Abstract
Healthcare delivery in the United States has been undergoing major changes. Move towards Market driven healthcare, internal and external restructuring of healthcare delivery systems and increasing sophistication of information technology are all key drivers for accelerating the pace of change in recent years.
All players in the Healthcare value chain – Patients, Providers and Payers are impacted by these forces. Today healthcare faces additional challenges, of escalating pharmaceutical costs, labor shortages, questions surrounding quality of care, compliance with regulations (such as HIPPA).
In this paper, we will primarily focus on the issues relevant to Health Provider Organizations and how BI technology and analytics would meet the challenges of regulations, privacy and data volume of healthcare.
Introduction
According to Health Leaders, a health industry publication, more than 150 Provider Organizations across the United States have gone bankrupt or closed in the past ten years due to financial instability. Many more will meet the same fate unless steps are taken immediately to get a better handle on financial performance and improve operational efficiency substantially.
Healthcare Value Chain
To meet the challenges and to ensure the long-term viability, Provider organizations require well-designed, efficient, and integrated clinical, administrative, and financial processes, and the ability to make “informed” decisions. The key to designing effective and efficient processes and to making sound decisions is the availability of high quality, integrated information delivered when and where it is needed, in a manner useful to knowledge workers, decision makers, and healthcare consumers.
Opportunities for cost savings in US Healthcare Industry ($ billion)
Business Intelligence systems can help Provider Organizations face these challenges
To proactively and more effectively manage information, the provider organizations require a more comprehensive framework – system and processes, than the traditional IT systems. We believe the answer is Business Intelligence. The Gartner group defines Business Intelligence as the process of transforming data into information, and through discovery, transforming that information into actionable knowledge. Thus BI is not a specific technology, or a single data warehouse, or a single analytical application. Business Intelligence is the process that is supported by people, information, and technology for improving the effectiveness and efficiency of an organization.
We have outlined a Business Intelligence Framework for Provider Organizations. BI systems will enable provider organization track utilization, monitor costs and revenue, and develop and live within fixed budgets. Reports and analysis from the business intelligence system will help identify cost trends, patterns and abnormalities and pinpoint financial weak spots. Leadership is then empowered with the knowledge and information to directly influence the performance and bottom line of the organization. A recent survey of senior executives from Healthcare Organizations revealed that Business intelligence systems are primarily used in financial analysis, but increasingly assisting in clinical research, performance measurement, physician profiling and other clinical and operational analyses
Business Intelligence Framework
What are Business Intelligence systems used for in your organization?
- Financial Analysis
- Operational Analysis
- Budgeting
- Cost Accounting
- Clinical Research
- Program Development
- Market Research & Analysis
- Disease Management
- Case Management
- Clinical Reengineering
- Physician Profiling
- Supply Chain Management
- Analytical Customer Relationship Management
- Physician Profiling
- Performance Management
- Case Management
- Operational Analysis
- Budgeting
- Market Research
- Clinical Reengineering
- Customer care Analysis
- Protocol development
- Risk Management
We will outline below some key areas where Business Intelligence systems will provide direct impact in improving financial and operational performance.
Negotiating Adequate Capitation Rates
Often health plans give physician organizations a monthly per-member fee (capitation fee) for providing care for their members. Health plans also delegate to these groups the responsibility of spending the money, deciding on care, and making payments to physician members. Some industry experts believe that root of provider organizations failure is inadequate capitation rates set by health plans. But, many provider organizations lack the information needed to pinpoint this issue and negotiate better terms with health plans.
Business Intelligence solutions with complete financial and operational data and analytic capabilities can help these organizations to understand the level of contracting and capitation rates at which they will achieve desirable economies of scale and profitability. This will empower the management to negotiate appropriate contract terms with health plans.
Controlling Operational Costs
With escalating healthcare costs, it’s important for provider organizations to understand their flow of expenses and how to control them. Prescription drug prices have gone through double-digit percent increases; Health professionals are in short supply and substantial increases in salary, benefits and bonuses are needed to lure and retain them. Administration of complex health plan contracts necessitates high overhead and administrative costs.
In this environment, it’s more important than ever for provider organizations to monitor their costs closely. Business Intelligence systems will enable the organization to track cost patterns over time and identify areas for reduction for controlling the budget. This is a vital part of financial management and if handled inappropriately, the organization can quickly become financially over extended.
