Case study: VTL and Brownwood Regional Medical Health Center(BRM-c), an outsourcing relationship that works.

Since their inception in 2004, BRM has focused on expansion from its roots as a Medicaid HMO in Brownwood, TX. Rather than distracting their focus from their main core area they decided to outsource their non core yet essential areas i.e. IT and business functions, including claims administration, data center and software applications to VTLGlobal.

BRM began its outsourcing relationship with VTL in 2004, and over the 2 yrs., the company has almost doubled its membership in central and eastern Texas. The company added 7 more counties and grew from 200 members in 2004 to more than 12000 in April 2006. BRM’s members now have access to almost 300 physicians and 35 hospitals, in addition to a network of pharmacies, home healthcare agencies and other related health services.

With its outsourcing relationship firmly in place, BRM is free to concentrate on core tasks, such as medical management and provider network development. Those initiatives helped BRM, over the past 2 years, elaborated 7 more intensive care units, raised funds by 40 % and now also running a free asthma cure center in Deer park, Texas.

Growth presents business challenges

As BRM has grown and taken on more Medicaid management responsibility within the state, the company has faced significant business challenges. Processing managed Medicaid business requires sophisticated administration, applications and technology. From the beginning, BRM knew that it did not have sufficient capital to invest in IT or to hire the claims and IT resources needed to support its growth plan. Claims administration and IT are not their core competencies, but they could be penalized for failing to comply with state standards for claims processing and for timely encounter submissions. Backlogs and mistakes could result in hefty state fines.

Medicaid cuts that reduce plan rates well below actual medical costs to survive in result complicated matters further. BRM needed to find a balance to offset Medicaid rate cuts, while proactively managing care to a patient mix that included the "sickest of the sick," including the most frail and severely handicapped children," says Kopes.

BRM decided that outsourcing would be the most efficient way to drive down operating costs. The decision also helped BRM grow without incurring significant up-front costs for hardware, resources and training.