For health care leaders, data — transformed into relevant, digestible business intelligence — instills confidence. In the absence of data, executives are left to navigate without a guide, relying solely on their instincts.
While making decisions based on data may seem obvious, putting it into practice can be difficult. This is especially true for hospital executives managing physician practices, because they face three common challenges:
- accessing data
- analyzing the right data
- understanding the data
Millions of hospital transactions are converted into data by billing, accounting, payroll, general ledger and electronic medical record systems. Yet most of this data is left in the transactional system that created it. Occasionally, the data is moved into a data warehouse where information goes to die, never tapped by those who need it most. Why do these data graveyards exist?
Information technology departments are concerned with data corruption, data integrity, data loss, system stability and so forth. But their focus on protecting data, rather than making it accessible, hampers decision-making. A basic IT summary report is not enough. Leaders need to be able to choose how the data is dissected and summarized, then drill down into the details — the individual patient, date of service, charge code and diagnosis code.
Solution: Create a data culture that authorizes and empowers key decision-makers who have direct access to data. This likely requires difficult conversations with the IT department, but if it's done with proper focus on fixing gaps to achieve a specific goal, everyone wins.
Analyzing the Right Data
There is often a distinct knowledge gap in hospital-physician alignment efforts: Hospital executives are seldom familiar with managing physician practices. To understand and improve physician performance, hospital executives need unbiased business intelligence that provides a consolidated view of their entire health system. Health care reform mandates, federal compliance rules and competitive pressures are forcing the industry to communicate better and to bring together data that provide a more holistic picture of a patient's care from multiple providers. Even a consolidated data warehouse is simply a vast ocean of disparate data sets if you do not know what to look for.
Solution: Understand the 10 key influencers of physician economics. If a physician practice is losing money, analyzing data with the following questions in mind will reveal the economic realities.
- Volume: What is the visit and procedure volume relative to benchmark?
- Visit coding: What is the impact of under-coding patient visits?
- Procedure utilization: What is the procedure acuity relative to benchmark?
- Revenue cycle (collections): What is the day-to-day billing and collections process?
- Rates: What is the actual reimbursement for services performed?
- Payer mix: What is the impact of providing services to different payer groups?
- Other revenue (fees): What other revenue sources are there and how do they affect the practice economics?
- Labor costs: How do staff costs, FTEs and benefits compare with national benchmarks?
- Other costs: What other costs (malpractice, administration and so forth) might affect financial performance of the practice?
- Physician compensation: Is production in line with compensation?
Understanding the Data
Most experienced health care executives have spent time understanding the business of health care, not the business of IT and information systems. Likewise, most experienced IT teams have spent time creating calculations and manipulating data, but lack a basic understanding of the health care business. The result is often an IT report that provides data but lacks business context or specific insights into details that are of concern.
For example, a hospital pays its orthopedic physicians on a per work, relative value unit (RVU) basis. However, the report generated from the billing system does not take into account surgical-assist modifiers, which discount the full value of the work RVU assigned for each surgical assist. As a result, anytime the orthopedic physician does a surgical assist, he or she receives full credit in error. This simple error can cost the organization money.
Solution. Cross-train IT teams and decision-makers. Executives, professionals and physicians all must become more comfortable with business intelligence data. And the data experts need to better understand the business of health care and the larger organizational goals for which they are aiming. If you don't have someone in your organization with both data and health care experience, hire someone who does. Or contract with a service provider specializing in health care data that hires people with both skills.
Avoiding the Million-Dollar Mistakes
Hospitals and health systems spend millions of dollars on business intelligence and data reporting systems, yet the systems need to be continuously upgraded to deliver the full picture. The issue presents a challenge for both the employees and the system.
With rapid changes in technology, hospitals increasingly are feeling the pressure to adopt more efficient systems. Yet, the right talent to manage this process is in increasingly short supply. In fact, a report by the McKinsey Global Institute projected that the United States needs 140,000 to 190,000 more workers with “deep analytical” expertise and 1.5 million more data-literate managers, whether retrained or hired.
This role requires an individual to be technically proficient and to have an understanding of the health care industry in order to develop a business intelligence tool that meets the analytical needs of health care executives. It's a fairly unusual combination of skills that is difficult to find.
There are also significant cost considerations for building, maintaining and upgrading proprietary systems. An alternative approach is to partner with a service provider that can take on the responsibility for investing in the latest technology and hiring expert personnel.
For example, the specialized service provider may have functional experts (e.g., an electronic medical records systems expert), technology experts (business intelligence analysts, developers and so forth) and industry experts (health care analysts and managers and C-suite consultants) who can develop tools that integrate with your billing system. These tools provide you with a blend of technology and health care expertise on a common platform, typically at a fraction of in-house development costs. It rarely makes financial sense to have that depth of expertise in-house, even for some of the largest hospitals and health systems.
Finally, people often become excited about new tools and platforms. They forget that most analysts and executives are exceptionally comfortable with what they are accustomed to: spreadsheets. Regardless of the system you are dealing with, it's critical for executives to be able to manipulate the data in spreadsheets.
Demand for more cohesive analytics is at an all-time high. Hospitals and health care providers will face increasingly intense pressure on their financials in coming years as new models and reimbursement systems come into play. To adapt to these changes, executives must have the access and tools to analyze and understand the data to keep their hospitals afloat.
Trevor Kobe is a principal at Equation Consulting in Salt Lake City.