Business intelligence software has become the darling of many hospital financial managers. But like some “sweethearts,” it can turn your life around – or ruin it. It all depends on how carefully you choose, and in the case of BI platforms, how well you fold these tools into your overall strategic plan.
Transformative BI is no easy task. The Advisory Board has constructed a BI maturity model to help providers identify the level at which their current BI platform is performing and how to develop a more mature system that’s integrated into the hospital’s overall strategic plan. The model divides BI into four levels of sophistication for each of nine parameters.
In this model, your BI system can 1) be fragmented, 2) take an enterprise perspective, 3) incorporate advanced analytics, or 4) play in the “big data” arena, the most mature level. The nine parameters evaluated at each of these four levels are: BI architecture, data sources/data currency, types of analysis/use of analytics, data models, data governance, tools, skills, culture and BI governance.
For example, a hospital with a fragmented BI architecture may have several point solutions while one that takes an enterprise approach will have a central infrastructure in place and a hospital at level 3 – advanced analytics – has “a BI core and self-service infrastructure in place.”
Similarly, the model differentiates among various skill levels: fragmented BI systems typically use SQL, Excel and other lightweight tools while a hospital at the advanced analytics level has an “in-depth understanding of statistics and operations analysis and procedural programing.”
The take-home message behind the BI maturity model is pretty straightforward: a business intelligence system is not very intelligent until it is backed by a data driven strategy. BI can’t be haphazardly “pasted” into a hospital’s operations but must be an integral part of senior management’s mindset. The cultural component of the Advisory Board’s model drives home that point nicely. It describes the culture behind a fragmented BI system as one that underappreciates the value of data and relies on gut feel decisions, while hospitals with the most mature BI platforms offer training in data literacy, identify BI opportunities, and “have an engrained understanding of BI capabilities and limitations.”
Unfortunately, many hospitals still operate at the fragmented level.
“Our industry has been very late to the dance” when it comes to using business intelligence technology, said Mitch Morris, principal of health sciences and government at Deloitte Consulting.
Wal-Mart is a role model for mature BI analytics and has proven that it can fold this technology into its strategic plan to understand it costs, what its customers want, and what it has on the shelves. In such a high-volume, thin-margin business, Wal-Mart would be flying blind without this kind of data mining. “In healthcare, we’ve been flying blind,” Morris said.
With all the pressure on the industry in 2014 to trim the fat, many of Deloitte’s clients have been asking how can they take out 20 percent to 30 percent of their costs? Layoffs alone won’t accomplish these kinds of deep cuts. “You have to really understand where your costs are” and understand how your costs are changing and evolving over time, and having insights on what parts of the business are doing well and what parts are not, explained Morris.
There are many niche applications that can help hospitals understand pieces of this puzzle and some that help hospitals see the entire picture. A BI program that looks at hospital readmissions, for example, would fall into the former group and can help reduce Medicare penalties for avoidable 30-day readmissions.
But the industry is also starting to see hospitals invest in enterprise data warehouses, which allow financial managers to analyze not just financial data but also clinical and operational data. BI tools like this allow CFOs to find out, for instance, how well nursing unit A utilizes supplies compared with nursing unit B, said Morris, or what level of patient satisfaction exists in your surgical department versus internal medicine, or what the profit margin is for knee replacements.
Despite the efforts of many hospitals to incorporate BI systems into their strategic plan, it’s a “hard-to-build capability,” according to Greg Chittim, senior director for consulting firm Arcadia Healthcare Solutions.
Arcadia has found that many of its clients have lots of data in their computers but they are often not using it strategically, in which case their analysts become “glorified report writers,” said Chittim, without having the ability to answer practical questions.
One of Arcadia’s clients, for instance, had access to a mountain of claims, clinical, and related data but were not able to answer straightforward questions like: How much am I spending on med/surg procedures versus advanced imaging at hospital X for all of the health plans that we have contracts with? “Because of the way they architectured their data, they had to go back and forth with the analysts over seven to 10 business days to reach the point where the CFO got the answer …” said Chittim. The take-home message here is clear: Managers have to think through their data governance strategy. “Data governance is not particularly sexy but it requires the attention of everyone in the C-suite.”
Of course, any strategically positioned BI system should help managers get a handle of return on investment. Anil Jain, MD, senior vice president at the data analytics firm Explorys, has found that many CFOs in U.S. hospitals are trying to get a good handle on their traditional fee-for-service departments. They are using BI tools to understand where the patient and clinician outliers are, and comparing, for instance, whether a certain orthopedic offering is more profitable than a certain GI offering.
In practical terms, that may mean using a variety of analytics tools to spot a physician who is outspending all his or her colleagues in delivering care without generating higher revenue and better outcomes. Once those outliers are identified, managers can then address the issue with the practitioner and look for a solution that meets the organization’s needs.