12 Ways Health Insurance Companies Can Leverage

Big Data for Business Value

The volume of data structured and unstructured, internal and external coursing its way into every healthcare
organization is voluminous and increasing exponentially. For health insurance companies (payers), data today comes
from disparate sources that include patient-ecosystem interactions across channels such as call centers, healthcare
and medical devices, social media, patient-provider conversations, smartphones, emails, faxes, medical reports, dayto-day business activities, and others.
Gartners 2011 Top 10 list of IT Infrastructure and Operations Trends predicts an 800% growth in data over the next
five years. However, organizations actually process only about 1015% of the available data, most of which is
structured. While managing this overwhelming data flow can be challenging, payers can reap real benefits such as
increased productivity and an enhanced patient-ecosystem experience by capturing, storing, aggregating, and
eventually analyzing data. Payers can glean objective-driven business value by going beyond simply managing Big
Data to harnessing the actionable insights from it. This will help them sustain competitive advantage and stay ahead
of the curve in this information age.

About the Author

Ajay Bhargava
Ajay Bhargava is the global Practice Director of Tata Consultancy Services (TCS) Analytics and Big Data Practice for
insurance and healthcare customers. He has more than 24 years of industry, research, and teaching experience in
areas relating to databases, enterprise data management, data warehousing, business intelligence, Big Data, and
advanced analytics.
Over the years, Ajay has provided business and technology-oriented strategic, mentoring, and customer-centric
solutions to clients. He publishes articles, and is a speaker and panelist at various conferences on enterprise data
management, business intelligence, and advanced analytics. He has taught at The University of Texas, Austin, and
College of Engineering, Pune, India, as adjunct faculty.
Ajay holds an M.S. in Computer Science and an M.S. in Aerospace Engineering from The University of Texas at
Arlington. He obtained his B.Tech. in Aeronautical Engineering from Indian Institute of Technology (IIT), Mumbai.

Table of Contents
Big Data Defined
Business Value
Harnessing and Harvesting Big Data
Twelve Ways to Create Value from Big Data
The Opportunity
Getting Started
Conclusion

Introduction
Since the advent of the Internet, data generated by both humans and devices has witnessed an exponential increase,
presenting a challenge that is difficult for organizations and existing technologies to cope with. Not only the size, but
also the rate at which data is being generated, and the growing variety of data to be assimilated, prompted the
evolution of Big Data and its associated technologies and algorithms. Globally, enterprises, payers included, are
increasingly finding themselves in an environment where they are data rich, but information poor. The regulatory
environment, mergers and acquisitions, and the need to provide better patient care, faster and more economically,
is driving payers to adopt Big Data to stay ahead in a very competitive landscape.
This paper establishes an understanding of what constitutes Big Data, defines what it takes to harness and harvest it,
and suggests 12 different ways in which payers can derive actionable business insights. It then goes on to show how
one can get started in a small, cost-effective way, to harness tangible business value using Big Data.
Big Data Defined
Big Data opens up new opportunities that were not achievable by analyzing structured content in traditional ways.
Although there is plenty of hype in the industry surrounding Big Data, it can be described by the following five
characteristics:

Volume: Big Data refers to the enormous and exponentially growing amount of data flooding every
enterprise. Big Data relevant to healthcare insurance companies can come from a variety of sources
including:
o Structured, granular Call Detail Records (CDRs) in call centers
o Detailed sensor data from medical devices
o External data regarding the weather, geography, clinical, pharmaceutical, demographic and
psychographic behavior
o Unstructured data from sources that include social media, medical reports, and Electronic Health
Records (EHR), in addition to genomic data
Data providers such as HealthData.gov supply data feeds to healthcare providers, Medicare, Medicaid,
childrens health programs, treatments, population statistics, and so on.

Variety: Proliferating channels have led to burgeoning data types. This presents payers with the challenge of
extracting insights from varied types of data. This data goes beyond the usual structured environment of
data warehouses and comes from disparate source systems such as mobile and online data, patientgenerated data, medical device scans (X-rays, Magnetic Resonance Imaging (MRI), and so on), social media,
text (Medicare claims), audio, video, log files, and more.

