Mary Chmielowiec, executive vice president insurance services for data analytics experts PointRight, outlines three simple ways to step up your analytics game.
A number of organizations stand out for best practice in the use of analytics: CapitalOne, Target, Amazon, Netflix, Boston Red Sox and New England Patriots quickly come to mind. Not one of these companies is a healthcare organization.
Healthcare is generally not considered a rich source of analytics best practice, although progress is being made within the industry. Changes coming with healthcare reform provide significant motivation for developing analytics capabilities, with one of the most compelling reasons being ‘pay for performance’ or, simply, money. Looking outside the industry and borrowing from other experts, the benefit is clear: strong analytics capability will be the differentiator as competition intensifies and geographic boundaries soften.
The next wave of innovation in healthcare risk management will come from the use of analytics: it will support revenue generation and early intervention to contain the most costly adverse outcomes. Today, healthcare risk management professionals are either experiencing, or thinking about how to capture, the value of analytics in their operations.
Making use of analytics
The most advanced analytically based organizations are those that embrace analytics at the senior executive level and incorporate data-based decisions throughout the organization. These organizations build capability not on a project by project basis but as an ongoing process that drives business decisions at all levels.
It is important to recognize where your organization is on the continuum of analytics capability. Broadly speaking analytics are broken down into two categories: descriptive and predictive, with descriptive analytics as the entry path to building more advanced predictive capabilities. Descriptive analytics are used each time an alert message is triggered or a scorecard is produced, while predictive analytics are in use for optimization, random tests, or statistically based predictive modeling.
For healthcare risk managers, the Centers for Medicare & Medicaid Services (CMS) is encouraging an analytics approach by collecting and measuring data in their tools and programs. Examples of these programs include Nursing Home Compare, Five-Star Quality Rating and Quality Assurance and Performance Improvement (QAPI) to just name a few. These tools were designed to provide consumers with insight into the performance of hospitals and nursing homes, and are also used extensively by insurers and plaintiff attorneys.
The motivation to start down a path of deeper analytics insight can be found in a newspaper. On July 24, 2014, the Boston Globe reported on the $14 million jury award to a family regarding the death of a loved one due to negligence while residing in a Danvers, Massachusetts nursing home in 2008. The case, as described by the Boston Globe, details the effects of negligent care when the patient was examined by the hospital team after falling out of a wheelchair: “a festering pressure sore on her back, acute appendicitis, a urinary tract infection so severe it had invaded her blood stream, kidney failure, uncontrolled diabetes, and severe dehydration”.
The compensatory damage in the case was $1.4 million with an additional $12.5 million in punitive damages. Could analytics have predicted that the Danvers facility was destined for a large lawsuit?
Rolling back to 2007, and using benchmarking—a simple form of analytics—let’s look at an area of primary concern in matters of litigation: the facility staffing. The benchmark analysis shows that the facility had low total licensed staffing compared to the state average and also used licensed contract staff (see Table 1).
More advanced analytics analysis indicates that use of contract staff is correlated with litigation. Typically, contract staff do not have intimate knowledge of residents or facility policies and procedures, which can lead to problems with outcomes. In addition, there were other signs of problems with the facility: it was cited for actual harm during a complaint survey before March 2008 related to pressure ulcer treatment/prevention, and poor performance in pain management.
Very few long stay residents in 2008 reported pain (see Table 2). This information coupled with expert knowledge tells us that facilities that don’t recognize pain and manage it properly also have more professional liability risk. More advanced statistically based models show this facility was at a high risk for litigation; blind to prior claim experience, this facility scored a D on a scale ranging from A to E with a score of A being the lowest underlying professional liability risk and E the highest level risk for professional liability activity when compared to all facilities in the nation. If the organization had any of these analytics available perhaps the risk manager could have made a compelling case for additional staffing and training; certainly the insurance underwriter would have benefited from understanding the risk more deeply before pricing insurance coverage.
Analytics matter now
From a risk management perspective, sustained improvement depends on the ability to measure, monitor and make adjustments to ongoing performance, building momentum for progress. Two measures, introduced by CMS—the Five-Star Quality Rating program and Hospital Readmissions Reduction Program (rehospitalization)—are driving performance and holding healthcare organizations accountable.
For skilled nursing home owners and risk managers, the CMS Five-Star system is motivating change. Despite criticism about the methodology used to calculate the star rating and the known limitations, organizations now recognize that the rating matters. Measurement has changed behavior. PointRight analyzed the change in the overall Five-Star ratings from 2009 to 2013. The changes at the top and bottom were significant: the percentage of five-star rated facilities increased from 14.9 percent to 27.8 percent; percentage of one-star facilities decreased from 26.2 percent to 13.7 percent, while the middle bands remained largely the same.
Understanding how the scores are built and then prioritizing activities to improve performance is an ongoing discussion in most organizations. Consumers are data-savvy and, fortunately for risk management professionals, the essential data needed to get started are easily accessible and readily available.
The introduction of a rehospitalization measure is also having an impact on healthcare management. Accountable Care Organizations, hospitals and nursing homes are all monitoring rehospitalization rates, and wisely incorporating positive performance into marketing communications and discussion with partners. Performance, good and bad, will have a major impact on the bottom line for all of the organizations.
Getting started with analytics
1. Start simply
The effort should begin by developing an understanding of the information that is known about your organization and how that information is viewed by consumers, financial and insurance professionals, competitors and others who review it.
Initially you should work with what is available and make sure the data presented about your organization is accurate. If it isn’t, get it changed and educate your staff on how to correctly complete CMS documentation. For healthcare organizations, reputation is correlated with revenue.
Healthcare reform is increasing the amount of information available publically and requirements for transparency will reveal additional information such as corporate structures, which were previously difficult to determine.
2. Define and measure
Once the basics are mastered, take time to identify the business value expected for making the effort and make sure the value is clearly defined and can be easily measured. Making the CMS performance data available in management dashboards, scorecards and other decision making tools is a good start.
More sophisticated analytics efforts such as driving data into your organization’s decision-making processes takes an investment of time and money. For some, the financial investment is a challenge and the cultural hurdles substantial.
3. Apply leverage
There are ways to advance analytics capability by leveraging third-party providers to jump-start the effort in your organization. Analytics providers can propel an organization from simple project orientation to process based decision-making by providing vetted models and insight for immediate consideration in the organization.
PointRight, as an example, provides analytics insight for professional liability risk management, survey performance and patient care. By making immediate use of data analytics your organization can rapidly advance on the continuum from descriptive to predictive capability. As an organization’s use of analytics progresses, the available information such as likelihood of professional liability activity, identification of expensive workers’ compensation claims and changes in rehospitalization rate will drive risk management decisions and risk management investment.
Analytics, predictive analytics, and big data analytics are the answer, the new buzz and the new mandate for risk management professionals and business managers. Historically, competitive advantage could be achieved through scale and efficiency. Today, organizations that embrace the trend to imbed analytics capability from the top to the bottom will succeed while the ones that don’t will not. Figure out where your organization is on the continuum and get a roadmap into action that will improve your capabilities and give you an analytics edge.
Mary Chmielowiec is executive vice president insurance services for data analytics experts PointRight. She can be contacted at: email@example.com
PointRight is the industry leader in providing data-driven analytics and web-based tools that measure risk, rehospitalization, quality of care, compliance and reimbursement accuracy of the healthcare and insurance industries. Using some of the largest and best databases in the industry, its nationally recognized clinical staff, researchers and technologists expertly translate disparate data into usable information and insight.
For more information, visit www.pointright.com
Mary Chmielowiec, PointRight, CMS, QAPI