NEWPORT BEACH, Calif. - January 22, 2009 - The TriZetto Group, Inc. today announced the release of six predictions for the healthcare industry by its founder, chairman and chief executive officer, Jeff Margolis. Shared privately with a select group of customers during his address at TriZetto's Executive Vision Summit in November, Margolis's predictions span a wide range of topical concerns, including healthcare reform, healthcare costs and developments in electronic medical records, evidence-based medicine and medical tourism.

#1: Comparatively more aggressive investment in electronic health records (EHRs) and workflow applications by providers will meaningfully reignite the challenge for health plans to be recognized as "healthcare systems organizers."

"On a per-member or per-patient basis, we're seeing levels of investment in EHRs by hospital systems that dwarf the spend by health plans in similar instruments, called personal health records, or PHRs," explained Margolis. "During the past few years, most hospital systems have allocated an average of 25 percent of their capital spending on health IT generally.¹ Again; this exceeds what we're seeing on the payer side in both absolute and relative terms.

"If health plans fail to systematically coordinate benefits and care, they risk disintermediation and, worse, real improvement in access, cost and quality will prove elusive," Margolis said. "For example, the new Obama administration is promising to spend a good portion of a $50 billion investment with physicians to adopt EHRs and the infrastructure to share them. But, those plans indicate that many in Washington are overlooking a faster, far less costly path to ubiquitous PHRs. Health plan information systems are the single richest repository of comprehensive diagnostic and treatment data and benefits information in the entire U.S. healthcare system. Both government and payers are missing a key opportunity."

#2: The scarcity of primary care physicians will spur higher growth in those health plan models that can systematically and effectively extend physician-patient physical interaction with evidence-based medicine media/instruction whether virtual (e.g. over the Internet) or in facilities.

#3: Federal and state budgetary pressures will impede meaningful healthcare policy reform prior to 2010; however, healthcare information technology enablement/standardization containing a provider bias will be popularized in multiple bills.

#4: A decade (post-1997) of expected annual increases in medical unit cost trends will give way to a decade or more of selective unit cost decreases in discrete items (e.g., pharmaceuticals, devices, common imaging and lab tests, specialty care procedures and basic bed-days) combined with new types of process-compliant reimbursement methodologies.

"Much like the recent housing market bubble, there's now a healthcare market bubble," suggested Margolis. "And just as people believed that housing prices would only rise, so too do pundits say that healthcare costs will continue to climb. I take a contrarian view: The healthcare bubble will burst. Too much spending for too little value cannot persist indefinitely. Fully insured premiums in 2011 will be less than 2010 rates, and even in 2010, some individuals and many groups may pay less for health insurance than they will in 2009."

#5: Growth in off-shore medical procedures will be constrained by the development of more comprehensive and effective informed-consent methodologies to weigh risks and benefits and assess liability.

#6: Health plans and brokers will be required to significantly drive down distribution costs of benefit plans to consumers in order to catch up to the efficiency of operational administration and shift a higher percentage of premium dollars toward care and wellness management.

"Costs in the distribution of health plans are a staggering $23 billion annually," Margolis noted.² "This amount is roughly equal to the revenue generated from all retail electronic sales in the U.S., double the sales from alcohol sold at bars and restaurants and equal to the revenue from sales of women's clothing."³

This part of the industry is ripe for the type of sweeping change that altered the travel industry in just a couple of years, said Margolis. Watch for the debut of online exchanges and other new technology enabled systems that reduce these distribution costs dramatically, provide payers a straight-through processing environment and enable brokers and employers to quote, enroll and receive member ID cards for health insurance directly over the web, he added.

"This quote-to-card capability at the broker desktop will significantly differentiate and drive more business to participating health plans," predicted Margolis. "Further, it will eliminate a significant number of ID card and eligibility issues that now frustrate customers, and it will give brokers and benefit consultants more time to sell."

TriZetto is a California-based company providing software and IT services that help payer organizations drive integrated healthcare management: the convergence of benefits administration, care management and constituent engagement to improve U.S. healthcare. Margolis has spent more than 20 years architecting IT solutions for health insurance plans and integrated healthcare systems. In 1997 he founded TriZetto, which in 10 years grew to $500 million in revenues. Previously, Margolis was chief information officer of managed care organizations FHP International (PacifiCare), TakeCare and Comprecare. Early in his career, Margolis helped found Anderson Consulting's (Accenture) healthcare practice. Margolis serves on the boards of Cedars-Sinai Medical Center, Hoag Hospital, the Crohn's and Colitis Foundation of America and several advisory boards at the University of California at Irvine. Margolis is currently writing a book about how our healthcare system works, where it doesn't and a systematic approach for fixing it.

About TriZetto

Founded in 1997, TriZetto is the fastest-growing, privately held healthcare information technology company in the U.S. With its technology touching half of the U.S. insured population, TriZetto is Powering Integrated Healthcare Management . TriZetto provides information technology solutions that enable health insurance payers and other constituents in the healthcare supply chain to improve the coordination of benefits and care for healthcare consumers. The company's offerings include enterprise and component software, hosting and business process outsourcing services, and consulting.

Footnotes:

¹ FitchRatings, "Quality and Patient Safety Spending in the Not-for-Profit Hospital Sector," May 17, 2006.

² The Henry J. Kaiser Family Foundation State Health Facts, 2007; Centers for Medicare & Medicaid Services, 2007; U.S. Census, 2006; and producer contracts.

³ U.S. Census, www.uscensus.gov, 2006.

CONTACTS:

Government Relations Contact:
Brad Samson
949-719-2220
brad.samson@trizetto.com

Media Contact:
Melissa Bruno
Schwartz Communications
781-684-0770
trizetto@schwartz-pr.com