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The role of analytics in the evolving healthcare market

This article appears in the issue January 2014, [Vol 23, Issue 1]
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With healthcare spending at about $3 trillion per year and accounting for nearly a fifth of gross domestic product (GDP), managing costs and improving outcomes are top priorities for healthcare providers, insurance companies and consumers alike. KMWorld interviewed five experts in the field, who offered insights into how business intelligence solutions can help organizations take on the challenge of a new and sometimes confusing environment.

Those interviewed by Judith Lamont, KMWorld senior writer, include John Carew, assistant VP, advanced analytics for Carolinas HealthCare System; Michael Corcoran, chief marketing officer, Information Builders; Graham Hughes, M.D., chief medical officer, Center for Health Analytics and Insights, SAS; Vi Shaffer, research VP at Gartner; and Alex White, managing director for corporate finance/restructuring, FTI Consulting.

Q Lamont: What are the most significant driving forces in healthcare today?

A Hughes: Multiple forces are putting pressure on the healthcare system, but the biggest change is the unstoppable shift from volume to value. Traditionally, revenue in the healthcare industry has been a function of the number of products and services provided. The Affordable Care Act (ACA) is requiring a focus on outcomes—keeping patients healthy. This means that healthcare has to pivot and make some dramatic changes in its business model.

A Shaffer: Another major factor is the shift in demographics. We are dealing with the diseases of an aging population as the baby boomers hit 65 and above, as well as a range of chronic diseases. It requires a different continuum of care. We are seeing innovative changes in how healthcare is paid for and delivered. Providers have more incentives to keep patients healthy.

A White: The method of care is also shifting, with greater emphasis on outpatient care and the care continuum. These changes represent good opportunities for improving the quality of care because of the continuity across multiple settings, and also for cost savings—for example, by eliminating redundancy in diagnostics and treatment or identifying health risks earlier. That, combined with new technologies such as wireless sensors and mobile devices, means there is a tidal wave of data that people are struggling to capture and analyze from across a host of care settings.

Q Lamont: How are analytics solutions helping to address these issues?

A Hughes: Understanding individual risks as well as the risks within population is a data-driven exercise. Healthcare providers who are being rewarded for value will have to measure whether they are achieving the patient outcomes that are expected of them, and evaluate the extent to which they are proactively managing the risk of the patients they are taking accountability for.

A White: Multiple studies have shown that around a third of the nearly $3 trillion the United States spends on healthcare is wasted. As the paradigm shifts from volume- to value-based reimbursement, that means companies that are well positioned to identify and reduce inefficiencies should, in theory, be at an advantage. The bet that many are making is that analytics can help them do that—whether it's identifying unwarranted use of interventions, reducing fraud and abuse or managing care more effectively.

A Shaffer: Many of the innovations in treatment and reimbursement depend on technology for analytics, use of electronic records and monitoring seriously ill patients outside the hospital. More information is available about the patient, which allows better analysis of what approaches are most effective. Information is a strategic asset, and it must be infused rapidly to drive the clinical process, because there is a lot of downward pressure on costs now.

Q Lamont: From the viewpoint of a healthcare provider, how is your organization responding to these challenges?

A Carew: Carolinas HealthCare System is a non-profit healthcare system with 40 hospitals and 900 provider locations, as well as home healthcare, skilled nursing and hospice care. We are doing extensive analyses to measure quality of care across this continuum, evaluating outcomes and costs. We also need to understand which patients are at risk for developing severe or chronic illnesses, and try to avert those conditions.

Q Lamont: What is an example of an analysis that is being done right now in response to changes in healthcare regulations?

A Carew: We are looking very carefully at hospital readmissions, because that is one of the provisions of the ACA that has already been implemented. If a patient is readmitted within 30 days of a hospital stay, there is an impact on reimbursement. One of the strongest predictors of readmission is past utilization, so we monitor those statistics as well as other factors in ?the patient's environment, such as ?family support.

Q Lamont: What sort of interventions are you conducting in response to this information?

A Carew: When we identify a high-risk patient, we have several approaches. One is a program called TeachBack. This program assists with health literacy, meaning the ability of an individual to understand his or her condition and cope effectively with it. TeachBack explains the disease and how to take medication, and then the patient explains it back to the provider. We use this method because teaching is one of the most effective ways for someone to gain mastery of information.

A Hughes: It is important to address patient engagement head-on as part of multiyear population management strategy. For example, a 14-year-old diabetic does not interact with the healthcare system the same way as an acutely ill 70-year-old. Even though analytics-powered customer engagement approaches are common in other industries, its adoption in today's healthcare system is very immature, and only the pioneers are experimenting with these technologies.

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