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Friday, September 6, 2013
HHSC: We Can Only Guess at the Cost of Procedures
By Selected News Articles @ 4:30 AM :: 4741 Views :: Health Care

Under Pressure

by Gary Baldwin, Health Data Management, September 1, 2013 (excerpts)

For health care finance executives, the adage "no money, no mission," has never been more apropos, as they face both dwindling reimbursements and payments increasingly tied to outcomes....

What follows are snapshots of how CFOs and senior level finance executives are using I.T. to streamline their financial organizations-and the tools they're considering to meet their future needs.

Money Atwal: Manage Data, Not Interfaces

When it comes to I.T., Money Atwal wears two hats. He doubles as regional CFO and CIO for the Hawaii Health Systems Corp., which runs three (?) hospitals on the islands, including 280-bed Hilo Medical Center. The payer mix is tilted toward Medicare and Medicaid, with the two public payers accounting for about three-fourths of revenue, the rest deriving from a variety of commercial plans.

The large portion of Medicare and Medicaid payments does absolve the health system from much of the chargemaster controversy widely covered in mainstream media that roiled the industry earlier this year, when CMS released national data on hospitals' charges. Hawaii Health's charges track closely with its Medicare DRG reimbursement rates, Atwal says. That's in contrast to some hospitals with larger commercial payer bases, that might have to inflate their charges to balance out percent-of-Medicare commercial contracts and other demographic considerations.

After the famous Time magazine article on the vagaries of hospital economics came out earlier this year, Atwal had to explain the complex math that goes into industry chargemaster calculations to his board of directors. "The chargemaster is an easy target if you don't understand health care finance," he says.

But there are aspects of the health system's financial operations that Atwal acknowledges are difficult for even a CFO to analyze. That's why Hawaii Health is partnering with its hospital information system vendor, Meditech, as an alpha/beta site for the creation of a new analytics platform. Meditech will develop the platform to work in a seamless manner with its various hospital modules, which encompass both clinical documentation and financial transactions. Atwal currently has only limited analytics capability, and he was eager to sign on as a guinea pig for a new dashboard-driven system.

For example, he'd like to establish the exact cost of a given procedure. "That is a finite detail that requires very detailed reports," he says. Part of the problem, Atwal explains, is that multiple systems house the needed data-such as the legacy supply chain system, which Atwal is converting to a Meditech module, and the time and attendance system, which tracks labor costs. In essence, Atwal lacks a reliable cost accounting technology. "Today I can guess at only a 70 percent confidence level the cost of procedures," he says.

That figure's not good enough in the accountable care era, however. And with bundled payments and shared savings looming on the industry horizon, Atwal wants to be prepared before taking risk on a service line. "With an ACO, I'm not going to guess at 70 percent. I need to be at 99 percent to say this is the service line we are going to promote."

Atwal has a clear vision of what he would like in an analytics package. Ask him to explain, and he launches into an enthusiastic-and highly detailed-portrait of progress. "Say you want to know what the exact cost of a procedure is. So you look at a monthly dashboard. You can see OR increased net revenue by $500,000. Revenue there is normally flat, so you drill down. You see revenue by procedures. You look at the number of procedures, but they didn't increase. So you drill down again, and find out you get higher revenue from hip implants. But volume there didn't increase. Then you open up the data on the surgeons. It looks like one doctor has the same amount of revenue, but his equipment costs much less or he spent less time on procedures. This analysis would be done in a manner of minutes. That is a hypothetical example, but it would take me a week to do that now."

Analytics self-service would be a blessing for Atwal's I.T. crew as well. "I have a small staff, with 12 devoted to I.T. and six data analysts." He also understands the complexity of the analytics effort, which would require his staff to "put together many data cubes" to generate the type of creative data mining Atwal envisions. "One month we might need volume data, another month it might be medication costs," he says. And I.T. analysts don't always think like CFOs, he says. "They don't drill down into the next layer" in their thinking.

With a dashboard, Atwal could present high-level data to the C-suite, such as gross revenue, current census and costs. "In the same screen, we could drill down to the level of detail we need to make better business decisions." Even with non-employed physicians, the health system could analyze their relative supply costs and help steer them to more cost-effective vendors, Atwal says. Using the integrated supply chain module will expedite the task, he says. "If there is a separate supply system, the item is not tracked in Meditech, unless you have staff enter duplicate data."

Transitioning to an integrated suite of Meditech modules also means fewer interfaces to maintain. "Do I want to manage interfaces or do I want to manage data?" Atwal asks rhetorically. "This is where having a dual role as CFO and CIO helps. You want to put your money with the data, not trying to support the infrastructure. You want good data analysts versus true technical people who watch interfaces and hardware. I will put my money where the data is."

read ... No Money No Mission

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