Technology: The cure for Empire Blues. (E-Fusion Conference: Health; Technology).

Empire Blue Cross & Blue Shield, New York's largest health insurer, was slow to respond to the advent of managed care. That cost the company 7 million members, and the reduction in its statutory reserves from the drop in business brought the company to the brink of bankruptcy, said President and Chief Financial Officer David Snow.

But, the company has reversed its financial situation and now--having gone public Nov. 7 with a $417.3 million stock offering--has developed a strong Web-based system that is helping it grow as it cuts expenses and becomes more efficient. "Our recovery is attributed heavily to technology," Snow said of the company.

Empire Blues is spending $120 million to enhance communications with its customers in several ways, including connecting all its customer service centers electronically so if one is out of service, phone calls from customers are seamlessly rerouted. That investment paid for itself Sept. 11, when the company's two major call center facilities in the World Trade Center were knocked out during the collapse of the twin towers.

"If that had happened two years ago, before we were digitized, we would have lost a significant amount of time, money, records and quite possibly customers because we wouldn't have been able to serve them sufficiently," Snow said.

A system of comprehensive portals that Empire Blues is developing is so strong that it will be adopted by other Blues plans across the country through an initiative known as the Blues Exchange, he said.

The system includes a portal for each of its client groups--employees, brokers, doctors, members and hospitals. For example, a doctor's office can handle 85 different tasks with the Empire Blues online. One of those features is the "Waiting Room," a way for the doctor's office to move the records of all patients who have appointments with the doctor that day to a folder on the desktop. As each patient leaves the examining room, the reason for the visit and diagnosis are entered and the copay charges calculated.

This feature is finding favor with physicians because companies are asking their employees to pay larger in-network deductibles that aren't always easy to calculate. Also, every Web page on the site is embedded with a "Click to Talk" function so the doctor's office can easily reach a customer service representative and get answers to questions about the rate of payment.

A case for encouraging business customers to deal with Empire Blues through the Internet is stronger, Snow said, because businesses deal with the health insurer every day, compared to consumers, who are most likely to contact the company when they are ill.

Still, there is reason to encourage more members to transact all dealings with the company online. Empire Blues is now aiming to trim another expense--the $17.6 million it spends in a year to print and mail "Explanation of Benefits" notices and provider directories to members. That cost, which breaks down to $8.36 per member per month, could be virtually eliminated if all members used the Internet to access their account information.