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Data and analytics are no longer nice-to-have tools. Instead they underpin an organization's ability to achieve high-valuecare, which we define as patient-centric care with improved quality and outcomes, at lower costs. Because healthcare reform--particularly Medicare payment reform under the Medicare Access and CHIP Reauthorization Act--puts all providers at risk financially if they fail to improve value, data and meaningful analytics are critical elements of the cost of doing business. With such tools, hospitals and health systems can drive the performance improvement needed to succeed in a value-based environment.
For most hospitals and health systems, unwarranted variation in care is a significant source of suboptimal patient outcomes and unnecessarily high costs. Such variation is present in clinical practice when there is a gap between the desired best practice and current practice. An analysis that excludes outliers and is risk- and severity-adjusted can indicate when quality outcomes and/or costs differ significantly by physician or other care provider. This apples-to-apples analysis produces actionable data that can be used to eliminate or decrease the performance gap.
Causes of unwarranted or inappropriate variation may include:
Challenges to reducing unwarranted variation include gaps in clinicians' knowledge, lack of economic incentives to drive desired clinical behaviors, concerns about malpractice risk, physicians' desire for the ability to go with personal preferences, and inadequate decision-support tools.b
Hospitals and physicians typically have been compensated for the care they provide even if such care creates unwarranted variation in quality or cost. The value mandate from both private and public purchasers and payers is rapidly changing this situation, putting a high-intensity spotlight on unwarranted variation in care and providing incentives to reduce such variation.
An organization-wide approach to reducing clinical variation must be supported by a commitment from the leadership team to aggregate, analyze, and disseminate credible data related to quality, outcomes, and cost. Benchmark data and advanced analytics that use such data enable the organization's leadership and quality teams to compare performance against a variety of factors:
Historical trend performance and/or performance targets. This assessment looks at the performance of the hospital or health system using the organization's own data, either overall or by hospital, department, physician, treatment type, patient diagnosis, or other considerations.
Peer group comparisons. Data from public and commercial sources enable comparison of the organization's performance with that of an appropriate peer group, defined as of similar type with like functions, services, operating revenue, or other factors.
Using benchmark-based reports and scorecards, hospital executives and managers are able to observe patterns of performance based on factors such as diagnosis, comorbidities, treatment type, department, and physician. Areas of undesirable variation can be explored and targeted for improvement.
One health system with three hospitals and approximately 300 affiliated and employed physicians sought an assessment of its performance compared to peer organizations on selected measures of utilization, quality, cost, and patient safety. The goal of the assessment was to enable the health system to identify areas where it should focus early efforts to reduce clinical variation.
The health system used data from its own performance records and from public and proprietary databases. It obtained a robust analytic platform with more than 2,000 performance indicators, which enabled a view of how the system performed internally over time and comparatively with other organizations regionally and nationally (peer organizations were selected from among more than 5,000 hospitals nationwide). Measures included length of stay (LOS), mortality rate, critical care utilization, emergency department admissions, hospital-acquired conditions, and cost.
Based on all-payer data for the most recent 12-month period, the organization was performing below the 50th percentile in LOS (see the exhibit above) and mortality rates and below the 25th percentile in critical care utilization compared with all hospitals and with a regional community hospital subset nationwide (the data were severity- and risk-adjusted). Analytics identified the sources of the greatest performance variance by department, clinical condition, and physician.
Data credibility is the essential foundation for driving behavioral change. Physicians who receive reliable data with evidence of unwarranted variation in their own care--whether related to quality, outcomes, or cost--typically need no further inducement to bring their practices in line with their colleagues.
Building a sustainable program to eliminate unwarranted clinical variation can be undertaken one step at a time. The focus initially may be on an individual DRG or on use of a certain drug, device, test, procedure, condition, work process, clinical program, or other element of patient care. Prioritization of which areas to tackle first can be based on a number of factors, including likelihood of early success, magnitude of the benefit or opportunity, resources required to effect change, and expected implementation timing.
Following such a prioritization exercise, the organization can focus on the categories of data or measurement that typically reflect the most significant opportunities to reduce unwarranted care variation. For example, some of the major categories of resource utilization are:
Charges and Costs Detail
For one $3 billion hospital system, benchmark data of a peer group of large hospitals in the Northeast indicated the size of the improvement opportunity in these and other categories (see the exhibit above). For the top five categories, the hospital system's costs were approximately $135 million higher than those of its peers.
Looking at its own data across the top five measure categories and overall, the organization was able to identify which physicians had the most significant opportunities to reduce variations in care. All Patients Refined DRG data were severity-adjusted, and outliers were excluded.
