Dealing with health insurance companies can be slower and more painful than the procedures they cover. Customers who find mistakes on bills or have questions about their policies can spend hours on the phone with service representatives who are ill-equipped to help. HIP Health Plan of New York is addressing that notoriously difficult process through customer-focused initiatives. One new tool makes even the CIO a customer-service rep.

Should a telephone representative fail to solve a customer's problem, the system automatically sends his or her boss an E-mail describing what happened. Twenty-four hours later, if the problem is still unresolved, another E-mail is sent, this time to the boss' boss. Should more time pass and the problem remain unsolved, the system ratchets the alert up the reporting chain. If the problem remains unsolved after five business days, the system sends an E-mail directly to the CIO.

Fortunately, problems seldom progress to that level: HIP employees solve customer-service problems on the first call 93% of the time. With that quality of service, HIP maintains it has the lowest customer-turnover rate of any medical plan in the country. "Satisfaction is so high, they just don't leave us," says Dan McGowan, president and chief operating officer.

Technology has done more for HIP than keep customers from leaving. Following last year's terrorist attacks, the company, which is based in New York, bounced back fast, even though its data center in lower Manhattan had to be evacuated. HIP's carefully crafted business-continuity plan kept operations going at a time when customers were very much in need.

The fact that a nonprofit health-maintenance organization ranks at the top of this year's InformationWeek 500 may come as a surprise, but HIP is no ordinary nonprofit -- or HMO, for that matter. Management has used IT to distinguish its operations, says Christopher Formica, an analyst at A.M. Best Co., a provider of insurance company ratings and information. "If you look at their operations, it shows," he says. "They've been very innovative. They're well ahead of the curve."

Business- and disaster-recovery plans helped Steber (left), McGowan, and Villalba get HIP through the Sept. 11 attacks

HIP wasn't always a model of success. The organization was founded in 1947 by then-New York Mayor Fiorello LaGuardia and the municipal labor unions, because the city had no health coverage for its employees. For the first few decades of its existence, HIP acted as a typical group-model health-maintenance organization, providing limited health care through wholly owned or leased medical centers. As time passed, it became bloated and wasteful. From 1992 to 1996, the company lost tens of millions of dollars and, each year, around 50,000 members.

To stem the losses, HIP changed its structure to include a network of doctors in independent practice. That wasn't enough. "You couldn't just work hard to catch up," says McGowan, who joined HIP in 1996. "You had to find some vehicle to leapfrog the competition. We chose technology."

During the past five years, HIP has spent about $69 million on new IT, and the company plans to spend another $16 million this year. "It's not for managing our infrastructure, it's not for maintaining," McGowan says. "That's all new technology."