What’s the future of healthcare? Ask a health executive and there’s a good chance they’ll say predictive analytics.
As the engine that turns the raw materials of “big data” into actual insights that can be used to tailor services, anticipate needs, find fraud and eliminate waste, predictive analytics is increasingly valuable.
Actuaries like me are in the business of creating predictive models and, more important, translating the models built by predictive analytics into the business insights that improve products and services for health providers and insurers – but we need executive support to truly transform the industry. The Society of Actuaries recently conducted a survey of health payer and provider executives to glean key insights into how predictive analytics trends will temper financial pressures and contribute positively toward the Triple Aim of healthcare — improving patient care, patient health and per capita costs.
Health executives have a strong opinion of the future of predictive analytics in their field, as 93 percent believe predictive analytics is important to the future of their business. And in an industry that’s increasingly focused on value-based care, it’s clear that achieving the Triple Aim is top of mind for survey respondents. For both payers and providers, the top four outcomes identified as most valuable to predict — cost, clinical outcomes, patient satisfaction and profitability — all directly impact the goals of the Triple Aim. Further, more than half of executives surveyed say predictive analytics will save their organization 15 percent or more over the next five years, and a quarter of executives forecast saving 25 percent or more in that span.
Overall, the survey results highlight how executives view predictive analytics as essential to providing value-based care. Predictive modeling can be used to identify patient health risks, helping doctors anticipate their healthcare needs, mitigate their conditions and uncover needs that can be addressed with new solutions for patients and providers. These capabilities represent an especially important growth area for providers who currently lag behind insurers in terms of predictive analytics use. However, the survey also reveals providers are expected to be on par with insurers within five years, as the industry seeks tools to effectively manage risk in a value-based world.
Despite the anticipated financial benefits from predictive analytics, 16 percent of healthcare executives still indicate that a lack of budget is the biggest challenge to implementation within their organization. In my experience, budget concerns are less about having the money to invest and more about major organizational change necessary to fully implement predictive analytics. Operationalizing the changes that predictive analytics requires and prescribes is a big task. The changes, financially sound as they are in the long run, can require investment in new infrastructure and systems, as well as adjustments down to hiring for specialist roles, new skills and even day-to-day operations changes.
Regulatory issues, specifically compliance with security requirements in the face of recent highly publicized data breaches, were identified by executives as the second most challenging aspect of implementing predictive analytics. Given the recent prominence of hacking, as well as the size and scope of the data breaches that have become worryingly common, I view the security of user data and records as the biggest challenge. Health data can easily be used to identify individuals, so the prospect of having records hacked is very concerning for both payers and providers. Nevertheless, the financial benefits that predictive analytics brings to the table outweigh the potential negatives.
Challenges for implementation of less concern to executives surveyed include incomplete data and a lack of skilled applicants. But the data we have now is much more complete than in the past, and we are finding new, better ways of collecting data from sources both traditional (like health records) and nontraditional (like wearable devices). Similarly, healthcare may need to start looking at nontraditional professionals to hire for predictive analytics roles, such as actuaries. After all, predictive analytics is the cornerstone of the actuarial profession, and we have been analyzing complex big data since our inception – long before it was popular.
It’s clear that executives are confident about the benefits of predictive analytics — 88 percent of respondents said they currently use or are planning to use predictive analytics. And the survey found that the top two expectations for the future of predictive analytics are the refinement of data collection methods to increase security (20 percent), and investment in people with the necessary expertise. These results indicate that executives are also confident that the industry will invest in solutions to the biggest present and future challenges for the healthcare industry.
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Biography: Mr. Duncan is Adjunct Professor of Actuarial Statistics at the University of California Santa Barbara and president of Santa Barbara Actuaries Inc. From 2010 to 2014 he served as Vice President, Clinical Outcomes, Analytics and Reporting at the Walgreens Company. He founded Solucia Consulting (now SCIO Health Analytics), a provider of analytical and consulting services to the healthcare financing industry in 1998.
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