When compared with their peers, three physicians in different specialties accounted for nearly $2 million in potentially unwarranted care variation. This variation represented 10 to 20 percent of the total variation and spend in each of their service lines. The opportunities to reduce variation and costs in medical/surgical supplies and imaging were particularly notable. Further assessment of spending by category indicated specific products that might be adding unnecessary cost or varying from patient protocols.
Physician 1, for example, used more anesthesiology supplies per minute than did his peers--and the highest-cost surgical mesh. As was the case in this instance, often physicians simply are unaware of the cost of the items, tests, or drugs they order and can shift their ordering behavior without affecting their patients.
Even more powerful analytic work looks at the relationship between care quality, patient satisfaction, and cost indicators by hospital and physician. For example, reducing unwarranted variation in knee and hip joint replacements presents an important area of organizational focus in the current regulatory environment. Effective April 1, 2016, the Centers for Medicare & Medicaid Services rolled out a mandatory bundled payment program in 67 markets. Known as the Comprehensive Care for Joint Replacement, it involves approximately 800 hospitals. By making hospitals responsible for all charges within 90 days of discharge, the program incentivizes hospitals to optimize inpatient care, streamline postoperative care, and discharge patients to lower-cost settings or directly to home when appropriate.
In the context of knee joint replacement, a best-practice analysis for one multihospital system identified the best-performing hospital in the system based on indicators including length of stay; total cost; a risk-adjusted patient safety index including pressure ulcer rates, postoperative infections, and other measures; the hospital-acquired condition rate; and a patient satisfaction rating. The benchmark was based on all-payer data for short-term acute care facilities nationwide.
Best-Practice Analysis: Knee
Replacement by Physician
Drilling down within the best-performing hospital, the analysis identified the best-performing operating physician for knee joint replacement using the same indicators. Based on data covering a two-year period, the top exhibit of the two above shows the results for 10 physicians, highlighting that Physician 1 performed above the national all-payer benchmark on all dimensions.
Further analysis established what the improvement opportunity might look like if the lowest-performing physicians performed at the level of Physician 1. The bottom of the two exhibits above shows those results, which would bring a cost-reduction opportunity of nearly $10 million.
The health system's chartered clinical improvement team closely studied the clinical practices of Physician 1 to learn specific means by which he was able to ensure patient safety and quality while reducing surgical and related hospital costs. Directed by physicians with participation from nurses and other clinical team members, this is the hard work that needs to be done to reduce unwarranted clinical variation in hospitals and other facilities nationwide. The benchmark data and analytics identified the target and set the stage for the work that followed.
Hospital leaders need access to credible and accurately attributed data and analytics that enable them to identify both significant opportunities to improve financial and clinical performance and the root causes of suboptimal performance that require corrective action. Armed with the ability to simultaneously access data on utilization, quality, patient satisfaction, and cost, and benchmarks of internal and external best-practice care, executives can quickly identify underperforming areas to which attention should be directed.
Walter W. Morrissey, MD, is managing director, Kaufman, Hall & Associates, LLC; Robert W. Pryor, MD, is senior vice president, Strategic and Financial Planning practice, Kaufman, Hall & Associates, LLC; Anand Krishnaswamy is vice president, Strategic and Financial Planning practice, Kaufman, Hall & Associates, LLC.
a. Soni, S.M.,
Giboney, P., and Yee, H.F., “Development and Implementation of Expected
Practices to Reduce Inappropriate Variations in Clinical Practice,” JAMA, May 24/31, 2016.
DHG Healthcare: Optimizing CDI for Bundled Payment Arrangements
Kaufman Hall: Five Key Learnings from HFMA’s Financial Analytics Leadership Council
Grant Thornton: Guiding Organizations Through Cloud-Based ERP Adoption
A senior leader at Grant Thornton LLP HealthCare Advisory Services talks about key ways to lay the groundwork for a shift to cloud-based ERP solutions. Insights stem from a presentation given at the HFMA Large System Controllers Council.
HealthTrust: Solving Workforce Management Challenges
6 Patient Revenue Cycle Metrics You Should Be Tracking (and How to Improve Your Results)
Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
10 Ways to Reduce Patient Statement Volume (and Reduce Costs)
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
Reduce Patient Balances Sent to Collection Agencies: Approaching New Problems with New Approaches
This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
The Future of Online Patient Billing Portals
This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
Payment Portals Can Improve Self-Pay Collections and Support Meaningful Use
Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.
Large Health System Drives 10% UP (Patient Payments) and 10% DOWN (Billing-related Costs)
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
ICD-10: Managing Performance
With the ICD10 deadline quickly approaching and daily responsibilities not slowing down, final preparations for October 1 require strategic prioritization and laser focus.
Clarity Drives Collections
Read how Gwinnett Medical Center provides clear connections to financial information, offers multiple payment options for patients, and gives onsite staff the ability to collect payments at multiple points throughout the care process.
