Is there a correlation between price transparency and cost? I read an article in the HFMA Strategic Financial Planning Newsletter recently about this and I can relate my personal experiences to it wholeheartedly. My observations are that hospitals segregate these two activities but I believe they are explicitly linked. I know there are many factors that influence price setting, not the least of which is the federal government (Medicare/Medicaid), but I suspect the reason that hospitals don’t more closely link pricing to margins is that they lack visibility into their own data.
When I first started working in healthcare in the late 90’s, my only prior exposure to revenue cycle automation came from the airline industry where pricing is tightly linked to both demand and yield. I was part of the team that helped Continental Airlines transition into the era of de-regulation. It didn’t take industry leaders very long to identify the metrics that truly informed pricing once the government was taken out of the equation. This taught me very valuable lessons about analytics and instilled in me a drive to use data to improve operations.
To understand and achieve sufficient transparency and maintain a proactive approach to maintaining margins, hospitals must be capable of correlating costs for supplies and drugs, etc. with the cost of providers and overhead costs. Then they must compare this with the payments from payers, individuals and other purchasers. While we certainly can’t take the federal government out of the equation for hospitals, recent expectations have been set for quality performance that may help the affected organizations begin to take a more margin focused view of pricing. Bringing together the necessary data is not simple and definitely should be approached iteratively using a configurable set of analytic tools that can provide the right data to the right individuals in the organization who manage operations and continue or create new services.
The Perficient High-Performance Costing Expressway provides a complete solution that enables hospitals to rapidly deploy a micro-level costing solution. It provides integrated software and hardware with a prescribed set of data integrations and services to quickly deploy a costing application. The Perficient High-Performance Costing Expressway leverages Oracle’s Hyperion Profitability and Cost Management (HPCM) and Enterprise Health Analytics (EHA) solutions and is also an integrated foundation for applications of advanced costing.
View our most recent costing webinar Align Patient Outcomes with Financial Data: a Formula for Correlating Cost and Quality for an overview of the High-Performance Costing Expressway and download our white paper.
Also, please visit the Perficient team at Oracle OpenWorld 2014 (#OOW14) from September 29th – October 1st at the Healthcare Solutions Pavilion in Industry Central (Marriott Hotel Atrium Lobby booth HMH-003) and at the Perficient Main Booth #2221: Moscone South Exhibition Hall Level 1. Watch our blog for more details about what we are learning at OOW14!
Follow me on twitter @teriemc