Although the business of health care rightfully has a reputation for being incredibly complex, health system leaders have a unique opportunity that other industry leaders lack to better understand their organization’s offerings.
In their dual role as both a large employer and care provider, health systems have a tool -- domestic utilization analysis --- that can generate insights that simultaneously impact the value of their employees’ health care and inform their market-facing strategies.
Domestic utilization analysis simply means analyzing how systemwide employees (and their dependents) utilize domestic (sometimes called “in-system”) providers within the system, inclusive of cost and quality.
When done right, domestic analysis provides health systems the opportunity to reduce avoidable income leakage to non-domestic providers, reduce high-cost utilization, and improve preventive services and their utilization. By analyzing in-patient, out-patient and professional utilization and cost data, a health system can gain insight into how often its employees use domestic providers -- as well as non-domestic, and into its value as an effective domestic network solution. If it delivers that insight and understanding, the analysis may also drive the future success of a systems’ market-facing products and help strategically position the employer health systems for sustained revenue in the value-based world in which they increasingly compete.
Moreover, a data-driven analysis of domestic utilization can be extraordinarily valuable to systems that need to develop a long-term strategy. Results of such rigorous analysis can inform the system’s strategic priorities, and provide information critical to measuring the impact of its provider network and various initiatives that identify the right data to measure. It can analyze the information and data in a disciplined, comprehensive manner that uncovers a system’s opportunities better than a piecemeal or siloed approach.
Health systems need to look methodically at their unique positioning within the market and analyze utilization through four key lenses: geography, clinical condition (diagnosis), providers and quality of care. By examining utilization via these lenses in a manner that recognizes the relationships between them, they can uncover opportunities to optimize network utilization and financial performance.
| Four lenses for health systems to consider in a domestic utilization analysis Geography: Do our employees go outside our network for care because they don't have easy access to nearby providers or facilities? |
Geography
Where do your employees live compared to where they are going for care? What are the gaps in service area and services provided for your employee population?
A geographic lens is a straight forward way to set the stage for other lenses. A geographic spread of employee home and work locations can be compared to the home system’s network of facilities and providers to identify gaps in coverages. Beyond using a qualitative “eye test,” we use a rigorous quantitative approach, generally using established access standards, such as the ones issued by CMS to gauge the network breadth and depth offered in Medicare plans. These access standards require a minimum number of facilities and providers, by specialty, within a certain distance of the population served, in this case, the system’s own employee population.
Quantitative access analysis can point to specific gap areas within a health system’s network that lead employees and their families to choose more convenient out-of-network providers. Reviewing the geographic distribution of non-domestic utilization is vital to see where employees are going geographically. By comparing the actual geographic utilization of the non-domestic spend with identified gaps in the domestic network, health systems can formulate priority initiatives, such as adding affiliated practices, or establishing some other form of partnership that would increase coverage for needed specialties or facilities in a particular area.
Clinical
What gaps in our care drive employees to use non-domestic providers?
Employees will go outside their home system if they can’t obtain care for their clinical condition. A thorough analysis of your medical claims for a minimum of two years, both domestic and non-domestic, will identify patterns of gaps in care. Start with claims data grouped by clinical categories, such as Major Diagnostic Categories (MDCs), with further drill-downs to details, as needed. For each clinical category, a summary of the percentage of non-domestic utilization is an initial indicator that there may be a clinical service gap, which you can confirm with your organization’s clinical leadership.
A clinical analysis may confirm, for example, that your system doesn’t offer adequate provider care or strength of care for certain clinical conditions. These gaps may be whole categories, for instance, lack of significant pediatric services, or more targeted, such as lack of transplant services or bariatric surgery. Where analysis shows adequate services available within the system for certain conditions, but a high employee utilization rate of non-domestic providers, organizations have the best opportunity to do further exploration to reverse the trend. Strategies can range from improving clinical quality inside the system to merely improving communications, both to employees and referring physicians, about the availability of excellent in-network clinical services.
Providers
Which specific non-domestic providers are associates going to and for what services?
