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IBM Wants to Cut Health-Care Paperwork

IBM Corp. Thursday announced a new service designed to cut down on the vast amounts of paperwork created in the nation's health-care system. Big Blue snagged its first client in health insurer Empire Blue Cross and Blue Shield.

The IBM system will use software from Lexington-Mass.-based deNovis that electronically reads statements and rules, automatically making payments to doctors, hospitals and pharmacies. Empire plans to implement the system for its entire network, which has 4.7 million subscribers and 85,000 providers in New York state. Financial terms of the 10-year deal were not disclosed.

IBM claims the new Net-based claims-processing system could help the health-care industry save up to $125 billion by eliminating the vast amount of paperwork it generates.

"This is a model for insurance companies to follow in cutting their administration costs by as much as 50 percent, saving billions of dollars," Russell Ricci, general manager of IBM Global Healthcare, said in a statement. "Reducing skyrocketing administration costs and encouraging wellness and preventive care programs are key elements in holding the line on the nation's $1.4 trillion healthcare bill."

Under its deal with IBM, deNovis will design its transaction-processing software and data warehouse infrastructure to run on IBM platforms, such as WebSphere. IBM will also lend deNovis its marketing and sales muscle to push the technology to health-care companies.

According to deNovis, the company's claims administration software reads forms correctly 95 percent of the time. The company was founded in December 1999 and received over $75 million in its first two rounds of venture funding.

The health-care industry has long tried to cut down on the reams of paperwork that flood the system, mostly to no avail. IBM's health-care unit has targeted the industry, offering its e-business services to mid-sized health insurers, like regional Blue Cross and Blue Shield companies.