The $4 trillion healthcare industry is spending billions of dollars on mission-critical transactional platforms. Legacy systems that are inefficiently developed according to need then licensed to work on cloud infrastructure, make up a majority of this cost, and it’s an area that’s ripe for disruption. By using such technologies as RPA, ML, and AI, even a single cloud company could streamline transactional processes for health insurers (payers), cut operating costs significantly, and provide a way for stagnant, commoditized cloud service providers to set themselves apart from the competition. This is a problem that my company, nirvanaHealth, is working on right now.
Why SaaS Is Not Providing Enough ROI for Payers
The healthcare industry is currently spending $35 billion on SaaS offerings, not to mention the $40 billion they’re spending on developing or fixing existing transactional platforms and the $20 billion it takes to implement those solutions. A large part of this expenditure is due to the fact that legacy systems are still being used – and they’re not designed to be integrated into cloud infrastructure. Cloud providers like Amazon or Azure haven’t tapped the market either, so the result is an inefficient use of resources to manage segregated systems and try to get them to be compatible with the cloud.
Significant changes like the ones nirvanaHealth is working on wouldn’t be possible without the exponential improvements in automation made possible by modern technologies. With the vast amounts of transactions and data that make up the healthcare industry, powerful artificial intelligence can streamline the process.
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A Complex Industry for Cloud Providers to Tackle
I’ve been working to improve the healthcare industry’s transaction management for over two decades, and in that time, I’ve seen why cloud providers have moved on from solving the problem. At first glance, the healthcare industry seems like a ripe, low-hanging fruit, ready for picking. This is what many high-tech companies – such as Amazon, Microsoft, Oracle, Google, and Apple – thought back in the 2000s when they realized that there was potentially billions of dollars in untapped revenue for the company that could solve the transaction dilemma.
Almost as quickly, they realized that the healthcare industry is extraordinarily complex. There are almost constant regulations and compliance changes to keep track of that vary from state to state. The healthcare industry is, unfortunately, home to a lot of legacy thought as well. Even though the regulations constantly shift, technology adoptions are often very slow (as is seen by the healthcare industry’s slow response to ransomware, for instance). This legacy mindset rendered the “juice not worth the squeeze” in the eyes of the major cloud providers.
For the last five years or so, there has been a lot of talk about disrupting the healthcare industry, but there hasn’t been much action. We’ve been trying to change that at nirvanaHealth. We recognize the untapped potential of the over $170 billion total addressable market (TAM) that could come to the company that can bring automation into the healthcare transaction processes that not only reduce administrative costs but also avoidable medical costs. The total addressable market in healthcare for the cloud is $20 billion – but when combined with the opportunities in platform, implementation, SaaS, and cloud, it is $170 billion.
Right now, cloud providers are quickly becoming commoditized, differentiated only by slight differences in the services they provide and different cost savings. All that could change with a leveraged partnership between a company like nirvanaHealth and any large cloud provider, such as Amazon Web Services. By building transactional platforms on cloud-native architecture using RPA, ML, and AI specifically for cloud providers, it would be possible to set a cloud provider apart from the competition while at the same time providing a significant reduction in costs for healthcare payers. Ultimately, the result could be decreased costs to the consumer, taxpayer, and insurance companies.
With continuous advances in automation and AI, costs could be consistently driven down as a platform improved. Due to the large upfront investment in moving to a transactional platform, such a development could also ensure long-term SaaS streams of revenue for the company that successfully implements them. New tech companies have a golden opportunity in front of them to streamline a legacy healthcare problem, as well as provide cloud service providers access to a huge potential upside. We at nirvanaHealth are trying to tap that stream.