Traditionally, Healthcare Innovation has centered on well being system tech deployments with much less give attention to what is occurring on the payer aspect, though over time the rise of “payviders” and built-in well being programs has shifted that focus considerably. However final week I had a captivating dialog with Kevin Adams, CEO of HealthEdge, one of many largest suppliers of software program and companies to the well being plan market. One of many issues he mentioned that shocked me is that his firm often doesn’t interact with well being plan CIOs, however works straight with CFOs and chief working officers on enterprise course of transformation. Learn on for a evenly edited model of our dialog.
First, some background about Adams: Amongst different positions, he has served as CIO at Cigna and CTO at Edifex. In 2015, he based an organization referred to as UST HealthProof. Right here is his description of that launch: “I wished to begin a enterprise that was centered on group and regional well being plans to assist them change into extra environment friendly and efficient, in order that they may higher compete with the nationals,” Adams mentioned. “Most of our clients had been provider-led well being plans that wanted a major quantity of operational effectivity, so we constructed a whole mannequin that mixed expertise and the companies to run the enterprise on prime of the expertise and offered a assured final result, which means claims had been processed, and it was a assured value, and that value usually was 20% to 40% cheaper than what anyone else might do. We took it from zero to $520 million in income and 5,000 staff over the course of 10 years. Then Bain got here and acquired us and mentioned you are going to go assist everyone, not simply the small guys.”
Certainly, in 2025 Bain Capital acquired UST HealthProof for $1.3 billion and merged it with portfolio firm HealthEdge.
Healthcare Innovation: Might you begin by speaking about that merger of UST HealthProof and HealthEdge?
Adams: UST HealthProof was HealthEdge’s largest buyer. We had been an vital a part of the HealthEdge enterprise. Most integrators say we’ll combine anyone’s stuff. However as a result of our drive was to simplify and scale back price, HealthEdge was the spine of our method, and there are many advantages to that by way of focus.
We turned a really giant buyer and will drive lots of price discount within the software program pricing, however extra importantly for us, all of our processing, all of our implementation sources, everyone solely needed to know one piece of software program. We did not need to know the myriad of issues that almost all integrators like an Accenture would wish, so we may very well be rather more environment friendly, rather more efficient, as a result of we had been so centered on what we did.
We name our enterprise mannequin “enterprise course of as a service.” We went to well being plans and mentioned we are going to course of your claims with accuracy and compliance and all these fundamentals, however we will do it 30% or 40% cheaper than you are able to do it. The one factor well being plans at the moment can do to be extra environment friendly is to work on their working prices. The issues round medical loss ratio [MLR] or the medical aspect of their price equation are going to take years to get fastened by way of both renegotiations or premium will increase.
HCI: Do lots of well being plans have inner programs that they attempt to develop and keep themselves or do most of them work with a predominant vendor associate, very like on the supplier aspect there is a huge EHR vendor like Epic or Oracle?
Adams: At present, when you break the market up, there are two giant suppliers of what I’ll name trendy expertise, and one in all them is us and the opposite is the Trizetto arm of Cognizant. Cognizant has perhaps an 8% bigger market share, however we’re each in that roughly 20% vary of market, so occupying about 40% of the market. The opposite 60% of the market is made up of both legacy mainframe options that had been usually homegrown or legacy small software program suppliers that aren’t enhancing their software program anymore, however it’s too troublesome to maneuver off, so persons are nonetheless on it. There are a selection of small guys on the market, however the largest quantity is on mainframes nonetheless.
HCI: And is that problematic? With the best way that expertise is altering and AI is being introduced into issues, are the plans which are nonetheless on these legacy mainframe programs struggling?
Adams: Sure, so this will get again to my remark round how Bain goes to make us service everyone. It’s really each actually good for our enterprise and equally difficult, as a result of the mainframes have traditionally been very giant. When you have a look at Anthem’s mainframe, it is obtained 35 million members on it; Cigna’s mainframe has 20 million; Aetna’s has 26 million. Traditionally there hasn’t been trendy expertise to assist that diploma of measurement. However we simply completed a validation with AWS to scale our product to 35 million members, so we now know that we are able to assist that degree of membership, and due to this fact well being plans are coming to us in droves. The power to assist mainframes is getting very troublesome due to getting older out, and no person can do COBOL anymore, to not point out the IBM stuff could be very, very costly on the mainframe aspect to assist. However most significantly, the shortage of flexibility in that software program — I imply, these are Seventies-era, so the quantity of complexity and the shortage of flexibility is forcing these well being plans to maneuver. I can not inform you the title, however we’re at first of a really, very giant mainframe inhabitants transfer, and we’re super-excited about what which means.
Additionally, CMS has initiated an RFP to maneuver all of fee-for-service Medicare, which is 34 million People. They’re going to do a bake-off over the following six months to take away or substitute the mainframes that run price for service.
HCI: You held the CIO function at Cigna. What points are the well being plan CIOs grappling with at the moment? What retains them up at night time?
Adams: Actually, our enterprise mannequin does not actually speak to the CIO all that a lot. Sometimes while you have a look at a well being plan, the management focuses on product innovation — distinctive reimbursements, distinctive networks, distinctive advantages, distinctive pairings of a wide range of totally different capabilities. The second factor that they give attention to is price, whether or not it is driving down medical loss ratio, which is 85% of each greenback, or the executive loss ratio, which is 15% of the overall greenback spend.
