputs and outcomes you’ve completed for use in the next steps.

Info-Tech’s methodology for a reference architecture

1.1 Define the Organization’s Value Stream

1.2 Develop a Business Capability Map

2.1 Define the Organization’s Key Capabilities

2.2 Develop a Strategy Map

3.1 Business Process Review

3.2 Information Assessment

3.3 Technology Opportunity Identification

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

"Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful."

Guided Implementation

"Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track."

Workshop

"We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place."

Consulting

"Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project."

Diagnostics and consistent frameworks are used throughout all four options.

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

A typical GI is between six to nine calls over the course of one to four months.

Phase 1

Call #1: Introduce Info-Tech’s industry reference architecture methodology.

Phase 2

Call #2: Define and create value streams.

Call #3: Model level 1 business capability maps.

Phase 3

Call #4: Map value streams to business capabilities.

Call #5: Model level 2 business capability maps.

Call #6: Create a strategy map.

Call #7: Introduce Info-Tech's capability assessment framework.

Phase 4

Call #8: Review capability assessment map(s).

Call #9: Discuss and review prioritization of key capability gaps and plan next steps.

Phase 1

Build your organization’s capability map

Phase 1

1.1 Define the Organization’s Value Stream

1.2 Develop a Business Capability Map

Phase 2

2.1 Define the Organization’s Key Capabilities

2.2 Develop a Strategy Map

Phase 3

3.1 Business Process Review

3.2 Information Assessment

3.3 Technology Opportunity Identification

Phase 4

4.1 Consolidate and Prioritize Capability Gaps

This phase will guide you through the following activities:

This phase involves the following participants:

Step 1.1

Define the organization’s value stream

Activities

1.1.1 Identify and assemble key stakeholders

1.1.2 Determine how the organization creates value

1.1.3 Define and validate the organization’s value streams

Build your organization’s capability map

Step 1.1 → Step 1.2

This step will guide you through the following activities:

This step involves the following participants:

Outcomes of this step

1.1.1 Identify and assemble key stakeholders

1-3 hours

Input

Output

Materials

Participants

Build an accurate depiction of the business.

  1. It is important to make sure the right stakeholders participate in this exercise. The exercise of identifying capabilities for an organization is very introspective and requires deep analysis.
  2. Consider:
  3. Avoid:

Define the organization’s value streams

The image is a graphic, arranged horizontally. It begins on the left with the Industry Value Chain, then arrows point right to the Value Receivers: Customers; Partners. There is another arrow pointing to the right, to the Value Streams. Beneath that, are boxes labelled Capabilities.

Value stream descriptions for health insurance

Value Streams:

Product Development

Distribution & Underwriting

Policy Management & Servicing

Claims Management

Determine how the organization creates value

Begin the process by identifying and locating the business mission and vision statements.

Business Strategy Documents

What is business context?

“The business context encompasses an understanding of the factors impacting the business from various perspectives, including how decisions are made and what the business is ultimately trying to achieve. The business context is used by IT to identify key implications for the execution of its strategic initiatives.” (Business Wire, 2018)

1.1.2 Determine how the organization creates value

1-3 hours

The first step of delivering value is defining how creating value will happen.

  1. Use the organization’s industry segment to start a discussion on how value is created for customers. Working back from the moment value is realized by the customer, consider the sequential steps required to deliver value in your industry segment.
  2. The first step to delivering value is defining how creating value will happen. Consider:
  3. Avoid:

Health Insurance Industry Reference Architecture visualization

Capability maps, value streams, and strategy maps for health insurance organizations.