Sheila Talton
How analytics can accelerate the path to value
October 25, 2021
By Sheila Talton
The COVID-19 pandemic hurt revenue for mid-tier and large health systems through the early part of 2020 because patients delayed elective procedures, which comprise up to 37% of hospital spending. Millions of Americans also skipped routine screenings and visits to their primary care providers as COVID-19 cases continued to soar across the country. As a result, physicians now are seeing patients with more advanced diseases than these patients would have had if they hadn’t delayed care.
The pandemic-related disruption to their revenue streams has caused many health systems that historically have relied on “fee for service” (FFS) models to realize they need to increase revenue through value-based programs. However, the transition to value-based care (VBC) seldom is smooth. And many health systems that have implemented alternative payment models are mostly experienced in upside risk contracts, where providers face no financial penalties should costs and utilization exceed the amount agreed upon with the payor.
Increasingly, though, payors are pushing downside risk onto providers, putting more pressure on hospitals and health systems to control costs. This is a challenge for provider organizations that have focused solely on improving their quality ratings and paid little or no attention to cost or utilization. But the reality is most of these risk-based contracts have a significant component relative to cost and utilization, which is a hurdle providers must clear before they even qualify for bonus payments from a quality perspective.
Another challenge for providers shifting to value-based contracts is that the payor often sets the terms of the agreement because providers aren’t as skilled in effectively negotiating financial terms. And provider groups may not fully understand how to model and predict their performance and the impact of that performance on those contracts.
Beyond those considerable disadvantages, many provider organizations doubt their ability to manage in an environment that requires balancing quality and cost. This is a perfectly understandable concern given that so many providers typically lack visibility into their performance, especially since historically this was not as significant a barometer in a fee-driven environment.
Yet if providers had that information, they would know where to make improvements from a quality perspective that simultaneously would boost cost and utilization performance. They would understand the tradeoffs of certain medical procedures. They could identify gaps in care and take action to close them.
Data analytics helps providers glean insights from performance management measures and metrics that allow them to be financially viable under at-risk and pay-for-performance contracts. Using data analytics, hospitals and health systems can accelerate their path to value.
Giving providers control
Many health systems under risk-based contracts do not have data on cost and quality measures, nor have they mastered or even developed the ability to calculate the measures reflected in these contracts. Worse, a lot of health systems are dependent on information or reporting from the payor, much of which comes from claims data alone and may be three or four months old and outdated by the time the health system gets it. This compromises an organization’s ability to adjust and improve performance. Providers may even be unaware that they are eligible for bonus payments. There are cases where payors call health systems and say, “We think you may be eligible for this bonus. Can you give us more data?”
But if providers used analytics to measure quality and performance metrics, they wouldn’t need to solely rely on payors for data. They would know where they stand relative to contractual performance incentives using their own data. Rather than getting a call from payors about their bonus eligibility, providers should be in a position to call insurance companies and say, “Our numbers show that we’ve earned this bonus.”
On the clinical side, analytics can be predictive and to a certain extent prescriptive. It can suggest modifications to clinical workflows to improve efficiency, for example, or generate models to determine how a proposed change would impact both care gaps and revenue. These types of analytics are important for determining where improvements and initiatives should be occurring and where opportunities should be optimized.
Critical to using analytics to accelerate the path to value is ensuring information is available to authorized users across the care continuum. This enables a healthcare provider to guide decisions from three perspectives – clinical (based on the best quality of outcome), operational efficiency, and financial impact. In a value-based world, all three matter greatly.
Analytics as a business solution
While analytics historically has been considered a technology solution, a platform that provides transparency into clinical, operational and financial data clearly is more than that – it’s a business solution. The metrics and measures generated by a healthcare analytics platform provide actionable insights to improve outcomes across the enterprise.
Analytics also creates an opportunity for payors and providers to be more closely aligned regarding incentives and shared objectives. And those objectives in a value-based contract are for the patient to be healthy and for them to be treated preventatively and proactively to minimize cost of care.
Utilizing analytics to accelerate the path to value requires an advanced cloud-native analytics platform, AI and machine learning capabilities, and automation of configuration, calculation, and delivery of insights. Unfortunately, many health systems lack the financial resources for the kind of capital investment required for an in-house system. Even if they were willing to invest in an in-house platform, the time and effort required for staffing, development, pilot, implementation, training and maintenance likely would be prohibitive.
For many hospitals and health systems, it makes sense to partner with an experienced healthcare technology solutions vendor whose platform has been successfully implemented by other providers. This would enable them to benefit from what the vendor has learned through working with other health systems. Current best practices, the most effective analytics models, and experienced support immediately would be available to hospitals and health systems that choose the right partner.
An analytics platform offers the insights that will enable provider organizations to deliver quality care while optimizing resources and controlling costs. By turning to technology and business experts to build a healthcare platform that enables value-based care, health systems can focus on their core competency, which is providing care for their patients.
About the author: Sheila Talton is president and CEO of Gray Matter Analytics, which she founded in 2013. Prior to launching Gray Matter, Sheila was the VP/Globalization Officer for Cisco Systems in China and South America, President of EDS’ Business Processing Information Services and a Senior Managing Partner at Ernst & Young/Cap Gemini.
