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

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.

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