SHIP Builds Stability With Integrated Analytic Solution

Information Builders and Teradata Help Insurance Provider to Reduce Fraud and Improve Long-Term Planning

Senior Health Insurance Company of Pennsylvania (SHIP) is a long-term-care (LTC) health insurance carrier. In the fall of 2008, the Pennsylvania Insurance Department approved the separation of SHIP from Conseco. As a result of this separation, SHIP became an independent company owned by the Senior Health Care Oversight Trust.

SHIP operates without a profit motive, ensuring that any excess income will accrue solely to the benefit of policyholders. Today SHIP services more than 130,000 policyholders. Its ultimate goal is to pay the last policyholder with the last dollar held in reserves.Because SHIP does not sell new LTC policies to generate revenue, reaching that final payout requires continuous analysis of a tremendous amount of data.

“We need to gain insight into trends that will impact the business in five, ten, or even fifty years,” says Mark Shrum, vice president of Information Technology at SHIP. “This entails managing risk for our policyholders who may be entering a part of their lives when they most need the long-term care policies that they took out years ago. It’s our job to make sure the coverage is there when they need it.”

Soon after its formation, SHIP began managing its block of LTC policies as if it were starting a business from scratch. Once the company got its basic operations in place, management stepped back to ask how they could perform better. Despite volumes of data, they weren’t getting the insight they needed from the raw numbers. This realization motivated them to team up with Information Builders and Teradata to develop an LTC data warehouse and business intelligence (BI) solution.

With an emphasis on cost savings and efficiency, Shrum and his team are now transforming SHIP’s stockpile of data into usable information. They use Information Builders’ BI, integration, and data quality software along with Teradata Database, its parallel appliance data warehouse platform, schema, and database software. Together, this analytic environment helps managers to reduce fraud and maintain the level of reserves they need to pay clients for the next 50 years or more. Information Builders and Teradata are changing the way SHIP acquires and exchanges knowledge, allowing the IT team to generate dynamic reports that analysts can drill into as needed.

“Information Builders does a great job of creating tools that fit the different roles you see in an organization,” says Shrum. “We are providing intuitive tools to business users so they can determine for themselves how deeply they need to dive into the data. That way, they can change direction without the need to interact with IT and slow everything down.” 

Sizing Up a Million-Dollar ROI

As with many insurance companies, fraud detection analysis is important to SHIP. Sometimes policyholders seek payment for fake treatments or false diagnoses, or relatives fail to report the death of a policyholder. Fraud is responsible for up to 7 percent leakage in the insurance industry each year, and no one is quite sure of the actual percentage in long-term care. Because SHIP pays nearly $400 million a year in claims, identifying even one-half of one percent of the fraud that occurs each year could save more than $1 million for the company and its policyholders.

The organization’s new BI solution can help analysts isolate unusual patterns for a particular diagnosis or long-term care scenario, such as an irregular set of claims in a region, evidence of patients traveling inordinately far distances to seek treatments that are readily available nearby, or a tendency to use a facility that is substantially more expensive than another facility in the same area.

“By performing these types of analysis, we can compare geographies, age ranges, costs, and other variables to identify suspicious circumstances, which helps our analysts to ferret out fraud,” says Shrum. 

Information Builders has developed native adapters that enable its WebFOCUS BI platform to leverage Teradata’s powerful native database capabilities, including user-defined scalar functions. In addition to common geospatial capabilities, Teradata Database can store timestamp data, permitting SHIP to analyze how specific data points change across locations and time periods – an important capability for detecting unusual behavior among policyholders.

Replacing an Ailing BI Infrastructure

Information Builders and Teradata joined forces to propose a best-of-breed solution for data integration, data quality, data warehousing, and data analysis. Teradata provided the underlying data warehouse environment, while Information Builders offered complementary tools for data integration and business intelligence. Teradata consultants, along with Information Builders’ Professional Services, teamed up to help SHIP get up to speed with its best-of-breed solution. 

SHIP found the combined package to be very appealing.

“We were impressed by the capabilities of WebFOCUS and iWay tools, which are easy to use, allow us to access information directly, and enable advanced analytical capabilities,” Shrum recalls. “We didn’t want to have too many fractured technologies; seeing how seamlessly Information Builders and Teradata worked together was a major selling point for us,” Shrum adds. “It was clear that they were there to help solve our business problems, not just to sell us a solution. Platform vendors like Microsoft and SAP also have good BI products, but they are too big to provide the level of personal, hands-on attention we need.”

A Comprehensive Warehouse With Clean, Accurate Data

SHIP makes tens of thousands of payments and manages thousands of claims each month. With information dating back 20 years, a huge amount of data is currently loaded into the Teradata environment. In addition to information about policyholder locations, claim types, ages, and costs, SHIP plans to gather additional detail about demographics, prescription drug usage, proximity to family members, facilities visited, and many other facets of care.

SHIP used iWay DataMigrator to convert its existing SQL Server database into a Teradata data warehouse, as well as to set up nearly two dozen interfaces to load the database daily, weekly, and monthly. iWay’s DataMigrator and Data Quality Center (DQC) automate the process of cleansing the data and loading it into Teradata.

“iWay has an in-flight data quality tool that massages the data as it goes through the system, resulting in fresher data on the other side,” says Shrum.

Primary WebFOCUS users include the IT staff members who publish reports, two strategic business analysts, and staff members handling fraud prevention, rate increases, operations, compliance, and finance.

Teradata Database is optimized for many types of analytical capabilities, from geospatial and temporal to slice-and-dice and data mining. Its flexible database schema permits WebFOCUS to use location and proximity dimensions to analyze geospatial data inside the data warehouse.

“Information Builders and Teradata put significant power into the hands of our users,” says Shrum. “People can perform their own analyses and also present the data to readily show other decision-makers within the company how and why they came to a particular conclusion.”

The company also plans to deploy WebFOCUS InfoAssist to provide additional report-writing services to these business users.

Long-Term Insight for Industry and Government

SHIP’s new BI/data warehouse system will soon form the basis of a performance management environment that helps employees track turnaround times, payments, call center metrics, complaints, and regulatory requirements. Financial reports and dashboards make it easy to monitor reserves and predict how the company’s claims are trending. For example, they will be able to see, at a glance, what kinds of claims they are likely to receive over a designated period, how much they need to reserve for those claims, and how different types of care vary depending on whether patients receive in-home care or care at a residential facility, among other variables. 

“It’s a way for our management team to check on how the business is doing compared to previous predictions,” says Shrum. “With these metrics, we’ll know the business better, so we’ll be in a better position to make sound decisions about our financial reserves.”

As a leader in the long-term care space, SHIP has collected decades of data that can now be analyzed in aggregate to reveal trends about the long-term care insurance industry as a whole. 

“Unlike life insurance, no one knows what the cost of healthcare is going to be over the next 10, 20, or 30 years,” says Shrum. “It isn’t based on well-known experience tables and it’s hard to determine when people will need care and what the rates of degenerative diseases will be.”

Until now, long-term care underwriting has involved a lot of guesswork. Especially as the U.S. government takes a more active role in insuring and caring for its citizens, SHIP hopes to provide some perspective for an industry hungry for insight.

“By using our new BI tools, we can help both the insurance industry and the federal government gain insight into the cost and impact of long-term care,” concludes Shrum.