Why multiple applications constrain the effectiveness of risk pools

The number of core systems an insurance risk pool uses can have a major impact on the level of service that members receive, as well as the pool’s ability to make the best use of staff resources. Constantly jumping between multiple systems and trying to coax Word and Excel into accomplishing tasks they were never designed to handle is a recipe for performance issues. This can limit a pool’s growth and the types of services it can provide.

Activities most impacted

While the inefficiency of using a patchwork of applications to handle core business functions cuts across a wide variety of routine tasks, several activities performed by risk pool staff are particularly susceptible.

Calculating loss ratios

Assembling the information necessary to calculate loss ratios often involves building multiple spreadsheets and transferring data from several sources via copy/paste. This highly inefficient process is prone to errors. According to the ECRI Institute report, Copy/Paste: Prevalence, Problems, and Best Practices, the familiarity of the copy/paste technique explains why it is used so often. “However,” the report warns, “with several windows open, information can easily be copied into the wrong location. Secondly, copy/paste accelerates propagation of inaccurate information. The ubiquitous use of copy/paste means that, once created, an error can rapidly spread.”

This type of error is so common in the medical field that the industry has developed copy/paste management policies. The American Academy of Professional Coders (AAPC), a healthcare business organization, recommends the following:

The policy should include the stipulation that a provider must review the imported data, make necessary corrections, and add their signature attesting that they reviewed the imported data and found it to be correct (or made necessary modifications).

Following that recommendation means either implementing an additional set of quality assurance checks on top of an already cumbersome process, or accepting the risk of potentially corrupting the data while generating loss ratios. If these copy/paste errors are common enough to warrant developing an entire mitigation policy, they must occur with alarming frequency, even in settings where data errors can mean life and death. The only way to completely eliminate these errors is to remove the need to copy and paste altogether by keeping all of the data in one system.

Underwriting

Performing underwriting-related tasks can suffer from similar challenges. As noted in What are the switch costs of using legacy systems and spreadsheets to calculate member premiums?, “Moving back and forth between legacy systems and spreadsheets in the underwriting process—activities that may have become so routine as to feel like second nature—carries its own switch costs. In this case, the costs come in the form of inefficiency and added risk that impacts both risk pool staff and members.”

The article also discusses the 1-10-100 rule, which is often used to estimate the costs of data errors:

Verifying the quality of a record costs the business $1. This is known as the prevention cost. Cleansing and deduplicating a record costs the business $10. This is the correction cost. Working with a record that’s never cleansed costs $100. This is the failure cost. So, it is much cheaper to verify data than to correct it. And much cheaper to correct it than to work with bad data. Unfortunately, rekeying data—a frequent byproduct of a manual process—adds all three of these costs.

Certificate of Insurance (COI) management

In Managing certificates of insurance successfully, the labor-intensive aspect of the COI management process is examined:

A manual process for COI management can easily become a resource draining nightmare. In Why You Should Be Concerned with Certificate Tracking Gibson highlights, ‘… properly managing certificates of insurance poses a significant administrative challenge. It is time intensive and complex.’ It is this combination, time intensity, and complexity, that creates the administrative burden frequently associated with certificate management. A closer look reveals how each component contributes to this burden.

All too often, risk pools attempt to manage this burdensome task by using tools such as color-coded spreadsheets, calendar reminders, or even sticky notes. Unfortunately, these approaches do not scale well. They also require constant attention and are prone to lapses that could lead to member liability exposure resulting from non-compliant or expired certificates.

Values collection

The values collection process can be a monthslong endurance test consisting of emailing members to chase down completed forms, aggregating the numbers into spreadsheets, analyzing the quality of the data, and then repeating the process as needed for any missing or follow-up items. Taking control of the values collection process summarizes what this approach produces: “The result is a manual process that increases the administrative burden on staff—requiring, for example, sending multiple, ‘one-off’ emails to request values and follow up on status. Such a process also adds to the likelihood of values data being incomplete or inaccurate. Data collected from each location must then be aggregated, which usually means that it’s copied and pasted from individual spreadsheets into a master document or system that serves as the ‘single point of truth.’”

Invoicing

Many organizations routinely use Word and Excel to manage member invoicing. As noted in this blog post, many will simply accept this process as “normal” and make the best of the situation. “I never realized there was anything wrong with using Word and Excel to manage my business,” the author notes. “I was proud of my fastidious tracking system, my invoice naming conventions and folder structure, my weekly and monthly financial rituals.”

But organizations decide to use these tools for tasks they are not specifically designed for because they are widely available and, therefore, considered the “easiest” option. “Because of this,” the author concludes, “we inhibit the pesky signs that it’s the wrong way to manage your business. And we don’t notice just how much time it’s all taking.” Forcing a business process to run on applications that were engineered for other purposes typically results in inefficient, cumbersome workarounds.

The benefits of a single application solution

Aside from getting rid of the switch costs associated with application hopping, Origami Risk’s single-platform solution makes the task identified above much more efficient and accurate. Calculating loss ratios and underwriting become streamlined and simplified when all data is contained within a single source. With no need to transfer data, this also eliminates copy/paste errors and the associated costs they create.

COI management and the values collection processes are transformed by using an online portal. Custom portals, designed specifically to capture this information from members in an easy and accurate way, transfer much of the workload from your staff to your members and their vendors. Robust reporting and dashboards help the staff keep tabs on the process, while members and vendors use the portal to enter, update, and verify key data. And by using a tool actually designed to generate invoices, that process too is made efficient and simple.

Moving to a single-application solution does more than boost the productivity of your staff; it allows you to provide new levels of service to your members. Auditing functionality can support loss prevention training programs and help your members establish strong cultures of safety. Analytics can drive peer-based benchmarking and generate the feedback that members need to understand how effective their loss prevention initiatives are. By freeing staff resources from the burdens associated with a multiple-application approach, your team will have the time they need to fully deliver on the promise of your risk pool.

Contact us today to see how Origami Risk can make your operations more efficient and open the door to next-level services.