Orlando Health Gains Insight into Denials, Reduces A/R Days with RelayAnalytics Acuity
Read how Orlando Health was able to perform deeper dives into claims data to help the health system see claim rejections more quickly–even on the front end–and reduce A/R days.
Revenue Cycle Payment Clarity
To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.
Streamlining the Patient Billing Process
Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.
Wallace Thomson Hospital Automates to Maximize Limited Resources
Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.
7 Steps for Building and Funding Sustainability Projects
Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Key Capital Considerations for Mergers and Acquisitions
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
Key Capital Considerations for Mergers and Acquisitions
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
Trend Watch: Providers adapt as value-based care moves from hype to reality
Announcements from several commercial payers and the Centers for Medicare and Medicaid Services (CMS) early in 2015 around increased efforts to form value-based contracts with providers seemed to point to an impending rise in risk-based contracting. Rather than wait for disruption from the outside in, health care providers are now making inroads on collaborating with payers on various risk-based contracting models to increase the value of health care from within.
Yuma Regional Medical Center case study
Yuma Regional Medical Center (YRMC) is a not-for-profit hospital serving a population of roughly 200,000 in Yuma and the surrounding communities.
Before becoming a ZirMed client, Yuma was attempting to manually monitor hundreds of thousands of charges which led to significant charge capture leakage. Learn how Yuma & ZirMed worked together to address underlying collections issues at the front end, thus increasing Yuma’s overall bottom line.
Reforming with a New 50-Bed Acute Care Facility
Kindred Hospital Rehabilitation Services works with partners to audit the market and the facility’s role in that market to identify opportunities for improvement. This approach leads to successes; Kindred’s clinical rehab and management expertise complements our partners’ strengths. Every facility and challenge is unique, and requires a full objective analysis.
5-Minute Briefing on Revenue Integrity Through HIM WhitePaper Hospitals FS
As the critical link between patient care and reimbursement, health information enables more complete and accurate revenue capture. This 5-Minute White Paper Briefing shares how to achieve cost-effective revenue integrity by your optimizing HIM systems.
5-Minute Briefing on Accelerating Cash Flow Through HIM WhitePaper Hospitals FS
Speedier cash flow starts with better CDI and coding. This 5-Minute White Paper Briefing explains how providers can improve vital measures of technical and business performance to accelerate cash flow.
5-Minute Briefing on Reducing the Cost of RCM WhitePaper Hospitals FS
Qualified coders are getting harder to come by, and even the most seasoned professional can struggle with the complexity of ICD-10. This 5-Minute White Paper Briefing explains how partnerships can help improve coding and other key RCM operations potentially at a cost savings.
Providers Focus Too Much On Revenue Cycle Management
The point of managing your revenue cycle isn’t just to improve revenue and cash flow. It’s to do those things effectively by consistently following best practices— while spending as little time, money, and energy on them as possible.
Lucille Packard Children’s Hospital Stanford Case Study
How Lucile Packard Children’s Hospital Stanford increased payments received within 45 days by 20% and reduced paper submission claims by 70% by using ZirMed solutions.
Using Predictive Modeling To Detect Meaningful Correlations Across Claims Denials Data
The reasons claims are denied are so varied that managing denials can feel like chasing a thousand different tails. This situation is not surprising given that a hypothetical denial rate of just 5 percent translates to tens of thousands of denied claims per year for large hospitals—where real‐world denial rates often range from 12 to 22 percent. Read about how predictive modeling can detect meaningful correlations across claims denials data.
ZOLL and Emergency Mobile Health Care Case Study
Emergency Mobile Health Care (EMHC) was founded to be and remains an exclusively locally owned and operated emergency medical service organization; today EMHC serves a population of more than a million people in and around Memphis, answering 75,000 calls each year.
Maximizing Medicare Reimbursements White Paper
Since the Physician Quality Reporting Initiative (PQRI) introduction, CMS has paid more than $100 million in bonus payments to participants. However, these bonuses ended in 2015; providers who successfully meet the reporting requirements in 2016 will avoid the 2% negative payment adjustment in 2018, so now is the time to act! Included in this whitepaper are implications of increasing patient responsibility, collections best practices, and collections and internal control solutions.
Denials Deconstructed: Getting Your Claims Paid
Getting paid what your physician deserves—that’s the goal of every biller. Yet even for the best billers, achieving that success can be elusive when denials stand in the way of success, presenting challenges at every turn. Denials aren’t going away, but you can learn techniques to manage and even prevent them.Join practice management expert Elizabeth W. Woodcock, MBA, FACMPE, CPC, to: Discover methods to translate denial data into business intelligence to improve your bottom line, determine staff productivity benchmarks for billers, and recognize common mistakes in denial management.
