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Insights : Article

Begin Your Journey to Operational Intelligence

By   Ross Manson

January 22, 2016

There continues to be much discussion about changing the Affordable Care Act (ACA or Obamacare). A Supreme Court decision ruling the subsidies through the Federal Marketplace as unconstitutional would create significant chaos to the individual mandate and coverage options. It won’t, however, change the shift to payment for value. It seems there is bi-partisan support for changing the incentives in health care payment strategies. CMS has recently stated it is striving for a goal of 50 percent of payments by 2018 tied to quality or value through alternative payment models.

Initiatives such as the following are not going away regardless of what happens with the Supreme Court and Federal subsidies:

  • Accountable care organizations
  • Bundled payment arrangements
  • Value-based purchasing
  • Readmission penalties
  • Hospital acquired condition penalties

What Does This Mean for Health Care Providers? 
You need to create a path to become “operationally intelligent.” Some organizations have started down the path of operating on Medicare margins. To do this, the organization needs to understand cost. Cost can mean many different things to different people, but for our purposes we are going to define cost as utilization (the number of occurrences) times the cost per unit.

Utilization is being addressed through many collaborative efforts to create higher value care (care teams, ACOs, care managers, risk-based contracts, etc.). The cost per unit is an internal reflection of many different cost components – capital costs, staff costs, inefficient processes, poor scheduling processes, along with others. What it truly boils down to is too much variation.

How do you reduce variation? By obtaining better and timelier analytics, then training your staff to use that information to make better and more informed decisions. This can be handled at a higher organizational level or an organization can drill down into a department and determine the variation differences by physician, time of day and day of week.

The power of this information is unlimited. We are on the doorstep to incredible innovation and cost containment strategies within health care; one day we will look back and say this is the time we created the paradigm shift and made the cost of health care in the United States competitive with the rest of the world.

Begin the Journey Today
The journey to operational intelligence starts with learning. When you discover where you have been and where you are now, you can head down the path to where you want to be in the future. The advent of better technologies has created a huge opportunity for health care providers to begin to access this information and use it to make better and more informed decisions that impact efficiency. Once an organization starts down this path and develops a continuous learning environment, the data possibilities are truly endless. As the retail revolution (consumers demanding new information) continues within health care, this type of information will help you move towards getting a handle on pricing transparency and will allow you to differentiate yourself by communicating price and cost upfront to your patients.

Changes to the Affordable Care Act may or may not happen on the individual mandate and coverage side, but the shift to value and new reimbursement models is and will continue to happen. The time is now to begin the journey to be an operationally intelligent organization.