After the Affordable Care Act was signed into law in 2010, Kevin Walsh hit the road. A senior vice president at Xerox (XRX), he saw that state governments would need a lot of help figuring out how to make sense of Obamacare, so he went looking for customers. The company had recently moved into health services with expectations of using its technological expertise to expand in the growing industry, which accounts for 18 percent of the nation’s economy. Walsh’s team visited every state to learn how they were planning to roll out their insurance exchanges. “It was almost like we were building a new business,” he says. Xerox won more than $200 million in IT contracts from seven states.
The news recently has focused on the few dozen companies responsible for building the disastrous federal health-care exchange website; but they’re just a handful of the hundreds of companies quietly cashing in on Obamacare. Consultants such as Deloitte and tech companies including Dell (DELL) and Hewlett-Packard (HPQ) are advising government agencies, hospitals, doctors, pharmaceutical companies, and employers on implementing the law. Thanks in part to the Affordable Care Act, health-care advice is now a $10.2 billion industry that’s expected to grow 6 percent annually over the next five years, according to research firm IBISWorld. “The status quo is not the status quo anymore,” says Tami Simon, a managing director at Buck Consultants, a health-benefits adviser Xerox bought in 2010. “This is the biggest change in the health and welfare world in decades.”
Dell’s effort to make a name for itself in health-care services is guided by Andrew Litt, a physician whose title is chief medical officer. He says even after Obamacare became law, a lot of hospitals and insurance companies didn’t fully appreciate how big an impact it would have. They began to pay attention after the Supreme Court upheld the law in 2012. With deadlines approaching, “the amount of calls we get have just gone through the roof,” Litt says.
One of the company’s most sought-after services: using medical data to help health-care providers become more efficient. The Affordable Care Act pushes insurers to pay for quality and value rather than volume, meaning hospitals have an incentive to become much “closer to their doctors,” Litt says. Most large hospitals have already set up electronic medical record systems, so Dell helps them analyze the data to see if they are wasting resources: Can they squeeze two more surgeries into an operating room each day? The law also penalizes hospitals if too many Medicare patients end up being readmitted after treatment. With better data tools, doctors can track patients to ensure they’re getting the follow-up care they need.
Health-care services now make up $2.5 billion of Xerox’s $22 billion in annual revenue. In early 2010 the company bought Affiliated Computer Services, a health consultant that owned Buck and had experience running state programs to determine eligibility for Medicaid. Nevada hired Xerox to run the technology underpinning its health-care exchange and to operate the call centers that field queries from the public. After a rocky start, Nevada’s website is now working more smoothly than many other states’ exchanges—and light-years better than the federal site. Walsh says they’re studying customer behavior to see how the exchange can be improved.
Consultants including Aon Hewitt (AON) and Marsh & McLennan’s (MMC) Mercer are also helping corporations get comfortable with Obamacare. Just giving basic advice such as which workers must receive coverage and the best ways to explain new health plans to employees will keep consultants busy for the next few years at least, says Adam Klauber, an analyst at William Blair. As Obamacare’s requirements reshape the health plans companies offer workers, “This is an opportunity for employers to really take a step back,” says Buck’s Simon, who advises executives on whether to offer Cadillac coverage as an incentive or pare back to the minimum allowed under the new law. The question for companies, she says, comes down to “What kind of employer do I want to be?” There’s no shortage of experts competing to provide the answer.