Winning hearts and minds - healthcare industry's adoption of electronic data interchange

Healthcare Financial Management, Nov, 1996 by James J. Moynihan

This has been a good year for EDI. The Health Insurance Portability and Accountability Act established a timetable for national implementation of EDI standards. HCFA fiscal intermediaries continued their migration to EDI X12 formats from older file layouts. HCFA moved aggressively to pilot the claims status report standard (277), providing much needed leadership in the payer community. And more payers used EDI, not only for claims and claims payments, but also for eligibility transactions. EDI volume is increasing exponentially and costs are declining for providers.

While this progress is encouraging, it does not appear that EDI has entirely won the hearts and minds of the healthcare industry. One leading indicator reveals that the industry is not yet at the point where all providers believe that business communication should be electronically based and that paper-based transactions should be used only when electronic transactions are not possible.

This indicator is the increasing sales volumes of high-speed laser printers, which many healthcare providers recently have acquired or plan to acquire. Such printers clearly are technologically superior to older, slower printers, but this kind of progress is known in the computer industry as "paving the cowpaths." The expression arises literally from the streets of Boston, which were laid out along cowpaths in the 17th century. By the 20th century, those streets had been paved, a clear improvement over mud. But cow-paths proved not to be efficient designs for 20th century roads. If provider transaction volume is large enough to justify high-speed printers, a better solution would be to use EDI. If information is being printed on standard forms in high volume, providers should transmit the information electronically and eliminate paper-based processing.

Providers use high-speed laser printers for both accounts payable and accounts receivable applications. If providers used electronic commerce applications, the need for high-speed laser printers would be eliminated. Using procurement cards alone could eliminate 30 percent of all accounts payable checks because one consolidated bill from the merchant card bank for all card charges can be paid with one electronic payment. Check volume could be further cut through EDI payments and employee direct deposits.

Some of the same technology used by a provider's accounts payable department may be used to generate patient refunds and patient billing statements. Providers are increasingly using credit cards to obtain payments from patients; some providers also credit refunds to patients' credit cards. Other providers use direct debit programs to collect funds from patients who have outstanding balances.

Of course, paper-based transactions never will be completely eliminated, but by using EDI, providers' employees may realize that they manage information and cash, not paper and filing cabinets. When employees view their jobs that way, EDI will have won the hearts and minds of the healthcare industry.

James J. Moynihan is a principal of McLure-Moynihan, Inc., Sherman Oaks, California. He can be reached at (818) 501-3967 or via the Internet at JJMOYNEDI@AOL.COM