Velocity: Payers must be able to access, process, and analyze huge volumes of information as quickly as
possible in order to make timely decisions. They specifically need to reduce latency to:
o Optimize cross-selling and up-selling services in a call center environment
o Provide quick turnaround on enterprise intranet documents search to study the impact of different
events
o Reduce delivery time for business reports in a data warehousing environment

Veracity: The reliability and consistency of data its dependability and quality is a critical issue for payers
looking to derive meaningful insights. This holds true for both Big Data and small data. In some cases, such
as voice-to-text conversions, it is possible to gain meaningful insights even from not-so-perfect data in

terms of data quality especially if payers are trying to analyze macro-level phenomena such as performing
sentiment analyses.

Value: Payers that harness business objective-driven value insights will surge ahead of the pack in this
challenging environment. Today, Big Data analytics helps caregivers (including healthcare providers and
clinicians), payers, and regulators in monitoring performance and deriving efficiencies and savings while
controlling costs. Value, therefore, is the most important of the five Big Data characteristics.

Business Value
According to McKinsey & Co., 1 Big Data creates value in five different ways:
1. Managing Big Data increases transparency, making data more easily accessible to relevant stakeholders
2. As they create and store more transactional data in digital form, organizations are able to collect accurate,
detailed performance data in real-time or near real-time, enabling experimentation to identify needs and
improve performance
3. Big Data gives organizations the means to improve patient-ecosystem segmentation and in turn, better
develop and tailor products, services, and promotions to target each specific segment
4. Big Data strategy includes sophisticated analytics to provide actionable insights that minimize risks and
improve decision-making
5. Big Data is indispensable for organizations looking to create new business models and improve products and
services
Harnessing and Harvesting Big Data
There are two fundamental aspects to Big Data. The first is harnessing, which involves collecting, administrating, and
managing Big Data. The second is harvesting the skills and techniques required to apply science to data in order to
derive actionable and meaningful insights.
Harnessing Big Data
At the most basic level, harnessing is the amassing of Big Data; it relates to how payers manage Big Data and how
they develop an ecosystem that can not only create but also sustain Big Data. Previously, with far lower data
volumes and complexity, it was easier to harness data than it is today; however, the benefits of using this data were
limited as well.
Gartner estimates that between 8090% of all data produced is unstructured. Payers can now tap into a treasure
trove of unstructured data of all varieties: text, audio, video, medical records, click streams, claims, and log files.
They can also combine this unstructured data with structured data from sources such as disease or geographic
information, as was done to predict the flu outbreak in the US by looking at Twitter responses.
1

McKinsey Global Institute Report, Big Data: the Next Frontier for Innovation, Competition, and Productivity, May 2011.
http://www.mckinsey.com/insights/business_technology/big_data_the_next_frontier_for_innovation

Today, harnessing Big Data involves accessing a combination of data from sources such as social media as well as
from newer technology areas such as genomics offering payers access to data and the ability to analyze it.
However, Big Data can no longer be managed with traditional technologies. Instead, organizations must leverage a
whole new class of platforms, such as the open source Hadoop ecosystem and its commercial variants.
Hadoop is a distributed file system with the MapReduce paradigm, a framework for processing problems in parallel,
across huge datasets using a large number of computers. The MapReduce program includes two functions:

Map: This step essentially filters and sorts the data. The master mode entails the breaking and allocating of
processing, which is then carried out by individual nodes. The individual nodes process the task and return it
to the master

Reduce: In this step, the master node collects the answers to all the sub-problems and combines them to
form the output

Each step can be carried out in parallel and technologies can be built on top of them. The Hadoop-based frameworks
represent a paradigm shift not only because they are able to handle different kinds of data, but also because they
have the ability to provide speedy processing capabilities for huge volumes of data on commodity hardware.
Additionally, IT departments that are typically responsible for administering and managing the Big Data environment
are adopting programming languages such as R and Python. While these languages originated in the context of
handling Big Data at Yahoo and Google, payers can use them to handle many traditional data processing tasks as
well.
One example of the use of the Hadoop platform is an Extract, Transform, Load (ETL) enabler for business agility.
Today, payers are adopting this use case, often as their first experience in leveraging Big Data to meet business
Service Level Agreements (SLAs). Even though the traditional data warehousing environment still involves structured
data, payers who invest in this platform know they will be able to support unstructured data as well, now and in the
future.

