Case study Content
A Tale of Two Inter-organizational IS
The Affordable Care Act (also known as Obamacare) requires the creation of healthcare exchanges that necessitate the development of inter-organizational information systems.
To begin, a healthcare exchange is an online store that offers health insurance products to individuals and small businesses. Choosing medical insurance is a complex process with many different levels of coverage and costs, and selecting the right policy is difficult and confusing for most people.
Exchanges are thus created not only to offer medical insurance policies, but also to simplify and partially automate the selection process. Exchanges also promote fair competition among health insurers. Besides simplifying the selection of health insurance, another goal for exchanges is to help consumers navigate the complex array of governmental assistance options and possibilities.
Depending on income, family size, and other circumstances, some consumers are entitled to Medicare and a variety of other governmental programs. Thus, when using an exchange, a consumer provides personal data about income and family situation, and the exchange uses automation to contact various governmental agencies to determine that consumer’s eligibility. Given this determination, the exchange then offers insurance products appropriate to that particular consumer’s situation. Exchanges are supposed to pay for themselves by charging a modest fee to insurers.
States were encouraged to set up exchanges for their own residents, but if they elected not to do so, the states’ residents could use an exchange developed by the federal government.
About half of the states decided to use the federal exchange. The remainder developed their own exchanges (and supporting information systems). These many parallel development projects give us a unique opportunity to learn from the experience of similar projects that had, in some cases, very different outcomes.
Case Study: Access CT vs Cover Oregon
Access CT (Connecticut)
The state of Connecticut created an exchange named Access CT, a quasi-public corporation. . It was delivered on time and on budget and has been such a success that the state of Maryland stopped developing its own system and licensed the Access CT solution instead. Other states are considering licensing Access CT as well.
Key Leaders for Access CT
Connecticut governor Kevin Counihan
Master’s degree in marketing
More than 30 years of experience working in the insurance industry
Key player in the development of the Massachusetts healthcare system (regarded as the model for Obamacare).
Served as president of a private health exchange in California.
As soon as he was hired, he began a series of press conferences to explain the nature and goals of the project to the public.
Jim Wadleigh, Chief Information Officer.
Past director of application development for CIGNA, a health services organization.
His primary assignment was to hire and manage an outside contractor to develop the exchange Web site and supporting backend code and to manage the implementation of the exchange information system.
By June 2012, Access CT had created a project plan and begun a search for the contractor to develop the site. By September 2012, it selected Deloitte Consulting LLP. At the time, Wadleigh stated, “With only 12 months until the Exchange goes live, we look forward to beginning our work with them immediately.” That summer, in an interview on July 13, a local press reporter asked CEO Counihan, “Can you get it done on time?” His response: “This state’s going to get it done in time.” And it did. By the end of the federally mandated deadline, Access CT had enrolled 208,301 Connecticut residents, and Connecticut had become a model for state-run exchanges.
Cover Oregon
State of Oregon created an exchange named Cover Oregon that was a complete and utter failure.
Cover Oregon is a quasi-independent corporation as is Access CT, but the exchange information system was to be developed by a different governmental agency, Oregon Health Authority (OHA).
Personnel in the two agencies engaged in turf battles and held deep differences about project requirements. These differences resulted in always-changing, inconsistent direction to software developers.
Cover Oregon was never operable despite costing more than $248 million in U.S. and Oregon tax dollars. The exchange’s board of directors decided to stop development and utilize the federal exchange instead.
In May 2014, the U.S. attorney’s office in Portland opened a grand jury investigation into the project. Oregon legislature hired an independent company, First Data Corporation, to investigate the causes of this debacle.
Unlike in Connecticut, neither Oregon’s governor nor any other elected official was directly involved in the project. In fact, in January 2014, the governor stated that he’d only become aware of the failure in “late October.”
The site was to have gone operational on October 1, and it strains credulity to believe that it took 3 weeks for the news of the failure to reach him. In any case, it is safe to assume the governor was not a “hands-on manager” of the project, nor did he delegate any senior elected official to take that role. According to First Data, the project suffered from divided direction.
Oregon Health Authority (OHA).
Unlike Access CT, OHA did not hire a supervising contractor for the project, but instead decided itself to take an active role in the software’s development.
Unfortunately, the agency suffered high employee turnover and had difficulty hiring and keeping qualified personnel. OHA did hire the services of a professional software development company to create major software components.
However, of the three finalists for this work, two dropped out at the last minute, and the winner by default, Oracle Corporation, became in essence a sole source vendor.
OHA also attempted to do much of its own programming, but the team had no experience with Oracle and lacked both developers and managers.
Oracle Corporation
Oracle was able to negotiate time and materials contracts rather than contracts for specific deliverables at specific prices. Later, when problems developed, Oracle was paid tens of millions of additional money for change orders on that same time and materials basis.
Ironically, because of prior problems with technology projects, the Oregon legislature required the state to hire a quality assurance contractor, Maximus Corporation, to oversee the project.
Maximus Corporation (QA Contractor)
Maximus reported the following significant problems:
Divided control,
Lack of clear requirements,
Inappropriate contracting methodology,
Lack of project planning,
Lack of progress.
It is unclear to whom those reports were delivered or what was done with them. In January 2013, when the head of the OHA project received another negative report in a long string of such negative reports, she threatened to withhold Maximus’ payment.
Alas, when, in January 2013, The Oregonian asked Rocky King, the director of Cover Oregon, whether the system would work, he responded, “I haven’t the foggiest idea.”28 Sadly, when the fog cleared, the exchange failed. In March 2015, Cover Oregon was shuttered.
Why were there such different outcomes?
The two states started their projects about the same time, they had the same scope and goals, they began with about the same funding (Cover Oregon eventually spent nearly twice as much as Access CT), and they had the same required finish date.
There is no substantial difference in the population of the two states; Connecticut has about 3.5 million people and Oregon about 3.9 million.
Questions
Summarize the purpose and intended benefits of a healthcare exchange.
Explain why a healthcare exchange requires an inter-organizational information system.
Using knowledge from this chapter, summarize the difficulties and challenges of developing inter-organizational information systems.
Healthcare exchanges must utilize personal and confidential data about their users. Write a one-paragraph policy that stipulates responsible processing and storage of this data.
Explain what you believe are the reasons for the Access CT success.
List five key learnings you can take from the Access CT and Cover Oregon projects.
Last Completed Projects
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