by Ken Murphy, Senior Features Editor | insiderPROFILES, Volume 8, Issue 2
As seen in SAPinsider
For many organizations, creating a self-funded healthcare plan for employees is an attractive option for managing or even reversing rising healthcare costs and insurance premiums. With these savings come new complexities, however, as many of the administrative tasks once held by the insurance companies now fall on the organization. Enter AdminaHealth – a company primed to help other organizations take those complexities out of the equation. Learn how AdminaHealth deployed SAP Business One to help its customers transition to a self-funded healthcare plan and opened lines of communication among all parties, generated automated reports for better visibility, lessened the administrative burden, and reduced healthcare costs for the companies and their employees.
Rising healthcare costs and insurance premiums are making self-funded healthcare plans an attractive option for many organizations looking to reduce costs. With a self-funded plan, a business doesn’t pay a fixed monthly expense to an insurance company but rather pays its employees’ medical bills directly to the medical provider, and stop-loss coverage guards the business against cataclysmic loss.
For those companies that decide to make the self-funded transition, many need help to minimize the cost uncertainty and handle the administrative burden that comes with self-funded plans. AdminaHealth LLC, a wholly owned subsidiary of Salus Finance, LLC, assists companies in the transition and ongoing management by providing them with an administration platform to manage and process payments to providers. This platform is delivered with SAP Business One — business management software that was designed for small and midsize enterprises (SMEs) and runs on SAP HANA.
Complete Business Software for a Startup
As its name suggests, SAP Business One, which is powered by SAP HANA, provides a solution to manage an entire business. This is precisely what Salus Finance and its wholly owned subsidiary Salus HEM needed when it opened its doors in September 2014 and immediately brought on a customer that wanted to be up and running with a self-funded plan with additional liquidity enhancement in just four months. In early 2016, after receiving several inquiries from prospects, Salus Finance decided to separately market the administrative software without the liquidity enhancement. As a result, AdminaHealth was spun off as a newly created division — and so began an administration platform that could serve as a repository for customers’ healthcare transactional data, provide tracking information, and deliver real-time reporting.
The business was surprised to find that SAP offered a solution appropriate for a startup with just a handful of customers, according to AdminaHealth Chief Operating Officer Robert Bull. “After analyzing various options, we quickly determined that SAP Business One best fit our needs,” he says. “First, it had the security we needed built right in, and its setup made it very easy to configure the different system interfaces and the reporting required. A large part of what we needed was already set up in the system.”
SAP Business One was implemented in three months, a month earlier than anticipated. The first use case of the new solution was its SAP S/4HANA Finance application, which AdminaHealth used to process transactions for its healthcare vendors. Electronic data interchange (EDI) communication was set up with numerous banks to move the payments, and the transactions were reconciled on the customers’ back end through integrations with their accounting software.
How Self-Funded Plans Work
Instead of paying a fixed cost to an insurance company, in a self-funded plan an organization absorbs the risk of its employee pool. The company pays its employees’ medical bills directly to the medical providers while stop-loss insurance helps protect the business against catastrophic or unpredictable loss claims. It is not uncommon for self-funded plans to see savings of 10% or more during years that experience average healthcare claims versus traditional fully-insured healthcare plans.
Self-funded plans are not without drawbacks, however. Cost uncertainty and the administrative burden are commonly cited as the two main sticking points. Without a fixed monthly cost, budget forecasting becomes imprecise; companies don’t know how much monthly liquidity they’ll need to cover healthcare costs. On the administrative end, tasks normally handled by an insurer fall to the company — such as onboarding, paying and reconciling claims, true-ups, vendor management, and so on.
From Financials to Account Management
Ease of use and the recognition that SAP Business One extended beyond financials was a key factor in AdminaHealth’s transition to using the solution to run the administrative tasks of self-funded healthcare plans and offer that service to its customers. By managing the vendor accounts for all the different healthcare-related service providers — such as medical, prescription, dental, vision, and so on — instead of only managing the reimbursement payments to employees, AdminaHealth could help its customers drive competition among providers and pass potential savings on to its employees.
The realization that SAP Business One could take on the administrative burden, Bull says, was aided in part by AdminaHealth working with a specific bank that had been impressed by the platform’s seamless management of payments. “This customer saw that the platform could save its business a tremendous amount of time and effort and drive additional value for its employees by splitting its offered plans and leveraging greater options to drive down provider costs,” he says.
With SAP Business One, AdminaHealth essentially saw an opportunity to provide customers with an all-inclusive platform to create and manage their healthcare plans. The solution can help to mitigate the administrative pressure that typically comes with self-funded plans as companies struggle to add vendors. “Managing the administrative end helps you reduce the cost of healthcare for the company and its employees, which means maintaining or, in some cases, increasing the level of coverage for employees,” Bull says. “That’s what the platform does.”
Growing with the Solution
While most SAP Business One customers use the solution as the back-end system to run their business, AdminaHealth is somewhat unique in the way it uses the application. While a manufacturer or retailer might use the solution to keep track of inventory, customers, and transactions, the end customer buying a product doesn’t directly interact with the software. The same doesn’t hold true for AdminaHealth customers, who manage their accounts through a user-friendly portal that directly connects to SAP Business One. A company’s HR and finance professionals can access the portal to view claims processing information, invoices, and payments. When HR managers log in to the company accounts to make changes — such as entering plan headcount numbers — they are likely unaware that the data is processed on an SAP HANA database. Vendors can also access the portal to enter coverage numbers.
Based on the enrollment data entered into the portal, AdminaHealth automatically calculates the company’s monthly stop-loss premium payment, conveys the information to the provider, and completes the electronic payment to the stop-loss provider. Likewise, when a payment is made on a customer’s behalf, the customer can access the portal to review and approve it, or make necessary changes. This can happen weekly or daily, depending on the number of employees or vendors a customer has.
After analyzing various options, we quickly determined that SAP Business One best fit our needs. First, it had the security we needed built right in, and its setup made it very easy to configure the different system interfaces required and the reporting. A large part of what we needed was already set up in the system.
Robert Bull, Chief Operating Officer, AdminaHealth
With SAP Business One, AdminaHealth customers and their providers have an open line of communication. “Vendors log in to enter claim information; the amount and the supporting documentation goes back to the employer for approval; and once it’s approved, AdminaHealth makes those payments on their behalf,” says Bull. “That was the initial phase for how we used SAP Business One. Since then, we’ve added a lot of reporting around that and another level of detail.”
The additional detail in the follow-up phase includes exception reports, where AdminaHealth verifies for its clients its paid claims against coverage levels and the services provided. It also includes true-ups, which can result in refunds to customers to account for reduced headcounts. “So far, the solution has worked very well, and the important thing is we were up and running on time and very close to budget,” Bull says. “Since then, we’ve been able to continually grow the product over time.”
For a company like AdminaHealth, for whom the product is inseparable from the company itself, growing the company along with the solution means something a little different than for most. “It’s an interesting dynamic, because for us, the product that is running on SAP software is our company,” Bull says. “When I talk to other companies, I see that many are using SAP Business One strictly as a back-end enabling product. But for us, it’s everything — it is, in essence, what we are selling.”