HealthAxis CTO Keeps Insurance Biz Spinning

SAN MATEO (05/08/2000) - When John Wall became CTO of online health-insurance service provider HealthAxis.com Inc., the company was right at the jumping-off point in its transition to the Internet. He was in a position where flexibility -- both in the company's services and in his role as CTO -- were going to be crucial to the success of that movement.

The business of providing health insurance does not change much over time with regard to supply and demand. But HealthAxis recognized that, like any business in the new economy, it would have to develop an easily adaptable Internet strategy to remain competitive within its service industry.

"The biggest challenge we had is that the concept of a product that's going to be here for 10 years doesn't exist anymore," says Wall, who is based in Dallas.

"The world's changing at [such] a pace that it really has become the norm that four times a year you're readjusting what your product looks like.

As CTO, Wall was expected to lead that charge. He knew that a model of reuse would be the key in HealthAxis' effort to keep up with the increasing speed of business, which first meant reducing the number of applications bogging down the company's systems.

HealthAxis employs more than 1,000 people, including some 350 IT professionals who fall under Wall's supervision. The company serves more than 1,000 health insurers and their policyholders, numbering in the hundreds of thousands.

Over three years HealthAxis cut the number of purchased applications it used from 337 to only nine, according to Wall. That purge helped reduce what he calls the "entropy" introduced into the design and building environments, referring to the degradation that can eventually introduce chaos to, and slow down, technical processes.

Another way to reduce system entropy was to pick one solution for deploying products and services out on the Web. Although solutions by Oracle, IBM, or Microsoft would work on the Internet, Wall believes that HealthAxis had to go all the way with one of them.

"We decided that we would narrow down the variables in our technologies, and we made a conscious decision very early on to be a Microsoft shop in deploying [those] technologies," Wall says. "What that's done for us is reduced the number of moving parts in our design process, and that let us get forward faster."

The other implementation Wall pushed for was introducing XML into the well-oiled machine behind HealthAxis' Web strategy.

"Probably the most significant thing impacting our business model over the last 12 months has been the introduction of XML into our business practice," Wall says. "We actually got into that very early on, using XML before it was really that popular, and what we've seen is the ability now to start really connecting all of these systems together in a fashion that could never be addressed before."

Once its technology structure was shipshape, Wall then had to devote his attention to help reconstruct a business model that would set HealthAxis apart from its competitors. As a direct result of the e-commerce boom pushing technology into the business strategy, Wall found himself conducting the business transformation as well.

"When I came here, my role was very much strategic for where we were going technically," Wall says. "But the more we get involved in the Internet, the more exposure we get; and it's become so important to the business functions that technology has a say in where we're going."

"I've gotten a ton of exposure, not only to our business models and where we're going, but a ton of say in how the company goes," he adds.

A major part of Wall's new business responsibilities is overseeing the expansion of HealthAxis into new related markets, as well as making sure it keeps up to speed with its competitors in terms of research and development.

Analyzing the health insurance market, particularly with regard to online competitors, gives Wall the insight he needs to make decisions that are critical for setting HealthAxis apart from its competitors.

Wall says there are several business models employed by other health insurance players on the Web, but the major players are moving away from agents and agent commissions. Using the additional business aspects of his position as CTO, he has helped steer the company's business model away from a mediated process and toward a more direct-sale model.

"The model our company has taken is a disintermediated model, where the agent commissions that existed basically aren't there," Wall says. "We disintermediate the field agent that goes out, and it's really a direct sale to the consumer, and then those savings are passed on to the consumer as well."

Just as important as luring a strong customer base, Wall adds, is the fulfillment of services. In this case that means figuring out the intricacies of health insurance, including eligibility, physician selection and location, and claim status. Those types of customer services are now being integrated into the company's technology.

"The post-purchase model, and all the transactions that go along with it, we're integrating into the purchase cycle as well," Wall adds. "So once you buy a product, you can actually start to utilize some of the consumer pieces of it post-purchase."

Along with benefits to the consumer, East Norriton, Penn.-based HealthAxis is also focusing its attention on the benefits it can offer health insurance carriers as well.

One of the most expensive demons of the health care industry, according to Wall, is simple paper and distribution costs. HealthAxis is seeking to reduce those costs for health insurance providers by providing them with the ability to digitize the industry, thereby cutting down paper use and postage.

"When you buy an insurance policy, they'll typically send you back a certificate of insurance, and a lot of those certificates run 35 to 40 pages printed, and that's a couple bucks," he says. "What we've built now with our technology is the ability to say, 'OK, let's generate a virtual copy -- something like a PDF file -- and we'll post it up in the personal space for the individual that purchased insurance off your site.' "Wall also says that simple doctor's visits produce a lot of paperwork with EOBs (Explanations of Benefits), copies of which go to both the patient and physician. Put into perspective that the average person has 18 claims per year, and Wall says that the Internet provides a tremendous opportunity to cut costs for both insurance providers and consumers.

"We're really focused on reducing the costs for the carriers -- just because we know how much of an economic benefit it will be to everybody, because it's quicker and definitely tons cheaper," he says. "The Internet is the perfect medium to go do all of those transactions."

And Wall admits that, as CTO, he has the responsibility to look for ways to offer avant-garde business services by utilizing the company's technology to its full extent. The result, he says, is a tremendous yet welcome responsibility that falls upon all CTOs in the new e-marketplace.

"The faster a company moves and relies on technology to be successful, I think the more influence the CTOs of the world are going to have in companies," Wall says. "But it puts an additional burden on your shoulders that you not only have to know the technology model [but] you have to get very savvy on what the business model is."

CTO profile

Name: John Wall

Company: HealthAxis.com

Job title: CTO

Reports to: COO Dennis Maloney

Mission: To design and build reliable, scalable, and usable health careEducation: Bachelor's degree in Electrical Engineering from Purdue UniversityCareer path: Began as a systems engineer for Dana Corp. and moved up to technical manager, acquiring five patents along the way. Served as a senior technical analyst for Georgia Pacific and CTO for BT Systems Integrators prior to becoming Healthaxis' CTOBiggest challenge: Keeping all of the developers focused on one technology pathFavorite e-business site: www.expedia.comFavorite escape: Running.

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