Table 1: Understanding Big Data harnessing and harvesting

Harvesting Big Data

Unstructured data cannot be consumed in its raw form. It must be processed into a consumable form before it can
be interpreted or acted upon.
Harvesting utilizes technology and algorithms that enable payers to analyze, deliver actionable insights, and derive
real value from Big Data. Skills such as statistical analysis, data mining, econometrics, business analytics,
bioinformatics, and visualization techniques are in high demand as they provide a solid foundation for deriving useful
insights from the data. Universities are trying to fill the supply-demand gap by offering various graduate programs in
business analytics to provide for the next generational skills needed to mine actionable insights. Various startup
companies are providing analytical models that enable organizations to analyze large amounts of healthcare data.

Figure 1: Top-down approach to create actionable insights from Big Data

While the ability to successfully harness and harvest data is critical to a Big Data strategy, payers can derive true
value from their data with the help of analytics.
Defining use cases and hypotheses for Big Data harvesting becomes crucial when following a focused top-down
approach to creating actionable insights (see Figure 1).
Although this is a focused approach, payers often need to perform exploratory data analysis to first identify use
cases utilizing Big Data. This initial bottom-up approach becomes a prerequisite for determining and prioritizing use
cases for which Big Data Proof of Concepts (PoCs) must be pursued.
Real value is derived when actionable insights can make a positive difference in achieving the organizations strategic
objectives. Some of the other comparisons between harnessing and harvesting are shown in Table 1.

