August 30th, 2016

It’s the Facts

Christopher Simpkins

In an interview with powerful political operative Steve Bannon, he reflected on what political stories get the most traction: “It’s the facts, not rumors, that resonate best.” Healthcare payers and providers have often been on opposite sides of the aisle, having spent years hashing out contracts that compromise either professional judgment or financial prudence. This long-standing environment of mistrust doesn’t make for a smooth transition from pay-for-service to new value-based payment (VBP) plans.

But Bannon’s insight with investigative reporters is also true here – If there are solid facts to share, they can create the foundation for collaboration that will improve quality, cost and care.

Most large hospital or healthcare systems have masses of patient data, but they don’t know what happens once a patient leaves their facility, nor are they privy to the records of their competitors. This is where a VBP analytics platform comes into play; it provides actionable intelligence for all stakeholders.

Let’s look at the case of a knee replacement surgery.

Hospital A Hospital B
Hospital Fees: $12,000

Surgeon Fees:  $3,500

Lab Expenses: $500

Rehabilitation Costs: $750

Total Cost: $16,750

 

Hospital Fees: $11,500

Surgeon Fees: $3,500

Lab Expenses: $200

Rehabilitation Costs: $1,500

Total Cost: $16,700

 

Success rate/Complications:

Knee Revision Rate: 1.5%

Success rate/Complications:

Knee Revision Rate: 1.6%

 

In two facilities in the same geographic areas that serve roughly the same patient sizes and demographics, it becomes much easier to locate small differences in cost that eventually add up. Hospital A has significantly higher lab fees, are they routinely requesting unnecessary tests or perhaps their particular lab facility just charges more? Hospital B has rehabilitation costs that double Hospital A. Are they sending all patients to in-patient rehabilitation facilities rather than evaluating which patients would do just as well with home care? By showing providers where the actual differences in cost originate, they are able to redefine their protocols to better align with industry standards, reducing costs without compromising patient outcomes.

 

Below I offer some strategy recommendations:

  • Episodes of similar total cost can have very different financial distributions. You need to understand how dollars are being spent within the episode.
  • Context is everything. Is Hospital A’s cost of $750 for rehab half the market average or is Hospital B’s $1500 for rehab twice the market average?  You need to understand the specifics of your market to have a reasonable conversation about where improvement is possible.
  • Show your hand. You need claim-level details for the episode to understand whether the opportunity areas are a cost-per-service issue remediated by redirecting care to more cost efficient providers, or a utilization issue that needs to be remediated though education and internal medical policies.

Healthcare providers are very familiar with large clinical studies that compare two treatment methods on a similar population. Showing them two treatment modalities that produce the same outcomes, but vary in cost, is speaking their language. Think of ClarityQx as your translator.


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