Curtailing Unnecessary Losses
Provider organizations must protect themselves from unnecessary losses, such as treating patients not covered by their group or health plans and having extensive out-of-network referrals to specialists. This cost could be substantial and usually have to be absorbed by provider organizations. Streamlining authorizations, eliminating duplicate claims and preventing treatment of ineligible patients can help save the provider groups large amount of unnecessary losses.
Here again Business Intelligence system will help identify the extent of these losses and bring management attention to these issues. It will help identify the risk group of patients based on historical data and predictive analysis. It can track physicians who are likely to refer out-of-network specialists extensively and allow management to take needed action.
Sharing the Risk with Health Plans (Payers)
Health Plans also realize that their success depends on the survival of well-run provider organizations. Whenever provider organizations go bankrupt and close, all the players in the value chain – patients, physicians, insurers and regulators are all affected as they scramble to ensure the delivery of care. This is a costly proposition to Health Plans. Hence, Health Plans and Managed Care organizations are always concerned about long-term viability of the Provider Organizations that they deal with. They are willing to share the risk with provider groups that have a proven track record of success with these risk-based contracts. They are more committed to paying actuarially sound rates that reflect the actual costs of care to these provider organizations.
A provider organization, with a sound business intelligence system and analytical capabilities that can track costs and control budgets, has a better chance of gaining confidence and trust from health plans, which in turn, paves the way for sharing the risk with them. As a result, provider organization can negotiate better terms and lower the overall financial risk to the organization.
Providing Incentives for High Performers
For the provider organization to succeed, it must motivate individual provider members to control costs and improve on utilization while achieving quality outcomes and high levels of patient satisfaction. How can an organization achieve this objective? It must develop appropriate incentive programs and provide a financial stake to the physicians in improving care, quality, and outcomes while controlling costs. The compensation plan should be structured to encourage physician behaviors that ultimately achieve the organization’s objectives and allow for members to be liable for the same risks as the organization.
Without a properly defined data repository with historical data and analytical system, organizations will be unable to track physician performances over time to implement such a compensation plan. Business intelligence system will provide the data required and the tools needed to analyze and develop appropriate incentive plans and help track the adherence of these plans by individual members.
Alert System for Early Detection of Financial Risks
The recent sudden failures of many provider organizations have shown that these groups did not have early warning system to detect potential risks and take immediate measures. Through business intelligence system, set of key performance measures and metrics could be tracked over time and reported periodically to the CFO and other senior management. These reports could be sent automatically to the designated management members and alerts can be triggered if performance metrics fall below certain threshold values.
Tracking Clinical Outcomes of Different Treatments
We have primarily focused so far on the key financial and operational efficiency improvements that could be achieved by health provider organizations in rapid time frame with the implementation of a sound business intelligence system. But the value of this system is not limited to the financial performance alone. Business Intelligence systems can also help track clinical outcome of different treatment options through historical patient record analysis and provide physicians with the means to better understand the effectiveness of these treatment options. Although treating any one patient will involve a unique combination of complex decisions, aggregating patient populations and examining variations in physician decision-making will yield valuable insights for practitioners.
Customer Relationship Management
The government and patients are demanding that health providers create and improve internal systems to provide better service, minimize errors and improve clinical outcomes. Patients are pushing back at provider systems for accurate and comprehensive record keeping. A healthcare system overwrought with inconsistencies and errors can prevent even the best organization from developing strong relationship with its patients. A business Intelligence system that integrates patient data across the enterprise and make it available at the point-of-service will help provider organizations to improve customer service, reduce medical errors, improve productivity and enable patient-centric processes- the prerequisite for improving the care delivery process.
Spending on information technology has been historically low in the healthcare industry and especially so with provider organizations. But, as we noted earlier, provider organizations are facing great challenges than ever before now. Status-qua will only speed up reaching financial dire straits sooner. Provider organizations need to act quickly and invest in appropriate information technology that can immediately help them in identifying financial weak spots and implementing cost control measures. Business Intelligence System has proven to be the key enabling technology that will take all the raw data that is collected in these organizations and turn them into actionable information to empower the leadership to directly influence the bottom-line of the organization.
Systech Corner analytics, bi, healthcare