Automation and Operational Improvement Drive Sustainable Results
Physician practices must improve organizational efficiency to compete in this era of reduced reimbursement and escalating administrative costs.
Revenue Cycle Management Resolves Migration Implementation Issues
Many healthcare organizations are pursuing next-generation health information systems solutions. Learn more about Navigant's work with University of Michigan Health System.
Partnering For Success – Provider Achieves Strength in Stability
The proper implementation of healthcare information technology systems is crucial to an organization’s financial health.
Building a Clinically-Integrated Network
As value-based payment models evolve, providers are challenged to maintain superior clinical outcomes while controlling costs.
Winning in the Post-Acute Marketplace
Read more about factors contributing to the changes in the post-acute marketplace and what it means for manufacturers, physicians, clinicians, patients, and post-acute facilities as they anticipate the transition to the second curve.
Building A Common Vision with Employed Physicians
HSG helped the physicians and executives of St. Claire Regional in Morehead, Kentucky, define their shared vision for how the group would evolve over the next decade. As well as, develop the strategic and operational priorities which refocused and accelerated the group’s evolution.
Practice Performance Improvement
The client was a nine-hospital health system with 14 clinics serving communities in a multi-state market with very limited access to care, poor economic conditions, high unemployment, and a heavy Medicare/Medicaid/uninsured payer mix. In most of these communities, the system was the sole source of care.
Though the clinics were of substantial size (they employed 98 physicians) and comprised of multiple specialists, the physicians functioned as individuals and the practices lacked any real group culture.
Clinical Integration Without Spending a Fortune
Clinical integration can be expensive, but it doesn’t have to be, as this four-step road map for developing a CIN proves. Does it have to cost millions to initiate a clinical integration strategy?
Contrary to popular belief, we have clients who have generated substantial shared savings and a significant ROI over time, without massive investments. Yes, some financial capital is required for resources the CIN providers can’t bring to the table themselves. But the size of that investment can be miniscule relative to the value it produces: improved outcomes and documentation for payers.
Adding Value to Physician Compensation
Today’s concerns about physician compensation are the result of the changing healthcare environment. The transition to value is slow, but finally becoming a reality. Proactive hospitals want to ensure that provider incentives are properly aligned with ever-increasing value-based demands.
This report focuses on the three big questions HSG receives about adding value to physician compensation; Why are organizations redesigning their provider compensation plans? What elements and parameters must be part of successful compensation plans? How are organizations implementing compensation changes?
Effective Revenue Cycle Management in Your Network
Revenue Cycle Management has become an even more complex issue with declining reimbursements, implementation of Electronic Health Records, evolving local carrier determinations (LCD), and payer credentialing [The emphasis on healthcare fraud, abuse and compliance has increased the importance of accuracy of data reporting and claims filing).
The efficiency of a medical practice’s billing operations has critical impact on the financial performance. In many cases, patient billings are the primary revenue source that pays staff salaries, provider compensation and overhead operating cost. Inefficiencies or inaccurate billing will contribute to operating losses.
Succeeding in Value-Based Care
This publication identifies and outlines the necessary characteristics of a fully-functioning clinically integrated network (CIN). What it doesn’t do is detail how hospitals and providers can participate in the value-based care environment during the development process.
One common misconception is that the CIN can’t do anything significant until it has obtained the FTC’s “clinically integrated” stamp of approval. While the network must satisfy the FTC’s definition of clinical integration before single signature contracting for FFS rates and contracts can legally start, hospitals and providers can enjoy three key benefits during the development process.
Therapy: Benefits at All Levels of Care
Nearly half of all Medicare beneficiaries treated in the hospital will need post-acute care services after discharge. For these patients, a stay in an inpatient rehabilitation facility, skilled nursing facility or other post-acute care setting comes between hospital and home.
Does Your Budgeting Process Lack Accountability?
With the proper process, tools, and feedback mechanisms in place, budgeting can be a valuable exercise for organizations while helping hold organizational leaders accountable. Having a proper monthly variance review process is one of the most critical factors in creating a more efficient and accurate budget. Monthly variance reporting puts parameters around what is to be expected during the upcoming budget entry process.
Cost Accounting: the Key to Cost Management and Profitability
Managing the cost of patient care is the top strategic priority of most hospital CFOs today. As healthcare shifts to more data-driven decision making, having clear visibility into key volume, cost and profitability measures across clinical service lines is becoming increasingly important for both long-range and tactical planning activities. In turn, the cost accounting function in healthcare provider organizations is becoming an increasingly important and strategic function. This whitepaper includes five strategies for efficient and accurate cost accounting and service line analytics and keys to overcoming the associated challenges.