The Hidden Cost of Old Technology in Healthcare

If you’ve spent any time around the healthcare industry, you already know the systems are old. What might surprise you is just how old, and how much that age is costing the industry.

A recent West Monroe survey of 300 U.S. insurance executives found that nearly half are still running core platforms that are 6 to 10 years old, with some stretching past 15 years. More striking: 33% of organizations hadn’t meaningfully started their modernization journey at the time of the October 2025 survey, and 2% hadn’t started at all. Meanwhile, federal compliance deadlines are ticking, providers are frustrated, and patients are caught in the middle of a process that was never designed with them in mind.

The Legacy Tax Is Real

Maintaining old systems isn’t cheap. More than half of the organizations surveyed spend between 51% and 75% of their IT budget on keeping existing systems running, which researchers call “keep-the-lights-on” activities. That leaves a fraction of available resources for actual transformation.

A Self-Reinforcing Cycle

This creates a problem that compounds over time. Aging systems require more upkeep each year, which leaves less budget for modernization, which means the systems continue to age. Fifty-two percent of organizations reported delaying or canceling two to three strategic technology programs in the past year due to budget constraints tied directly to this maintenance burden.

And it goes deeper than the budget. Many insurers are still running core operations on COBOL, a programming language older than most of their customers. Organizations may have modern customer-facing experiences, but their back-end processes remain anchored to aging infrastructure that limits scalability, agility, and speed. Every dollar absorbed by legacy systems is a dollar not invested in automation, interoperability, or the operational improvements that reduce administrative burden and improve care delivery.

Prior Authorization: Where the Problem Becomes a Crisis

Prior authorization sits at the intersection of almost every modernization challenge the industry faces. Policies live in static PDFs. Decision-making depends on manual review. Inconsistencies between what a provider submits and what a system can process create delays that ripple through the entire care pathway, affecting providers, patients, and payers alike.

Prior authorization was supposed to ensure appropriate care and manage costs. Instead, it has become a flashpoint drawing scrutiny from providers, patients, legislators, and federal regulators.

The Compliance Clock Is Ticking

CMS-0057 requires health plans to support real-time electronic prior authorization across all three required transactions, CRD, DTR, and PAS, by January 2027. With less than a year remaining, organizations running decade-old infrastructure face a foundational shift, not just an incremental update.

The organizations that navigate this well are not waiting. They are making deliberate investments now, digitizing medical policies, modernizing workflows, and building the interoperability infrastructure that compliance requires. The West Monroe data reinforces the urgency: 45% of executives believe pausing modernization efforts for even 24 months would create a significant competitive disadvantage.

Compliance as a Launchpad

Framing CMS-0057 purely as a compliance challenge leads organizations toward point solutions that check boxes without transforming how they operate. A more strategic approach recognizes that the infrastructure required for compliance is the same infrastructure that enables touchless automation, faster turnaround times, and meaningful administrative cost reduction.

Full CMS-0057 compliance at scale is not theoretical. We recently helped a large BUCA plan become the first in the nation to achieve full compliance across all three required transactions at scale, demonstrating that the goal is not only achievable, but a launchpad for broader operational transformation.

From Compliance to Competitive Advantage

The gap between where most organizations are today and where federal requirements will demand they be by January 2027 is real. But so is the roadmap. Digitizing medical policies, implementing compliant FHIR-based APIs, and partnering with vendors who understand both the technical requirements and the operational realities of running a health plan at scale are the concrete steps that separate organizations building toward the future from those that will be scrambling to catch up. Explore how Itiliti Health’s solutions support that journey.

In our next post, we explore where AI fits into the modernization picture and why responsible adoption matters more than speed.

Want to see how modern prior authorization infrastructure works in practice? Schedule a demo with the Itiliti Health team.