Healthcare provider gives Sprint a shot

Executives at the healthcare provider say the gamble paid off. After a competitive bidding process, Oxford chose Sprint to provide outbound, toll-free and calling-card voice services and frame relay and IP data services. The switch was completed in May.

A year ago, network executives at Oxford Health Plans in Trumbull, Conn., had lost faith in their long-time carrier, MCI/WorldCom, and announced plans to migrate all the company’s voice, data and wireless services to a new single carrier. It was an unusually bold strategy at a time when many companies are hedging their bets by relying on multiple providers.

Executives at the healthcare provider say the gamble paid off. After a competitive bidding process, Oxford chose Sprint to provide outbound, toll-free and calling-card voice services and frame relay and IP data services. The switch was completed in May.

“The transition went very smoothly,” says Jay Woloszynski, vice president of shared technology services and CTO at Oxford. “Essentially, there was no business impact. We invested some money in extra equipment to make the transition easier and cleaner. The whole process took us about four months.”

Oxford executives say they were able to negotiate lower rates and more flexibility in their minimum annual commitments in the three-year, multimillion-dollar Sprint deal. These aspects of the deal will come in handy as the company redesigns its network to improve efficiency and take advantage of newer Sprint services.

“Yes, we got a good price. And yes, we’re getting good service. But we’re also doing a network redesign to drive down the number of packets on our network through business changes,” Woloszynski says.

“We are hopeful that we can save another 15% by redesigning our network,” adds CIO Steve Black.

Oxford’s decision to drop MCI because of its bankruptcy filing was a risky move, industry analysts say.

“What Oxford did is unusual. It exchanged one carrier for another carrier entirely in an era when the industry as a whole is financially impaired,” says David Rohde, an analyst with TechCaliber Consulting. Rohde says many of MCI’s enterprise customers have diversified their networks, but few moved all their traffic to a single new carrier after MCI’s financial troubles emerged.

“A lot of companies that had exclusive relationships with AT&T or MCI have diversified,” Rohde says, adding that a common strategy is to give 50% of the network traffic to one carrier, 25% to another carrier and leave 25% that is not committed to a carrier.

“All of these carriers have financial challenges,” Rohde says. “It’s not like MCI is bankrupt and everybody else is doing great.”

Oxford is a leading provider of health plans to employers and individuals in New York, New Jersey and Connecticut. It reported revenue of $4.8 billion last year and has more than 1.4 million members.

For its data network, Oxford runs IP over a point-to-point frame relay network that connects three locations in Trumbull with major facilities in White Plains, N.Y., and Nashua, N.H. The network also connects to two call centers, in Hooksett, N.H., and Tampa, Fla. Altogether, 3,500 employees at 13 sites have access to the network, which has DS-3s as its largest pipes.

Oxford ran a competitive bidding process between Sprint and AT&T to choose a replacement for MCI.

“We took a couple of months to make our selection,” Woloszynski says. “We placed a lot of emphasis on the transition. Cost was very important, and technology was important. But we wanted a carrier with a demonstrated ability to do a smooth transition.”

Winning Oxford’s business was a coup for Sprint, which had previously been unable to capture any of its business.

“We always looked at Oxford as a company we couldn’t crack,” says Oliver Kaufman, branch sales director for Sprint.

Neither Oxford nor Sprint will say exactly how much the deal is worth.

Sprint now has more than 95% of Oxford’s traffic, with a few other carriers, including AT&T and Verizon, each having a few lines. Sprint provides Oxford with standard frame relay and Internet services and wireless PCS and voice services.

Now that the network migration is complete, Oxford is working on a network redesign that is planned for next year. The company has 16 dedicated telecom and network experts on its IT staff reporting to Woloszynski, who oversees the company’s IT infrastructure. This team is analyzing traffic patterns and bandwidth-intensive applications to see if the network can be redesigned in a more cost-effective manner.

“The network team is proactively looking at what jobs are going across the network,” Black says. “As part of our transition to Sprint, we’ve gone from 15% usage to 90% usage. We’ve been able to drive process and application changes.”

The company’s network team is looking at issues such as how and where systems are backed up, how call center traffic is balanced, and where application servers are located to see if minor changes can reduce bandwidth demands at peak times.

“We’re looking at our diversity options because that will affect our design. We’re looking at technical options à la ATM, and we’re continuing to examine the business applications and processes that are driving bandwidth,” Woloszynski says.

Company officials hope to finish the network redesign by the middle of next year, and then establish a plan for migrating to newer data services such as ATM and IP VPNs.

Meanwhile, the company is improving its network privacy and security efforts to comply with the Health Insurance Portability and Accountability Act (HIPAA). The company will install software for secure file transfers via the Web early next year.

For the company’s IT executives, the goal of these initiatives is to make sure their network is reliable, flexible and cost-effective.

“When you’re looking at making a major vendor switch or to re-engineer a large network, do your homework,” Woloszynski says. “Pay your price upfront and get a good contract that will last year after year. Do a thorough job. You can do almost anything as long as you’re thoughtful and careful.”