• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 5. Constructing the e-Business A... > Problems Caused by Lack of Integrati...

Problems Caused by Lack of Integration

The lack of integrated application architecture can bring companies down rather quickly. Consider the case of Oxford Health Plans, a $4-billion health maintenance organization (HMO) whose motto is "The health and healing company." Oxford Health operates in New York, New Jersey, Pennsylvania, and Connecticut, offering traditional HMO service, point-of-service plans, Medicare/Medicaid plans, employer-funded plans, and dental plans. Oxford has been a juggernaut in the managed-care arena, buoyed by strong membership growth and keen marketing. Beyond this, Oxford has been praised for use of the Web, giving members access to lists of providers and allowing physicians to check the status of claims.

At the end of 1997, Oxford Health announced that a computer problem in the accounting and billing system had caused the company to underestimate medical costs and to overestimate revenue. The announcement that it was poised to post its first-ever loss stunned investors, and the stock fell more than 80 percent. Who is to blame? Initially, Oxford Health blamed computer conversion for rendering it unable to bill customers and to make payments to doctors and hospitals. However, Oxford later discovered that the problems stemmed from the fact that the company's internal financial controls were virtually nonexistent. A chastened—and now former—Chairman Stephen Wiggins didn't duck culpability, conceding, "At the end of the day a computer problem is probably a business problem, and somewhere along the line I obviously made a mistake."[7] No kidding.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint