As the healthcare industry migrates toward a value-based payment system, with risk-based models like bundled payments gaining speed, it is vital for hospitals and health systems to reduce costs. However, that process is difficult when organizations don’t know their costs. During an executive roundtable discussion at the Becker’s Hospital Review 7th Annual Meeting in Chicago,…
STRATA DECISION IMPROVING CLINICIANS ACCESS TO COST DATA
Empowering Clinicians With Cost Data as Part of A Business Intelligence Strategy Requires Collaboration, Education, and the Right Mix of Experts
At a Glance
- Bringing clinical and financial data together is critical to effectively running and operating service lines.
- Helping clinicians use cost data to make decisions requires a shared vision and a partnership between finance leaders and physicians.
- Hosting a “jam session” of technical, financial, and clinical experts can accelerate an organization’s business intelligence strategy.
- Labor and supply costs represent the most actionable cost data for clinicians.
- Clinician buy-in hinges on education and support.
- It is important to focus on easy wins at the beginning of the project.
In the past, the director of the orthopedics service line at Legacy Health in Portland, Ore., had to rely on a reporting analyst—and often had to wait in line—if she wanted to know how standardizing a hip implant might affect her service line’s financial and clinical outcomes. But now, she can run her own reports instantly and take greater ownership of her department’s performance using business intelligence (BI) tools that draw cost and quality data from the system’s enterprise data warehouse (EDW ).
Although all health systems want to place actionable data directly in the hands of service line leaders, doing so requires thorough planning and forward-thinking leadership. Here are some strategies that organizations can use to empower clinicians and service line leaders with integrated cost and clinical data, based on lessons learned from Legacy’s ongoing BI strategy.
Create a Vision
Giving clinicians access to cost and quality data as part of a broader BI strategy requires a clear vision and leaders who are willing to commit the time and resources. The vision should center on finding effective ways to marry clinical and financial data into useable information that clinicians and service line leaders can use to improve their performance and make healthcare delivery more consistent—and less costly.
Legacy’s BI strategy was guided by such a vision: System leaders wanted to provide their clinical teams with access to cost data and tools that would help them make good decisions in an environment increasingly focused on value. The philosophy was not entirely new. Legacy’s leaders have long viewed the organization’s electronic health record (EHR) as a value strategy, not an IT strategy, and this mindset helped drive EHR adoption across Legacy’s six hospitals and more than 50 ambulatory clinics, laboratories, and hospice facilities.
Although Legacy had access to clinical data due to the success of its EHR rollout, the health system still struggled to put practical, actionable cost data in the hands of clinical leaders. Legacy’s vision was to integrate the financial data from its costing system with clinical data from its EHR in a single EDW and then to provide physicians with “self-service” BI tools that would enable them to access cost data in the EDW and model the financial impact of their decisions. It was an ambitious goal that required collaboration with leaders from multiple disciplines as well as with two separate vendors for the EHR and the costing system.
Create a Workgroup and Host a “Jam Session”
Getting costing and clinical systems to “talk” to each other requires the combined efforts of technical, financial, and clinical experts, ideally assembled into a workgroup focused on the larger BI strategy. Members of the BI workgroup should be highly engaged so they can help define what can be an ambiguous project. BI means different things to different people, and members tend to be focused on their own needs. Together, the workgroup can get to the core of what matters to the organization and determine which cost information to share with clinicians and how to do it.
Legacy’s workgroup meets monthly and includes leaders from finance, quality, IT, operations, and the medical group. Earlier this year, the workgroup convened what it called a two-day “jam session” at Legacy with the health system’s EHR and decision-support vendors as well as with clinicians from Legacy’s care transformation group, which leads the system’s population health strategy.
Without using specific terminology, the clinicians told the workgroup and vendors that they wanted predictive analytics tools that would help them weigh the financial impact of their decisions. Specifically, they wanted access to cost data at the disease, diagnosis, and patient levels so they could understand the ROI of their initiatives. For example, they wanted to know:
- How reducing admissions of diabetes patients by 10 percent through better outpatient management might affect cost
- What efficiencies might be gained if knee implants were standardized
- Whether adding case managers to coordinate care might reduce readmissions and negatively affect the organization’s bottom line
To gain such insights, they decided to model various scenarios using historical data and trends as a guide. During the jam session, the workgroup conducted several test runs of the cost data and was able to quantify value in several service areas by using quality as the numerator and cost as the denominator. Specifically, the workgroup used length of stay (LOS) as the quality indicator and measured cost relative to LOS.
Share the Most Actionable Data
Robust financial platforms can collect many different “buckets” of finance data. Although highly useful to financial managers, these cost components can overwhelm clinicians, who can have the most impact in two areas: labor and supply costs. Thus, it is critical to limit which financial information is pulled from the costing system into the EDW for clinicians to access and assess.
Before integrating data from different sources, the BI workgroup and finance team need to determine how they will define certain data points. Strong data governance ensures that everyone is using the same cost data definitions before the technical experts and vendors begin building models and tools. Take the cost of a prescription drug, for example. Clinical, financial, and IT leaders need to agree on what exactly that cost is: Is it the unit cost of the medication, the cost of the medication plus labor, the out-of-pocket cost to the patient, or the charge to the patient? Such discussions are essential to ensuring the validity of the cost data.
When determining which cost data to share with clinicians, it is important to ask three questions:
- Do clinicians have an impact on the cost?
- How were the cost data determined? (For example, was the supply cost pulled directly from the supply chain, or was it allocated from the general ledger using statistics?)
- How granular should the cost data be for clinicians? (For example, is total labor cost enough, or will clinicians need breakdowns of nursing, administrative, and physician labor costs?)
The BI workgroup and finance team at Legacy narrowed the list of cost data available to clinicians. The final list included:
- Direct labor costs (cost of physicians, nurses, pharmacists, and other caregivers)
- Direct supply costs (cost of medications, implants, needles, and other supplies)
- Other direct costs (IT, utilities, and purchased services such as contract janitorial labor)
- Total direct costs (sum of direct labor costs, direct supply costs, and other direct costs)
- Total indirect costs (overhead, including administrative, housekeeping, and finance)
They chose to omit more financially oriented cost components, such as bad debt, depreciation, and indirect overhead expenses, which clinicians cannot control.
Hire and Reorganize BI Staff
Integrating cost and clinical data from various systems requires the skills of a BI architect, who can design the framework of a BI platform. Ideally, a BI architect should demonstrate:
- Strong visualization and organizational skills
- Excellent listening skills and a consultative mindset that can help unravel needs that are not always well-stated by clinical leaders
- Experience with healthcare cost and quality data
Finding a BI architect who possesses these qualities can be challenging in a competitive market. For this reason, organizations may need to groom an individual from within the ranks of IT to take on this key role.
Legacy hired a BI architect from the technology industry, which has been using BI effectively for many years. The BI architect was highly effective at working with vendors to build the infrastructure for clinicians to access the data. For the health system’s cost data, for example, the architect wrote an integration process that transferred information from the financial platform to the data warehouse via a secure file transfer protocol (FTP).
Other members of Legacy’s technical team who have worked on the project include a BI manager, several programmers and senior business analysts, and 10 reporting analysts. Until recently, the reporting analysts focused primarily on developing custom reports for the service lines. But Legacy redeployed several reporting analysts to help develop the self-service model for clinical leaders to access their cost data. These reporting analysts also are training clinicians on how to build their reports. In essence, they have become the heart of a virtual BI “think tank” at Legacy.
Having an individual who can bridge the finance and IT teams also is highly valuable. At Legacy, the finance director who had led the implementation of the costing system was transferred to the organization’s IT department to help guide the development of the BI platform.
Educate Clinicians on Costs and BI
Getting clinicians to make the most of the cost data requires education and support regarding costing methodologies and an understanding of what “cost” means. Business intelligence is a new concept for some clinicians, particularly those in not-for-profit health systems, who may get turned off by the “corporate” feel of the term. For this reason, education is vitally important to the success of a BI strategy that places integrated cost and clinical data directly in the hands of physicians.
The finance team at Legacy has been working with the senior director of the medical group to develop a “Cost Accounting 101” course for its hospitalists. The class is designed to promote greater accountability by showing hospitalists how their decisions affect cost and quality outcomes. The class also provides a forum for clinicians to offer suggestions back to the IT team. For instance, some hospitalists have suggested that the health system populate the EHR with the costs of lab tests and pharmaceuticals, along with outcomes information, to help hospitalists make more informed decisions at the bedside.
After a six-month implementation, Legacy’s EDW has become home to the system’s cost and clinical data. However, the BI team is still rolling out decision support tools to clinicians, starting with “super users” in the medical group, quality team, and other areas. This gradual approach allows leaders at Legacy to ensure that clinicians genuinely understand the cost data and how to use it.
Focus on an Easy Win at the Start
To gain systemwide adoption of BI tools that use cost data, it is best to select a discrete pilot project that can become an “easy win.”Orthopedics often is a good place to start because of its high costs, range of supplies, and wide variation in clinical practices and cost among clinicians.
To test the capabilities of the new BI platform at Legacy, an administrative fellow and a supply chain leader are working with the orthopedics service line administrator to review surgical costs and variations in clinical pathways that may present opportunities to contain supply costs.
Legacy also is piloting a tool in orthopedics that allows clinicians to query their cost and quality data via a self-service “universe.” Users enrolled in the pilot can access this universe via a secure web link and create custom reports using an intuitive interface. Specifically, they can build reports using “drag and drop” data fields that represent patient demographics, costs, and other metrics. Clinicians can click on each data field to get the definition of that element, which helps reduce ambiguity.
Grow BI to Meet Your Needs
Over time, a BI platform that makes cost and quality data available to clinicians should be scalable and adaptable as data, technology, and users become more sophisticated.
This year, leaders at Legacy hope to add patient satisfaction data to the EDW so clinicians can use satisfaction, quality, and cost data to inform their strategic decisions. The BI team also expects to make enhancements to the BI platform when the system fills key positions for a vice president of quality and a population health analyst.
Ultimately, the BI team at Legacy wants clinicians to see value in having integrated cost and clinical data at their disposal. One measure of success will be whether clinical leaders use the BI tools to access cost data during the budgeting process early next year. The tools may help them make decisions such as whether to hire a new clinician, whether to close a program, and whether to limit services to just a few hospitals in the system or partner with another organization that is stronger in that service area.
The end goal is to have clinical leaders access the cost data on their own and make decisions based on information they trust rather than consensus or gut instincts.
Developing a BI platform that empowers clinicians with cost and quality data requires an up-front investment, but leaders at Legacy believe a self-service approach is more efficient and effective than having reporting analysts run reports and “own” the data.
Ultimately, organizations that are able to marry their cost and quality data will have a strategic advantage as the pressure on margins increases, even if they choose not to implement a self-service BI solution like Legacy’s solution. With a clearer picture of their financial and clinical performance, these organizations will be better prepared to develop realistic strategies to meet their goals and demonstrate value to their customers.