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IT industry getting stimulus from health reform

The "administrative simplification" portion of the act could be worth $2-3 billion to IT, according to Greg Scott, who runs Deloitte's New York Health Practices office.
Written by Dana Blankenhorn, Inactive on

The combined demands of health reform amount to a mandate for insurance technology modernization. (Health reform image from CBS.Com.)

That is the view of the Deloitte Center for Health Solutions, an arm of the accounting firm which explained its reasoning in a press release.

It's the "administrative simplification" portion of the act that will provide the biggest boon, according to Greg Scott, who runs the accounting firm's New York Health Practices office.

Until the health reform debate got rolling last year, the Deloitte Center was headed by former Wisconsin Governor Tommy Thompson, who is also President of Logistics Health Inc., which got three contracts from the 2009 stimulus worth $277,000, according to Daniel Bice of the Milwaukee News-Sentinel.

Companies like Logistics Health also stand to gain from health reform, as insurance companies and hospitals focus on making changes the law makes necessary. Thompson recently decided against a run for U.S. Senate as an opponent of the stimulus and health reform.

The administrative simplification rules IT will benefit from now cover how carriers interact with providers for things like verifying eligibility, submitting claims, checking claim status and receiving remittances.

Scott is quoted in the Deloitte release, "Those will be significantly streamlined and standardized, requiring significant technology investment on the part of insurers."

How significant? Deloitte says the insurance industry thinks administrative simplification alone to be worth $2 billion to the IT industry, and could be up to 50% higher.

Not all the money will go into new software and hardware, Scott cautions. Much of the money will have to be spent internally, changing procedures and retraining employees.

But it's still a significant stimulus. And that's just in the fine print, for one industry.

It should be noted here that Scott was not cheering this news. He covers the side of the business that must pay for all this, not the side that takes the orders. Change may be good or it may be bad, but one thing IT managers know is it is profitable.

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