Availity – Case Study

What is Availity?

Availity is a healthcare software as a service (SaaS) company that focuses on streamlining the activities between healthcare providers and payers. They do this by creating various web-based software and services that range from engagement portals to electronic data interchange clearing houses. All these services work together to improve the efficiency of the interaction between healthcare providers and payers.

Availity started in 2001 as a joint venture between Florida Blue (formerly Blue Cross and Blue Shield Florida) and Humana. The goal of the company is to reduce the administrative abrasion between providers and payers so that both can focus on delivering great patient care.

Healthcare Software Industry

The healthcare software industry is composed of a wide variety of software types. Companies within the industry span a wide spectrum of software, hardware, and or services provided. Healthcare software include electronic medical records, healthcare enterprise resource management, insurance claims processing software, patient portals, etc.
Because of the variety of types of software offered, there are many different types of companies make up the spectrum of providers; companies can come from a manufacturing background with an industry practice in healthcare (e.g. GE Health), or from dedicated healthcare hardware and software providers, such as McKesson. In many cases, industry agnostic software companies can provide software and services that meet the needs of customers.

Over the next five years, the market is expected to grow to an estimated $76 globally by 2025. Growth in the industry will be driven by increase in adoption of electronic health records, government policies, and on-going support and upgrades to existing healthcare software infrastructure. As companies continue to manage costs, they will be looking to improve existing technology stacks to realize more efficiencies.

Customers and Competitors

In the healthcare software industry, who the customer is depends on what the software company’s vision is. Software companies organize into a variety of structures depending on what they want to achieve. For example, some companies may be focused on developing software for medical record keeping and fall directly in the industry as a competitor. Other companies may be larger software or consulting companies that have dedicated products or services that were not built but work for healthcare industry. These companies are considered in the healthcare software industry, however whether they are Availity’s direct competitors is blurry. For example, there are lots of industry agnostic EDI tools that are available and can be used for healthcare.

Availity’s portfolio of products fall under the hospital management software industry. With that, their direct competitors include athenaOne, Smartsheet, and NaviNet. Given the high fragmentation of the market, it can be safe to assume that Availity holds a very low percentage of the hospital management software industry market share and even lower for the overall healthcare software industry.

Availity Business Model

As a SaaS company, Availity generates revenue by charging fees for use of their software and services. The benefits that Availity’s software provides its healthcare providers is a one-stop-shop repository of insurance benefits. Instead of calling every potential provider to validate coverage, hospital staff can access an online portal to see if services are covered. This makes it incredibly efficient for hospital management to answer questions about coverage and services. Healthcare providers can also submit and manage claims directly through the portal, allowing for streamlined process from looking up the service, administration, and payment.

Given that hospitals and healthcare plan companies are focused on managing costs, implementing and adopting technologies like Availity provide significant value. Not only does it allow for companies to focus on patient care, the increase in efficiencies will help to manage the profitability of these companies. This is particularly imperative in an industry where costs are forecasted to grow at a rate that will eat into profit margins.

Availity Success Factors

Being a joint venture between Florida Blue and Humana positions Availity for success in two ways. First, with Humana is one of the largest for-profit health plan providers in the US, Availity can leverage their relationship for access to healthcare providers This will give Availity valuable input for helping grow the products and services the company offers. They can onboard Humana’s healthcare providers as part of a pilot program to gain valuable feedback on their product offerings.

Second, being a business that is cofounded by healthcare companies ensures that the vision of the company aligns with those of their potential clients. The two companies understand the American healthcare system and the challenges it faces; this allows them to position themselves as allies with their clients and understand how to build the necessary trust around stakeholders.

Availity – Looking Ahead

As healthcare costs are expected to continue to grow over the next five years, it will be important for Availity to continue producing new product features to help their clients manage these costs. The company can also look at expanding its range of services with their existing data and network to bring new technologies, such as artificial intelligence, to the market. They should continue to position themselves as partners with healthcare providers and insurance companies so that they can develop trust for introducing new technologies in healthcare.

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