FirstCarolinaCare Delivers Big Company Health Benefits While Keeping Costs Low

Rapid Claims, Customer Focus Help Managed Care Organization Excel Against Larger Competitors

In just four years, FirstCarolinaCare Insurance Company, a hospital owned managed care organization providing services to the eight counties around Pinehurst, North Carolina, has more than tripled its size, and it has used business process outsourcing services to drive down administrative costs and go head-to-head against much larger competition.

Craig Humphrey

FirstCarolinaCare formed in the mid-1990s to address unmet healthcare needs of the rural communities it serves. Many key operational processes are outsourced to DST Health Solutions (DSTHS)—front end services, benefit plan maintenance, claims processing, member and provider maintenance, customer service and portions of medical management administration. However, FirstCarolinaCare still manages sales, product development, account management, provider network development and other functions.

“We have really been able to take advantage of our outsourcers’ size, industry experience and economies of scale,” said Craig Humphrey, Chief Operating Officer, FirstCarolinaCare. “DST Health Solutions can provide services at a much lower cost than if we tried to duplicate them on our own. That’s why we have been successful in driving administrative costs down-at the same levels of our competitors-even though our competitors may have hundreds of thousands of members.”

Significant Gains in Efficiency
A DSTHS business process outsourcing (BPO) client since 1999, FirstCarolinaCare recognized that it needed to limit expenses associated with growth.

“We knew we needed to look into outsourcing because we did not want to invest millions of dollars to maintain our own system, the building, all the staff, all the equipment, and all the other things,” Humphrey said. “One of the reasons FirstCarolinaCare decided to go with DST Health Solutions was because we felt that DSTHS’ system was probably the most flexible and could do the things we needed to accomplish—provide reports, process claims and other functions.”

With the support of DST Health Solutions’ BPO services, FirstCarolinaCare has experienced significant gains in efficiency. The accuracy of claims processing is consistently at 99 percent or higher, and claims turnaround is better than the organization’s larger competitors. DSTHS is paying over 90 percent of all claims on behalf of FirstCarolinaCare in fewer than 14 days and processing enrollments within 48 hours.

“Our relationship with DST Health Solutions allows us to do things with a higher degree of accuracy, and that translates into a better customer experience,” said Humphrey. “With DSTHS’ performance levels, our employer group customers are going to be less likely to switch to one of our competitors.”

Ability to Focus on Employers’ Needs
DST Health Solutions’ outsourcing services have allowed FirstCarolinaCare’s management team to focus on core competencies around business development, client and member services, and provider education and services. The relationship has helped FirstCarolinaCare achieve stable and competitive administrative cost ratios. And it has helped the organization focus on strategic initiatives and new product development, allowing it to triple its membership.

“We try to create all of the administrative efficiency we possibly can so that over 85 percent of the premium dollar is truly going to a member’s medical expenses,” Humphrey said.
DST Health Solutions’ claims processing system, developed by health plan industry experts, delivers the business intelligence information needed to help FirstCarolinaCare’s employer customers understand care utilization, which helps them reduce the use of services and lower costs.

“We have tried to use our size to our advantage by touching those employers on multiple occasions, not just at their sale and at their enrollment,” Humphrey said. “Our account manager follows up, schedules benefit meetings and provides them with reports on their utilization. We help them become a better educated consumer of healthcare and, therefore, keep consumers from utilizing unnecessary services or over-utilizing other services.”

Greater Efficiency Through Automation
DST Health Solutions’ system includes electronic data interchange (EDI) and operational workflow capability that improves both claim accuracy and turnaround for provider payments.

These efficiencies have enabled FirstCarolinaCare to experience a two-year average premium increase of only 7 percent, compared with 10 percent to 15 percent increases by competitors during the same time frame.

“We don’t have the same mission in life as our competitors,” he said. “We are dedicated to serving just the eight-county area where we live. We are owned by a nonprofit organization, so from a business standpoint we target about a 1.5 percent profit margin from operations.”
To find success with an outsourcing relationship, Humphrey advises healthcare organizations to look for a service provider who understands the client’s business and has the resources to be responsive. “One thing that DST Health Solutions has done extremely well,” Humphrey said, “is make healthcare industry experts available to me whenever I need them.”

Contact Us
For more information on how we can help you, call DST Health Solutions, Inc. at 800.272.4799.

For more about DST Health Solutions, contact us at inforequests@dsthealthsolutions.com.