Magazine article Risk Management

Creating a Paperless Claims System

Magazine article Risk Management

Creating a Paperless Claims System

Article excerpt

One of the earliest promises of the computer revolution was to remove paper from the office. That also proved to be one of the earliest broken promises, since paper usage in the average office has actually gone up. Five to ten years ago, huge efforts and large amounts of money were spent attempting to use the Internet for electronic business-to-business transactions. Yet paper remains. While technology has brought us e-mail, too much paper is still produced, requiring handling, storage, retention and replacement. Paper is all too often what drives internal processes.

In few places is this more evident than the average claims department, which often drowns in hard copy. The cost and time required to manage so much paper has long made going to fully electronic, paperless claims management systems an attractive option. But what does such a transformation entail?

For most operations, there are four major factors to consider when going paperless: cost justification, equipment procurement, training and change management.

Cost Justification

When justifying the cost of going paperless, there are three things to consider: hard-dollar savings, soft-dollar savings and increased profit margins.

Hard-dollar savings are fairly easy to quantify, as they involve the costs of materials that are eliminated with a paperless claims system. These include blank paper, folders, filing cabinets and floor space. Each of these elements can save the operation thousands of dollars: the reduction in floor space alone can translate into significant cost efficiency.

Soft-dollar savings are operational costs that are no longer necessary, such as extra phone and fax lines. Many operations experience a decline in call volume once they go paperless because all of their claims are delivered electronically through existing email setups. Cutting down on the unneeded lines, depending on the scope of operations, can deliver noteworthy savings.

But the most important cost justification is increased profit margins. The promise of a paperless claims operation is that claims can be handled much faster and much more efficiently than before. With the saute size operation, the number of cases handled goes up, thereby generating more business and more profit for the same operating parameters.

For example, many organizations report up to a 40 percent reduction in processing costs when using a paperless claims system because they can turn claims around faster and more efficiently. This translates into less salaried time spent per claim. If the cost to the client remains the same, the claims department's profit margin increases, and that alone can more than compensate for the costs of running a paperless system.

The Components of an Imaging System

To create a paperless claims system, a certain amount of computer equipment is necessary, including scanners, servers, CD storage units, PC workstations, and other hardware and software.

Scanner. Scanning equipment comes in all shapes and sizes depending on your needs and budget. High-end scanners can process sixty to one hundred pages per minute based on scanning both sides. A mid range scanner is capable of thirty to sixty pages per minute Pictures and color are not an issue and solutions are available for odd-sized paper. The high-end scanners are typically used for daily production while a low-end scanner may be used as a back-up or for exception scanning. Back scanning--the scanning of old files--can also be outsourced.

Scanners range in price depending on your requirements. A high end scanner costs from $30,000 to $35,000, while a low-end scanner can be purchased for $2,000 to $3,500.

Server. A server is a dedicated PC that manages the imaging software. The document indexes, workflows and related interlaces are supported on the server. There are various manufacturers in the market today that provide these work-class PCs, and their costs range considerably depending on complexity, between $3,000 and $30,000. …

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