© 1995 

ISBN 0-324-00960-7 

Case Teaching Package 
A case teaching package is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course. 

Length 
This case is 8 pages in length and its case teaching package is 6 pages. 

Abstract 

This case will challenge students to make a strategic-business decision concerning the use of EDI (electronic data interchange) technology for claims processing to gain competitive advantage. Key information for this decision includes EDI's technology benefits (primarily labor-cost savings from reengineering the claims processing function in case Table 1, reduction of processing error rates, and improvement of customer satisfaction) and EDI technology costs (primarily hardware and software for both Crest and its doctor and hospital providers in case Table 2). Also, there are ongoing human resource issues from the possible loss or restructuring of jobs if the EDI project is adopted. In order to focus the case upon the strategic capital budgeting decision, the activity based cost information, necessary to determine EDI cost savings, was given in case Table 1, instead of being calculated by the students. Similarly, only one type of claim was considered, and capitation (a fixed, annual fee arrangement with doctors) was ignored. 

Fit Within a Course/Linkages to Textbooks or Journal Articles 

This case is intended for and has been used in graduate-level finance and managerial accounting courses. 

Study Questions 

1. How can the BPI team gain acceptance and full cooperation from the claims, records, and mailroom employees who realize that their jobs may be eliminated if this claims-process project is implemented?  Critique the performance of the BPI team in following its own ten-step approach to process reengineering. 
2. Should Crest make a strategic decision to invest in EDI technology for claims processing to gain competitive advantage?