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6 Healthcare EPM Trends: #5 Value of Care



Costing is an evolutionary process that begins with one type of procedure, one clinic, or one service line, or perhaps with a hybrid costing methodology. The great news is that technology can help realize the goal of improved costing by allowing for the use of multiple costing methodologies with full traceability and transparency to the underlying data.

Transparency of data and the ability to perform micro-level costing are both features that are missing from epm-t5most cost accounting software today. Having data doesn’t itself make a company successful; organizations must act on information and filter what is useful, appropriate, and above all else actionable. Correlating data from a clinical and financial perspective provides a linkage between price and cost as well. There are many factors that influence price setting, not the least of which is the federal government (Medicare/Medicaid), but one reason hospitals don’t more closely link pricing to margins is they lack visibility into their own data.

Several different data sources are needed to achieve transparency:

  • Transactional: Data recorded at the lowest level of detail within the EMR or ERP systems
  • Aggregated: Data that is aggregated for analytics
  • Allocated: Data that is created during the costing process

Each of these data types is vital to the decision-support system to answer tough questions such as:

  • How is your organization using cost of care insights within the quality management strategy?
  • What is the cost management vs. margin accountability strategy?
  • How is your organization using cost of care insights within your population health strategy?
  • What cost management data are needed to for shared-risk contract negotiations and price-setting strategies?

To understand and achieve sufficient transparency and sustain a proactive approach to maintaining margins, hospitals must be capable of correlating costs for supplies and drugs, etc. with the costs of care providers and overhead. They must be able to compare these costs with the payments from health plans, individuals and other purchasers. Bringing together the necessary data is not easy and 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. Provider organizations will require discipline to bridge operational and clinical functions – including collaboration from the CFO, finance staff, chief medical officer, chief nursing officer and division/ department administrators – to consider quality, safety, patient satisfaction, and financial performance simultaneously.

In some organizations, there may be a need to significantly and fundamentally rethink operations and what services and businesses are core to their mission. New productivity measures may emerge and new and different uses of technology may emerge. There is a fundamental culture shift that will require collaboration and significant leadership to see it through to completion.

Priorities must be set for integrating and storing data to support these initiatives. The volume of data needed to extract and evaluate EMR patientlevel data on a daily basis is not something for spreadsheets. While data visualizations can take many forms, the data analysis for quality and cost has to be repeatable, sharable, and trustworthy

This is just one of the healthcare enterprise performance management trends. In our new guide, we take a look at six performance management trends healthcare executives need to be thinking about in 2016 and beyond. We’ll identify technology strategies and solutions that will help healthcare organizations succeed in a data-driven, cost-management culture.

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Terie McClintock

Terie McClintock is the Oracle Healthcare Practice Director at Perficient, Inc. where she is responsible for providing healthcare subject matter expertise to the Perficient Oracle National Business Unit while also cultivating and managing the partnership with Oracle’s Healthcare Vertical and Horizontal Business Units. Terie has more than 25 years of IT experience. Prior to joining Perficient, Terie contributed over 13 years at M.D. Anderson Cancer Center with the most recent title of Director, Data Management Services. Prior to M.D. Anderson, Terie worked for IBM as a Senior Consultant.

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