When the CEO is complaining to the enterprise that you do not have product innovation otherwise you’re costing an excessive amount of, that is a CFO-COO dialog. So our main goal market is the COO or the CFO. What usually occurs within the bigger well being plans is a COO is saying to the CEO or CFO, “Hey, my arms are tied. We’ve obtained this [lousy] system over right here. I’ve obtained to do what I’ve obtained to do to be modern right here, and I am constrained by what the system is.” Sadly, what then occurs is that they level the issue on the CIO and say, “Go repair this drawback.” However they don’t know easy methods to repair that drawback. It actually requires a hand-in-glove method with the enterprise, and that is simply not what CIOs do, proper? Whenever you give a CIO an issue, they need to purchase new expertise, and so they need to go construct one thing.
So what we inevitably find yourself doing is speaking to the COO and saying, “We will clear up this drawback; you do not even want the CIO, as a result of we’ve got all of the expertise, we do all of the implementation work, we do all of the IT assist; we then do all of the enterprise processing.” So mainly, the COO is outsourcing the enterprise course of itself to us, and we assure the value level for that course of, inclusive of all of the expertise stack that is underlying it. So the CIO does not really like us rather a lot, as a result of we’re lowering the CIO’s function, however we’re bringing important tangible greenback enterprise worth to the well being plan. Not solely can they now supply new merchandise or change merchandise in a short time, however they’re additionally doing it at a value level that’s considerably decrease than they had been doing it earlier than.
HCI: OK, let’s shift somewhat bit and discuss AI. Have the well being plans been pretty early adopters of AI or have they been laggards? Or someplace within the center?
Adams: I believe everyone has tried to do one thing. The pixie mud is a really laborious factor to stroll away from. I used to be lately speaking to 1 CEO who has a board directive to have an quantity of financial savings pushed by AI, as a result of the board believes that it might occur.
You may have two types of AI, and at the moment 95% of what is occurring is within the first type, and that first type basically finally ends up being a glorified model of RPA, or robotic course of automation, the place you do not change the underlying drawback however you place a wrapper layer round it to handle the issue. What I am saying to most anyone who will hear is that you simply now have to take care of two advanced programs. You’ve obtained a complete group of people that perceive easy methods to keep this wrapper layer, however you then nonetheless have this underlying legacy expertise footprint. So so long as you are having to take care of each of these, you are by no means going to get effectivity out of it.
One of many the reason why I used to be so keen concerning the mixture of HealthEdge and HealthProof is that the HealthProof aspect of the equation are enterprise individuals who perceive easy methods to make the claims higher, sooner, cheaper, whereas the HealthEdge aspect have the tech savvy. With out these two issues collectively and totally aligned, it was very troublesome to get the answer to the place it wanted to be.
Our purpose as HealthEdge is to embed AI straight into the core processing engine to remove the issues from ever occurring within the first place.
HealthProof’s drive was to get prices down as little as attainable, and we’re most likely one-fifth of what it was after we began the enterprise 10 years in the past. I need to get that price as near nothing as we are able to get it utilizing AI tooling, and we’re already making nice strides on that. Then I believe over the following two to 3 years we’ll most likely remove, 50% of the individuals wanted to course of claims through the use of AI embedded straight into our, merchandise.
I imagine 95% of AI at the moment isn’t driving measurable outcomes, however the 5% is driving big outcomes. Whenever you’re really utilizing AI on the core, you then’re in a position to obtain a lot better outcomes. The issue that I’ve with AI proper now’s the the token price is so excessive that while you begin to embed these items into claims processing, it turns into an uncontrollable token price and the best way the programs are constructed at the moment is that they are they’re nonetheless pretty monolithic, and so they’re not damaged down sufficient to have the ability to isolate your token utilization to a specific piece of the enterprise. We’ve some work to do on the software program itself to allow it to be leveraged, after which the second factor is till token price can get down from 40 cents to five cents, it’s going to be very troublesome to actually make it ubiquitous.
HCI: After we interview individuals on the supplier aspect, we hear rather a lot about a contest between suppliers and payers utilizing AI round prior authorization and declare denials. Do you see that?
Adams: One of many advantages of Bain Capital shopping for us is that they personal athenahealth, so I particularly requested a connectivity between us. They went as far as to place their chief product and officer, Paul Brient, on our board. He and I are actively discussing methods to deliver these two capabilities collectively. His expertise creates a declare, my expertise processes the declare, so why does that need to be to this point aside? Within the first dialog I had with Paul, I mentioned to him we’re beginning a bot struggle within the UM [utilization management] subject, and that may assist no person. Principally by way of ambient AI, they decide that an authorization is required. They robotically collect the knowledge, create the authorization, and ship it to the well being plan. Most well being plans at the moment haven’t got AI responding. In order that they manually reply, and whether it is denied, the rebuttal and enchantment to that denial takes one second. So it is solely a matter of time earlier than the denial takes one second on the well being plan aspect, after which the enchantment will take one second, after which it turns right into a grievance, and also you’re proper again to the place you had been within the first place the place you’ve obtained to have two individuals speaking to determine all of it out.
I do not say this fairly often, however the authorities wants to determine some higher guidelines for this on the Medicare degree. That’s 70 million People — somewhat over 1 / 4 of the overall American inhabitants, so I believe that is an ideal place to begin. It’ll get a very good proof level for the way you are able to do it within the industrial markets, additionally. And that might be a dramatic price improver, as a result of it will simplify the general drawback.
