Portfolio Project Thesis

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Information Technology

Portfolio Project

Humana Inc. is a health and supplemental benefits company headquartered in Louisville, KY. The Company offers an array of health and supplemental benefit plans for employer groups, government benefit programs and individuals. The Company operates in two sections: Government and Commercial. The Government segment consists of beneficiaries of government benefit programs which include: Medicare, Military and Medicaid. The Commercial segment consists of members enrolled in medical and specialty products that are marketed to employer groups and individuals. In October of 2008, the company obtained PHP Companies, Inc. (Cariten Healthcare). In August of 2008, the Company acquired Metcare Health Plans, Inc. In May of 2008, it attained OSF Health Plans, Inc. Then in April 2008, the Company acquired UnitedHealth Group's Las Vegas, Nevada individual SecureHorizons Medicare Advantage health maintenance organization an HMO line of business (Humana, Inc., 2009).

In 1993, Humana Inc. split its hospital and health benefit plan businesses into two separate independent publicly held companies. This spin-off was done through the distribution to Humana stockholders of record as of the close of business on March 1, 1993, of all of the outstanding shares of common stock of a new hospital company, Galen Health Care, Inc. Each shareholder was given one share of Galen stock for each share of Humana stock that was owned. Humana shares were not given up. Galen was afterward merged, through an unrelated transaction, with a subsidiary of Columbia Healthcare Corporation (Humana, 2009).

In order for Humana to remain competitive in the insurance industry they must first hire and retain diverse talent. They must provide these people with the necessary tools and information that is needed for them to perform their jobs to the best of their abilities. In order for correct and current information to be delivered to Humana's customers the information that is available must be up-to-date and accessible. This requires equipment and technology that is not only up-to-date; it must function in a manner that is best for the front line workers. Humana prides itself on being an innovator within the industry and having good people, information and Information Technology is what allows them to do this.

Porters five forces model looks at five key areas which include: the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

The threat of entry consists of looking at the high or low costs of entry regarding how much will it cost for the latest technology. The ease of access to distribution channels or in other words do one's competitors have all the distribution channels wrapped up. On must look to see if any new laws are being introduced that will weaken their competitive position. One must also look to see how important differentiation is (Five Forces Analysis, 2009). In Humana's case they must look at the cost of new and innovation insurance products along with new distribution channels in which to market and sell these products. They must also keep an eye on new Government legislation that might have an affect on what they do. In order to be successful in the market they must figure out how to differentiate themselves from the rest of the competition so that they stand out among all others.

In looking at the power of buyers a company must look at who the large players are in the market and how they are differentiated within the group. A company must also keep in mind what the cost of switching between suppliers is for the end users (Five Forces Analysis, 2009).

Humana must identify all major competitors that are in the insurance market and figure out what makes each of those companies different. Then when recruiting new business they must not only try and differentiate them from that competition but must also try to keep the cost of switching insurance companies low for the end consumer.

The power of suppliers is often nothing more than a reversal of the power of buyers. The things that must be looked at include:

Are the switching costs high?

Power is high when the brand is powerful.

There is always the possibility of the supplier integrating forward.

Customers are diverse and spread over a lot of area (Five Forces Analysis, 2009).

Humana again would need to focus on keeping switching costs low while being aware that their customers are spread across a very diverse area. Brand recognition goes a long way in selling products so establishing a strong brand name is always a good thing to do.

There is always a need to evaluate the threat of substitutes. Where there is product-for-product substitution a company may find that they are loosing out to the substitution. Also if the product is priced to high, consumer may decide that they can do without the product rather than pay the high price (Five Forces Analysis, 2009). This does not affect the insurance industry in quite the same way that it does other businesses but it still needs to be looked at. Consumers always have the option of a lower priced insurance plan over a high priced one and in the end most always have the option of not being insured at all if they so chose not to be.

Competitive rivalry is a concept that every company doing business must take a look at. This is often likely to be high where entry into the market is easy and where the threat of substitute products, and suppliers and buyers in the market is high (Five Forces Analysis, 2009). Who the competition is and what they are doing is something that should always be on Humana's radar. This allows them to be able to control their share of the market and make the appropriate decisions at the right times.

The information technology system that Humana currently uses consists of several different systems. The claims processing system resides on a mainframe while the customer relationship management system is housed on a windows driven system. The two systems although being very dependent upon one another do not talk to each other at all. If left this way, day-to-day operations would be near impossible. In order to circumvent this issue the company developed a portal that links all of the systems together. This portal is the one place that all entities within the company can go to get any information that they need in order to service customers. This portal also provides access to the data warehouse which is used to store all plan and claim information for each member and provider. Even though this fix makes this company able to do business on a day-to-day business a better solution would have all the systems function on the same platform making the portal unnecessary.

The four agent-based technologies consist of: sourcing, procurement, workflow/supply chain management and supplier relationship management. Humana currently uses three of the four of these technologies. They use sourcing when they recruit doctors, hospitals and other medical providers in order to be on the panel to service their members. They use the workflow technology when establishing process for how claims are adjudicated, how customer inquiries are handled, how call center incoming call flows are managed along with how provider relations goes about contracting the different providers. The supplier relationship technology is used when providers are recruited and made available for the customers to use when accessing healthcare. Maintaining this pool of providers is very important in delivering good quality healthcare to the members of Humana.

Brokers are often seen as market makers. They bring buyers and sellers together and help to facilitate transactions. "Brokers play a frequent role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets" (Business Models on the Web, 2009). Humana utilizes many brokers when selling insurance plans to not only businesses but also to individuals. Without customers Humana has no business, so having brokers to help sell their insurance products is essential in creating value within the organization. Using this e-commerce business model allows this company to employee less sales people, which saves money in the long run. It also allows for those sales people that are hired to specialize in what they do in order to be more effective.

The systems development life cycle is a project management technique that divides complex projects into smaller, more easily managed parts. Segmenting projects allows managers to verify the successful completion of project phases before allocating resources to later phases. Software development projects more often than not include an initiation, planning, design, development, testing, implementation, and maintenance phase. The phases may be divided differently depending on the organization that is involved. End users of the system under development should be involved in reviewing the output of each phase to ensure the system is being built to deliver the needed functionality (Systems Development Life Cycle, n.d.).

Humana could benefit from using the systems development life cycle in order to build a new claims management system. This is a system that they have been trying… [END OF PREVIEW]

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