Harvesting and harnessing activities are complementary to one another two sides of the Big Data coin. Big Data
platforms do not replace existing traditional data management and analytics platforms. Instead, they merely
complement, add to, and improve upon the existing investments for better outcomes.
Twelve Ways to Create Value from Big Data
Leading-edge payers have either started or are planning to start exploiting Big Data in at least a dozen ways, each of
which adds value to their organization in one or more of the five ways described earlier. These use cases include:
1. Improving performance in existing data warehouse environments: IT has begun to adopt Hadoop-based
architecture to speed up ETL in a data warehouse environment to meet reporting business SLAs. Typically,
companies explore this use case to experiment with a Big Data platform such as Hadoop, to derive high business
value with minimal investments. This enables them to get funding for the next set of use cases for incremental
business value creation.
2. Detecting fraud: According to a recent Government Accountability Office estimate, one of every seven dollars
spent on Medicare is lost to fraud and abuse. Most of the healthcare (Medicare/Medicaid) fraud is perpetrated by
just a few providers intent on abusing the system, costing taxpayers billions of dollars and putting beneficiaries
health and welfare at risk. Typical types of fraud include incorrect medical coding or pre-existing conditions, same
address used for hundreds of patients, charge posting, and fictitious claims for services not rendered. Payers who
have succeeded at fraud prevention are those who adopted a multi-channel approach to fraud detection by looking
at structured data in their claims and patient/provider data warehouses, and combining it with textual data in claims
notes, police reports, and information from social media. They are interested in identifying suspicious claims using
text analytics and Natural Language Processing (NLP) capabilities, in addition to automated business rules, predictive
analytics, social media analytics, association rule mining, and link/network analysis (for example, doctor-chiropractor
collusion) techniques. With the advent of health insurance exchanges, payers will be in a position to proactively
identify fraud before claims payments are made.
3. Unifying communication by combining patient ecosystem channels. Combining direct patient ecosystem
connections that include email, call center, doctor, portal, faxes, medical reports, and more with indirect patient
touch points such as social media, blogs, log files and so on, provides a more holistic, 360-degree view of each
patients ecosystem. This helps create a personalized, unified communication response, enabling Chief Marketing
Officers (CMOs) to achieve better brand value and gain competitive advantage while directly improving the bottom
line by reducing communication waste. Also, combining patient ecosystem channels minimizes capital expenditure
by using cloud technology along with mobile visualization techniques that help executives in accessing holistic
patient ecosystem information anywhere, enabling quick and cost-effective decision-making.
4. Optimizing call center workload. Analyzing telecom data from the call detail records (CDRs) and combining it with
claims data helps in understanding what activity was performed by whom and how efficiently. This insight can be
used to provide training guidelines for employees. Temporal call pattern analysis on voluminous raw telecom data
can assist organizations in optimizing staffing levels as well. By analyzing text and speech in a near real-time
environment, organizations are presented with new opportunities to convert the call center from a cost center to an
investment center, to leverage cross-sell and up-sell product and service capabilities.
5. Improving clinical outcomes by using medical devices and bioinformatics data. CIOs are currently investigating
how analytics can help improve the frequency, regularity, accuracy, and timeliness of patient data collection by
sensing device data and responding in near-real time. In addition, devices that alert patients to take medicines,
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request refills, or schedule a checkup, can also be used to predict risks based on medical history, medicine side
effects, usage, and so on. Big Data harnessing and harvesting can be used to analyze typical care patterns,
workflows, and events, and (proactively) provide actionable insights to payers for reducing costs, and providing
better patient care.
6. Minimizing risk and speeding recovery from business disrupting disastrous events. CIOs are facing mounting
pressures to define plans to address disaster events that may disrupt business. In the wake of disastrous events,
payers struggle with extended power outages, communication failures, loss of IT infrastructure, and transportation
disruptions as was seen in the case of Hurricane Sandy affecting the US East Coast.2 Payers are simulating these
events, to better evaluate recovery strategies and minimize risk.
7. Enhancing collaboration with pharmaceutical companies. Payers can collaborate with pharmaceutical companies
by providing patient insights on product buying behavior, segmentation, and drug usage that might help reduce the
cost and improve the efficiency of clinical trials and drug research. This feedback loop is an important tool to bring
down the overall cost of healthcare.
8. Utilizing social media to introduce new products and services, as well as for sentiment analysis. CMOs are
moving away from capital-intensive television and Internet promotions to introduce new products and services, and
target patient ecosystems in specific regions. They are utilizing social media as a cost effective alternative,
innovatively changing the business model. Payers can experiment with this approach for regional patient ecosystem
segments and then upgrade their strategies to a national level. Certain population segments (for instance, younger
demographics) have shown interest in reviewing sentiments about products and services before making buying
decisions. Payers can analyze and listen to these blogs, tweets, likes, and so on to improve the quality of service,
customer experience, and engagement. Such one-on-one reach out to consumers goes a long way in brand
differentiation, retention, and loyalty.
9. Learning from the retail model. With the onset of the Affordable Care Act (ACA) and the creation of Healthcare
Exchanges in the US, payers are increasingly adopting the retail model, treating their customers as a Segment of
One. This new model is causing a significant strategic shift in providing personalized dissemination of information
based on the time, place, and device dictated by the insured. Payers that adapt their products and services quickly to
the retail model stand to gain a competitive edge. Analytics behind customer acquisition, churn, cross-channel
promotions, increased stickiness and engagement, tailoring the right-product mix to the right customer at the right
price, and a lifecycle approach will increasingly become relevant in the healthcare payers space.
10. Leveraging external data for more accurate pricing. Using real-time diagnostics information with external clinical
location, Medicare/Medicaid, treatment and childrens health data can lead to more appropriate pricing of medicine,
care, and services based on patient, provider, and payer ecosystems. The industry can move towards improved
patient-centric, personalized pricing by collecting data on usage, and availing easy price comparison facilities
provided by exchanges and concierge services offerings. Insights from supplemental products such as dental, vision,
and pet care will go a long way in helping payers understand customer value, market segments, shopping behavior,
and ultimately help them better price products and services.
11. Enhancing intranet search capabilities. Many payers, providers, pharmaceutical companies, and patients use Big
Data to improve speed and search capabilities on their intranet, especially from unstructured PDFs and MS Word
documents, which was once impossible. These search capabilities are currently used by niche concierge services care
providers, as well as in call center scenarios to provide real-time recommendations.
2

Gartner, Best Practices for Healthcare Payer CIOs Facing Business-Disrupting Disasters, December 2012.

12. Employing gaming-type incentives for keeping fit and healthy. In keeping with an ounce of prevention is better
than a pound of cure, and with an eye towards reducing claims cost, payers are combining instrumented data
sensing with customer incentives for those who are less of a claims risk. These discounts include gym memberships,
discounts on certain types of drugs, preferred treatment options and pricing, and discounts on equipment purchase
and usage monitoring. This means of patient data collection helps improve provider relationships as well.
Deriving value from use cases

