The application was originally developed for
PacifiCare, Inc. when PacifiCare was a startup HMO. The sophistication and ease of use of the application
helped give PacifiCare a strong
competitive advantage. This contributed to its growth to a $12 billion a year multi-state corporation.
After PacifiCare was bought by UniHealth in 1984, UniHealth had the application translated into RPG to run on
the IBM AS/400. UniHealth began marketing the application in 1986. In 1997 the application was sold to OAO
Technology Solutions. OAO earns $150 million a year from the marketing and servicing of this and related
applications. More than 200 client companies use the application to administer claims for more than 7 million
lives.
In 1982 TriLon asked for and received development and marketing rights to the
application from PacifiCare. TriLon's first client was J.P. Kennedy and Co., a third party administrator of
self-insured employer benefit programs. As good as the application was for the HMO model, it lacked the
flexibility needed to handle a full range and combination of potential benefits. After
it was rewritten,
Jim Kennedy, the owner of J.P. Kennedy & Co.
rated it as among the top 10% of any administration application at any price for its comprehensiveness,
ease of use, and flexibility
The original managed care application handled membership/Eligibility, Claims
Processing, Provider Contracting and Capitation, Utilization Review, Authorization/Referrals, Billing, Medicare, and
Medicaid. The updated application will also handle Section 125 cafeteria plans. It will be HIPAA compliant and web
enabled with secure authorization, access, and data transmission.
The updated application will have about 150,000 source lines of code (sloc). Productivity has
been low (200 sloc per month average per developer). And cost has been high, about $25.00 per sloc. This would mean a
development cost of at least $3.75 million if it were developed from scratch with current productivity standards. Open
source has historically drawn the top 5% of developers. These developers are usually at least 10 times faster than the
average with higher quality code. This means costs should be reduced to about $2.50 per line. In addition, by developing
and releasing the application as open source under the GPL license, TriLon will be able to draw freely on the design,
development, and implementation expertise and assistance of the health care and open source communities. This means higher
quality at a lower cost. As open source, it should take TriLon about 10 months to update this application at a cost of
less than $150,000.
