Let’s face it: technology moves faster than most of us would like to admit. What once worked five years ago (and sometimes just one) may already be out of date. The rapid pace technology is growing at is a concern for all parties involved in the insurance space, but especially for third party administrators (TPAs). With that concern comes the need for action.
Clinging to legacy systems that may have served their purpose in the past is both inconvenient and dangerous. Outdated technology doesn’t just mean you might be stuck dealing with slower claims processing or clunky interfaces. It can be a direct threat to your ability to stay compliant, secure, and competitive.
The Hidden Dangers of Outdated Systems
A primary concern posed by outdated systems is one of security. Old systems create cracks that potential threats know how to exploit. Weak encryption, outdated firewalls, and unsupported software are essentially open invitations for cyberattacks and makes it more appealing for cybercriminals who are looking for the personal, sensitive data that TPAs store. It isn’t an idle threat, either, since healthcare systems face more hacking attempts than any other industry. That’s a fact, not just speculation; in 2024, healthcare had more cyberthreats than any other industry, with 444 reported incidents impacting healthcare.
From the Change Healthcare cyberattack to countless others, we have plenty of examples to learn from. Increased security isn’t just adding bells and whistles to a system; it’s a critical component to have up to date. Even a single security breach puts more than sensitive healthcare information at risk. It can erode member trust and can expose a TPA to millions of dollars in fines, legal fees, and reputational damage.
The risks posed by outdated tech don’t stop at security, either. Older, legacy platforms are notoriously rigid, making it harder to adapt to regulatory updates and market shifts. For TPAs, this lack of flexibility is a dangerous liability when it comes to compliance.
Compliance Concerns
Compliance is one of the top concerns on everyone’s list, and for good reason. Regulations like HIPAA aren’t boxes you only have to check off once. With new legislation continuing to be introduced, the bar for privacy and data security is only getting higher. For TPAs relying on systems designed for yesterday’s requirements, that means trouble.
The consequences for failing compliance are rising as well. Whether that failure is from outdated encryption or insufficient access to data, one thing’s for sure: the penalties are severe. Beyond just the financial consequences, the failure to remain compliant can damage relationships with employer groups and members who expect protection of their sensitive information.
Why Regular Security Audits Matter
Guaranteeing the safety of sensitive client information isn’t something you can check off the compliance checklist once and be done with, either. Technology continues to advance, which means that security needs to as well. Even the most advanced platforms require consistent, ongoing evaluation, which is why regular and independent security audits should be non-negotiable for TPAs.
These audits do more than just check for compliance. They can uncover hidden vulnerabilities and present an opportunity to fix them, before a cyberattack gives us another headline. Consistent audits also demonstrate to both clients and members that the TPA takes data security seriously, cementing the trust in the relationship. By making audits a recurring practice, TPAs can ensure that policies, procedures, and technologies can keep up with both threats and regulations.
Keeping a Future-Proof Mindset
Looking to the future, the question isn’t whether TPAs can afford to invest in modern technology. The question is whether they can afford not to. Falling behind exposes both TPAs and their clients to risks far greater than the cost of an upgrade. Modern platforms provide more than security; they provide scalability, automation, and the ability to adapt as compliance rules shift.
At IPS, we’ve seen firsthand the importance of embracing a future-facing mindset. Cloud-based and securely built on Salesforce, our platform undergoes consistent audits to safeguard against threats, allowing us to help TPAs stay compliant, secure, and up to date with the latest tech. Equally as important, though, we make sure that tech stays affordable.
The TPAs who thrive tomorrow will be the ones acting today. That means moving past outdated systems, making compliance a top priority, and treating security audits as essential instead of optional. Old technology may feel familiar, but in this industry, familiarity is a risk you can’t afford. Your tech needs to keep you safe—not hold you back.
