Irvine, Calif.-based MedCom now has seven healthcare provider clients in New York state using the MedCard System, which is based on software that allows doctors to verify insurance status in real time and check patient referrals via computers. Software from MedCom and its rivals aim to transform the age-old medical industry into a paperless sector that runs like leading-edge e-businesses.
Saddled by a stifling bureaucracy and legions of paper pushers from hospital consortia to global insurance agencies, the healthcare industry stands to save billions of dollars by switching to a paperless model. Motivation to modernize also came from the Health Insurance Portability and Accountability Act of 1996, which requires that all insurance carriers accept electronic transactions by 2002.
"Compliance with these regulations is imminent," Mark E. Bennett, president and chief executive officer of MedCom USA, said in a statement issued Tuesday. "The MedCard System not only complies, but provides an efficient and cost-effective method to handle providers' traditional daily business procedures, while generating ongoing processing income for MedCom."
Start-ups focusing on healthcare technology, as well as giant corporations sick of footing the bill for insurance fraud and costly claims, are trying to usher the medical industry into the digital age.
In January, General Motors partnered with clinical information specialist Medscape in a three-year program to encourage physicians to use handheld computers to prescribe drugs and access digital health records. Detroit-based GM funded the distribution of handhelds to approximately 5,000 U.S. doctors who treat GM employees.
GM estimated that 900 million prescriptions--or 30 percent of all orders written each year--have to be rechecked because of doctors' messy scribbling or confusing insurance rules. Eliminating those errors could save GM millions of dollars in insurance costs for the 1.2 million people who belong to its health plans.
Oracle has also muscled into the healthcare industry. The Redwood Shores, Calif.-based database heavyweight cut a deal last fall to build an online marketplace targeting the medical-supply industry. As part of the agreement, Oracle helped San Francisco-based MedChannel build the MedChannel Collaborative Healthcare Network, and Oracle snared an equity stake in the start-up.
But the healthcare technology niche has a long way to go in becoming an electronically savvy industry: Its primary customers--physicians--are loath to give up traditional business practices for e-business.
Although doctors are turning to e-mail for personal communications and the Web for medical research, few use the Internet to run their practices, according to a study by the American Medical Association.
The survey released last month found that only 17 percent rely on the Web to obtain or transfer medical records, and only 8 percent use it for processing health-insurance claims. Only 13 percent use the Web for obtaining insurance and managed-care information.