Healthcare in the age of the consumer

Change is everywhere in healthcare, from new ways to diagnose diseases to value-based models of care. Often flying under the radar, however, are all of the changes being wrought by the largest — and arguably most important — group within medicine: the patients.

Thanks to the Patient Protection and Affordable Care Act and the industry's drive toward value-based care, patients are beginning to act much like they do as the consumers of other products and industries. The health exchanges mandated by the PPACA, for example, have opened up the market, letting individuals shop for insurance rather than simply selecting either employer-based health plans or limited self-pay plans. The increased emphasis on care quality has a consumer feel too, with online ratings giving patients better ways to compare hospitals and physicians.

To compete in this consumer-driven environment, hospitals and health systems need to adopt a customer-first mindset. They also must increase their data proficiency by an order of magnitude. Going forward, the organizations best equipped to thrive will be those with data-enriched insight into their operations and their patient populations.  

Change from all directions
A growing cost awareness among patients — especially from those with high-deductible insurance plans — is one of the first changes noticed by most healthcare organizations. Patients now ask more questions about pricing, and many wait to schedule non-emergency treatments and procedures until costs are determined. Employers are questioning value as well, seeking out providers known for offering high quality care at a reasonable price to recommend to employees.

The desire to compare cost and quality also has led to increased consumerism in another familiar form: ratings services. Industry ratings services like Press Ganey are becoming better known, and consumer-focused sites like ZocDoc and Angie's List are gaining popularity.

Furthermore, consumer tendencies toward convenience and economics are driving people toward "right place/right time" providers, drawing patients away from traditional healthcare settings. In some areas of the country, for instance, providers feel heavier competition from new care settings like standalone emergency departments and retail clinics. As telemedicine gains popularity, it may chip away at hospital income as well.

In fact, all of these elements are taking shape just as hospitals and health systems are experiencing increased financial penalties, lower reimbursement and declining revenue streams. A significant number of individuals who were recently insured by traditional commercial plans paying 60 or 70 cents on the dollar are now covered by health exchange plans paying 20 to 25 cents on the dollar — greatly affecting provider cash flow. For these reasons and more, hospitals must begin to consider the physician who refers into the facility as the most important "consumer" of all. It's clear that any consumer-focused approach that healthcare organizations adopt to attract a balanced patient mix also must include a healthy dose of physician outreach and recognize the vital importance of physician referrals.

Seeking rich data
To thrive in this new era, hospitals and health systems must shift their consumer focus into high gear — more Amazon.com, less electric company. They will need good data to achieve valuable understanding. For example, better information about patient populations could be used to attract and retain a good mix of well-insured patients.

Successfully making that shift requires readily accessible comprehensive insight into three main types of data: clinical, financial and operational. Superficial information won't pass muster, nor will retrospective reports issued once a month. Data must be immediately available, and analysis tools must allow executives to quickly drill down into key areas. Specifically, executives need rich data on the following:

  • Costs of services
  • Labor costs
  • Materials costs
  • Readmission levels
  • Payer mix
  • Accounts receivable
  • Referral patterns

There is a tendency in healthcare to believe that simply bringing all data together in one place provides clear vision. To the contrary, however, having every piece of data in one place typically results in an enormous, unwieldy data warehouse that requires expert query writers to extract information.

What hospital executives need instead is access to dynamic templates that allow them to start with the end in mind. For example, a CFO who wants to see the latest trends in bad debt should begin with the hospital's bad-debt write-off codes. The CFO could then bring across patient data to examine trends in inpatient, outpatient and emergency department write-offs. Similarly, bad debt could be viewed by physician or by the services that significantly affect patient care or drive financial performance.

This type of data program requires robust analysis tools and strong integration with hospital IT systems. It begins with clean data and the ability to specify which data sets should be used for analysis. The use of templates then allows executives to forgo monthly reports in favor of dashboards that show the most recent information. Furthermore, if templates are accessible from any Internet-connected device — including smartphones and tablets — data can be put directly into the hands of those who need it to improve care quality and revenue. It becomes more than just an abstract profit and loss report or outcomes tracker.

Striving for agility
Think of consumer banking a few decades ago: a checkbook in every desk drawer and the restraints of strict bankers' hours. Today, consumers expect the convenience of 24/7 banking from any Internet device. Today's patients are quickly following suit. They can find provider quality information online, and their choices are expanding as the cost of care comes within reach for many.  

In this environment, hospitals and health systems that fail to leverage data will likely find themselves in decline. To attract and retain patients and providers, they must be able to identify — and clearly communicate — their differentiators. They must also work to become more agile; for example, they should react quickly to reimbursement declines and take fast action to bring down A/R levels if they start to rise.

Boosting the competitive edge in healthcare can only be accomplished with data and advanced analytics. The future cannot be found in spreadsheets that take five minutes to open, reports no one reads or queries that require expert IT formulation and weeks to process. Rather, the future lies in the same kind of data and analytics that consumers themselves now demand — simple to use, relevant, real-time and dynamic.

Robert E. Watson is the President and Chief Executive Officer of Streamline Health.

More articles on healthcare leadership and strategy:
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