Online Network Seen as Cure For Health-Care Inefficiencies.

MedUnite Inc., a national online health-care network started by insurers, is poised to revolutionize the way a paper-based, $1.2 trillion industry does business by cutting down on delayed claims payment and authorization problems, according to an equity analyst.

The new service company has announced plans to launch a system designed to allow for the real-time sending and receiving of eligibility and benefits verification, claim submission, claim status, referrals and authorizations using the Internet. MedUnite plans to launch pilot programs in February, and then follow with a national rollout in June or July.

MedUnite's founders include some of the nation's largest health plans, including Aetna U.S. Healthcare Inc., Anthem Health Plans Inc., Cigna Healthcare Group, Health Net Inc., Oxford Health Plans Inc., PacifiCare Health Systems Inc. and Well Point Health Networks Inc. Collectively, these companies represent more than 60 million members.

For a company like Aetna, which has been struggling to get back in touch with doctors and patients, MedUnite's communications system may be just what the doctor ordered.

MedUnite's system focuses on eliminating inefficiency by automating the current manual processes, said Charles Boorady, an equity analyst for Goldman Sachs. He said the industry is buried in a "tremendous amount of waste," with much of the inefficiency derived from manual errors, paperwork and delays in the regular mail system.

Boorady explained that most of MedUnite's competitors still operate in a batch environment, where claims are submitted in a batch to the payer and then paid.

"What MedUnite is proposing is a real-time interactive solution where a physician's office or a hospital collections department works in an interactive, Internet-based mode instead of a one-way batch mode," he said.

And because the health-care market is so big, "there is plenty of room for more competition," he added.

Dave Cox, MedUnite president and chief executive officer, said physicians had expressed a need for a standardized system that would make their back office more efficient, while at the same time be convenient to use.

"Today, in a physician's office, if you have 10 insurance companies, you have 10 ways to handle a transaction," Cox said. "With MedUnite, you only have one way."

The system, which focuses on six or seven administration transactions, was designed to increase claims accuracy, he said. Insurers spend about $250 billion trying to tackle these administration transactions each year, he added.