Table 2: The Big Data use cases - VALUE creation grid

Table 2 shows how each of the dozen use cases can create value from Big Data.
The Opportunity
Generally speaking, Big Data is not yet a big priority in many payer organizations. They are still contending with
severely fragmented data environments and information silos, as well as insufficient investment in tools and
technologies, to be able to support a Big Data strategy. Most carriers are still maturing and expanding their use of
traditional data analytics and predictive models to optimize processes, reduce fraud, and generally improve their
bottom line
Payers that arent exploring and embracing Big Data and developing a Big Data strategy will be constrained in
gleaning actionable insights from the copious amounts of data flooding their organizations. With respect to Big Data
adoption and opportunity, we have observed the following:
Very few payers are using analytics to improve operational areas such as sales, marketing, or clinical
outcomes

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Relatively few payers are fully immersed in a comprehensive Big Data strategy and reaping its benefits.
However, most payers are currently educating themselves and planning their Big Data approach

Even fewer payers capture, persist, and analyze Big Data within their computing environment today, but
those that do, typically leverage traditional computing, storage, database, and analytics in addition to
newer platforms such as the Hadoop ecosystem

Larger payers universally plan to embrace Big Data and analytics across all financial and risk
management areas as well as most operational areas

Big Data harnessing and harvesting strategies can be used to proactively detect fraud and abuse, and
bring down the cost of healthcare, making it a win-win situation for payers and patients

Getting Started
Big Data solutions encompass a new generation of software and architectures designed to economically extract
value from enormous volumes and variety of structured and unstructured data. This is done by enabling rapid data
capture, discovery, and/or analysis. Payers that have created a culture where business leaders trust and embrace
analytics, and act on the insights provided are in the best position to profit from the potential value of Big Data.
Payers should take steps to create that culture today if it doesnt already exist in their companies.
The key is to start small with a proof of concept (PoC). Following is an example of how payers can leverage a Big Data
platform as well as some key considerations to keep in mind.
In this example, IT is interested in using a Big Data environment to speed up long-running ETL processes in a
traditional data warehouse environment (use case 1), because traditional processing is the cause for missing
reporting SLAs for business. In this example, a relative small number of data sources with large volumes were used
to prove the viability of the Big Data platform.

Table 3: Sample Proof of Concept for Big Data adoption

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Big Data Challenges: At-A-Glance

It is important for payers to develop a good business use case to
meet the strategic objectives of that line of business. In addition,
solid backing from a CxO/VP level executive is extremely important
not only for funding, but also to evangelize and communicate the
objectives and need for Big Data adoption to the larger
organization, including partners and vendors. Although the scope
and investment in terms of people (approximately five full-time
employees), tools (for example, the open source Hadoop
ecosystem), technologies and infrastructure (such as commodity
hardware or cloud) might be small, the architecture should be
appropriate for the long haul. To effectively harness and harvest
Big Data, organizations must foster close collaboration between IT
and business to iteratively experiment and drive actionable
insights. Payers can then use this incremental success to get
increased funding for next phases and/or use cases.

Seven factors that combine to make Big Data a

daunting challenge for payers:
1. An increasingly competitive landscape,
with mergers and acquisitions as well
as newly formed health exchanges at
federal and state levels
2. The financial tsunami of the past
several years, as well as the resulting
increasingly demanding regulatory
requirements (Health Insurance
Portability and Accountability Act
(HIPAA) and Affordable Care Act (ACA))
in North America
3. The explosion of data such as
genomics and data from medical
devices, and channel proliferation
4. The recent opening of electronic
health records
5. Siloed data environments at payer,
provider, and pharmaceutical
companies, and duplication of patient
information
6. Global shortage of expertise in
analytics and Big Data
7. The constant stream of innovations
that have made it essential for payers
to simultaneously deal with Big Data
while managing the challenges of their
existing small data environments

Conclusion
As payers identify the scenarios for applying Big Data within their
businesses, they will need to tweak existing processes to be able to
ingest the data variety, ensure data veracity, and manage data
volume and real-time data velocity, to derive objective-driven
actionable value. A holistic view of payers, providers,
pharmaceutical companies, and patients will enable significant cost
reductions, increased operational efficiency, and improved patient
care. Big Data and analytics can help improve clinical efficiency,
quality, and outcomes; identify patient profiles for preventative
care segmentation; influence provider behavior; and help minimize
fraud and abuse, significantly reducing the insurance risk for
payers. Organizations that develop an analytics-driven culture,
learn how to harness the power of Big Data, harvest the valuable
information and insights it can provide, will be able to create
competitive advantage and positively impact their brand and their top and bottom line.

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Contact
For more information, contact global.insurance@tcs.com

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