The COVID-19 pandemic hurt revenue for mid-tier and large health systems through the early part of 2020 because patients delayed elective procedures, which comprise up to 37% of hospital spending. Millions of Americans also skipped routine screenings and visits to their primary care providers as COVID-19 cases continued to soar across the country. As a result, physicians now are seeing patients with more advanced diseases than these patients would have had if they hadn’t delayed care.
The pandemic-related disruption to their revenue streams has caused many health systems that historically have relied on “fee for service” (FFS) models to realize they need to increase revenue through value-based programs. However, the transition to value-based care (VBC) seldom is smooth. And many health systems that have implemented alternative payment models are mostly experienced in upside risk contracts, where providers face no financial penalties should costs and utilization exceed the amount agreed upon with the payor.
Increasingly, though, payors are pushing downside risk onto providers, putting more pressure on hospitals and health systems to control costs. This is a challenge for provider organizations that have focused solely on improving their quality ratings and paid little or no attention to cost or utilization. But the reality is most of these risk-based contracts have a significant component relative to cost and utilization, which is a hurdle providers must clear before they even qualify for bonus payments from a quality perspective.
Another challenge for providers shifting to value-based contracts is that the payor often sets the terms of the agreement because providers aren’t as skilled in effectively negotiating financial terms. And provider groups may not fully understand how to model and predict their performance and the impact of that performance on those contracts.
Beyond those considerable disadvantages, many provider organizations doubt their ability to manage in an environment that requires balancing quality and cost. This is a perfectly understandable concern given that so many providers typically lack visibility into their performance, especially since historically this was not as significant a barometer in a fee-driven environment.
Yet if providers had that information, they would know where to make improvements from a quality perspective that simultaneously would boost cost and utilization performance. They would understand the tradeoffs of certain medical procedures. They could identify gaps in care and take action to close them.
Data analytics helps providers glean insights from performance management measures and metrics that allow them to be financially viable under at-risk and pay-for-performance contracts. Using data analytics, hospitals and health systems can accelerate their path to value.
Giving providers control
Many health systems under risk-based contracts do not have data on cost and quality measures, nor have they mastered or even developed the ability to calculate the measures reflected in these contracts. Worse, a lot of health systems are dependent on information or reporting from the payor, much of which comes from claims data alone and may be three or four months old and outdated by the time the health system gets it. This compromises an organization’s ability to adjust and improve performance. Providers may even be unaware that they are eligible for bonus payments. There are cases where payors call health systems and say, “We think you may be eligible for this bonus. Can you give us more data?”
But if providers used analytics to measure quality and performance metrics, they wouldn’t need to solely rely on payors for data. They would know where they stand relative to contractual performance incentives using their own data. Rather than getting a call from payors about their bonus eligibility, providers should be in a position to call insurance companies and say, “Our numbers show that we’ve earned this bonus.”
On the clinical side, analytics can be predictive and to a certain extent prescriptive. It can suggest modifications to clinical workflows to improve efficiency, for example, or generate models to determine how a proposed change would impact both care gaps and revenue. These types of analytics are important for determining where improvements and initiatives should be occurring and where opportunities should be optimized.
Critical to using analytics to accelerate the path to value is ensuring information is available to authorized users across the care continuum. This enables a healthcare provider to guide decisions from three perspectives – clinical (based on the best quality of outcome), operational efficiency, and financial impact. In a value-based world, all three matter greatly.
Analytics as a business solution
While analytics historically has been considered a technology solution, a platform that provides transparency into clinical, operational and financial data clearly is more than that – it’s a business solution. The metrics and measures generated by a healthcare analytics platform provide actionable insights to improve outcomes across the enterprise.
Analytics also creates an opportunity for payors and providers to be more closely aligned regarding incentives and shared objectives. And those objectives in a value-based contract are for the patient to be healthy and for them to be treated preventatively and proactively to minimize cost of care.
Utilizing analytics to accelerate the path to value requires an advanced cloud-native analytics platform, AI and machine learning capabilities, and automation of configuration, calculation, and delivery of insights. Unfortunately, many health systems lack the financial resources for the kind of capital investment required for an in-house system. Even if they were willing to invest in an in-house platform, the time and effort required for staffing, development, pilot, implementation, training and maintenance likely would be prohibitive.
For many hospitals and health systems, it makes sense to partner with an experienced healthcare technology solutions vendor whose platform has been successfully implemented by other providers. This would enable them to benefit from what the vendor has learned through working with other health systems. Current best practices, the most effective analytics models, and experienced support immediately would be available to hospitals and health systems that choose the right partner.
An analytics platform offers the insights that will enable provider organizations to deliver quality care while optimizing resources and controlling costs. By turning to technology and business experts to build a healthcare platform that enables value-based care, health systems can focus on their core competency, which is providing care for their patients.
About the author: Sheila Talton is president and CEO of Gray Matter Analytics, which she founded in 2013. Prior to launching Gray Matter, Sheila was the VP/Globalization Officer for Cisco Systems in China and South America, President of EDS’ Business Processing Information Services and a Senior Managing Partner at Ernst & Young/Cap Gemini.