Business case US Health benefits exchange: Evaluation of business opportunity; Unisys

Abstract

The legislation of PPACA by Obama government mandates the states to build a Health Benefit (Insurance) Exchange by January 1, 2014. This has opened up an avenue of opportunity for the IT business consulting, systems development and outsourcing enterprises. Out of the fifty states, 15 states, which includes the states of Utah and Massachusetts, established an exchange i.e. HBEX system work in progress or up and running, 18 are studying options, 2 have decided not to establish, and there is no significant activity from the rest twelve. The total investment in services, consulting and developing the HBEX systems over the next two years is projected to be $2.5 billion and the expenses on maintaining these systems for one year will be $196 million. HBEX comprises generic, commercially off the shelf and custom developed components. The eligibility, security and content management systems are generic solutions available as a software package from Unisys. Enrollment, Financial Management, Navigator and interfaces solutions have to be developed exclusively for the HBEX system. Database, web server and application server are the commercially off the shelf solutions. The value proposition Unisys offers to the individuals and small employees is – customer centric user interface, streamlined customer experience, plan comparison and plan selection, and tax credit and subsidy eligibility determination. The value proposition Unisys offers to the state is – lower total cost of ownership, leveraging states existing IT capabilities, faster time to market and adherence to state’s IT standards. The options available to Unisys in securing the contract are: >Status Quo >Build only generic systems >Build complete exchange >Partnership with firms >Secondary vendor The decision criteria used in evaluating the above options are – probability of winning the contract, capability of building the system, client satisfaction, value creation and future business opportunity Major competitors to Unisys in Healthcare domain are Deloitte, HP, Accenture and ACS. The constraints in securing the contract are – Unisys brand name, Expertise in healthcare domain, limited generic systems and consultancy services. The major risks involved in going for HBEX are – Supreme Court order restraining HBEX, impending US presidential elections, protests by physicians and insurance providers. The strategy to be adopted by Unisys for it to be a preferred vendor for states in the development of the HBEX system is to form a consortium with friendly competitors to establish a strategic partnership and maximize the value creation for all the stakeholders thereby enhancing the probability of securing the contract.