Following the results of the first two steps -- analysis of geographic and clinical capabilities -- is more granular research that identifies the non-domestic organizations your employees are choosing. Understanding the earlier results on geography and clinical capabilities will help you develop a hypothesis on why employees may be going to these particular providers.
More aggressive action may be warranted if analysis indicates significant utilization of providers in overlapping geographies and for services offered by your own system. Effective strategies for keeping utilization at home can include changing benefit design to reinforce differentials for going outside of the network and requiring pre-authorization or waivers for care outside the system.
Quality
Are there material differences in quality between your organization and non-domestic providers your employees utilize?
Finally, understanding any real or perceived differences in quality of care that may drive employees to go outside your domestic network can yield important insights. This is often the most difficult part of a domestic utilization analysis, and one that can require senior leadership insight.
Quality analysis should include a comprehensive review by numerous sources across different areas, such as outcomes, process and patient satisfaction, and compiling quality scores for the home system’s facilities and providers, as well as the out-of-network facilities and providers used by employees.
If results of the analysis shows other systems can deliver consistently better quality in some clinical areas, you may need to activate a broader clinical improvement program, irrespective of your domestic quality results. However, if your home system can provide similar or better quality, you may need to focus instead on communicating your high quality performance more effectively to your employees, especially if a nearby system has a strong brand name presence that creates a halo effect for all clinical areas, including some that are not be as high quality as yours.
Additional considerations
Beyond these four lenses, systems should consider other elements before choosing a comprehensive strategy.
One of the trickier issues is cost for services delivered by the home system vs. other systems, as well as independent providers, for example, stand-alone imaging centers. Many health system benefit departments are introducing health plans for their employees with higher deductibles and other “consumer” or “account-based” features that intentionally increase employee focus on cost.
This incentive for employees to act as consumers when purchasing health care presents important fiduciary challenges for benefit leaders at health systems. As a benefit plan fiduciary, their role is to manage the plans in a manner that aids their plan participants, who in this case are their employees. However, in their role as part of the broader system leadership group, these leaders are also charged with helping to improve the financial and operating performance of the system as a whole. At a minimum, health systems need to understand how they are positioned competitively in the marketplace to other employers from a cost perspective.
The other key issue to understand as part of the analysis is the impact of high-cost claims, particularly large, catastrophic claims. With respect to all of the analysis steps -- including geographic, clinical, provider and quality – it is important to identify the impact of individual massive claims. For example, percentages of home system vs. out-of-network utilization in some areas could be heavily skewed by one or a very few extraordinary claims, for example, a premature birth that includes time in intensive care, a complex cancer case, or a transplant with complications. Not to say that these types of situations should not be factored in to the analysis, but in developing strategies to improve performance, systems need to consider whether any insights that surface in the analysis are pervasive, or driven primarily by a one-off situation.
While many people think of cost as a main driver, there is a tradeoff between cost and quality that demonstrates the importance of finding an appropriate balance. For instance, for many consumers and payers, the higher quality seen in academic medical centers justifies higher costs.
Turning insights into action
With an understanding of the analysis, health systems will consider taking actions that drive additional domestic utilization, as well as leverage insights on domestic utilization to position themselves within their market-facing networks. There are a number techniques available to improve positioning tailored to what was found across geographic, clinical, provider and quality lenses.
In the case of clinical gaps, health systems can perform access gap analysis to drive the development of a priority list for network contracting or affiliation development. If there is sufficient clinical coverage, they may choose to modify their employee benefit plan design to incent use of domestic networks, with consideration of a tiered approach. They may also review the communication strategy of in-network options to support changes and consider advocacy services. Health systems may choose to assess the relationship structure of the network providers applying value-based reimbursement models. Taking one or a combination of these informed actions can drive success for a health system in both its employer and provider roles.
The value of conducting a domestic analysis is not limited to actions taken immediately after analysis. Rather, to uncover new opportunities and challenges over time, health systems should consider continuing analysis of utilization data to monitor employee medical trends, disease burden and domestic utilization of professional and facility providers.
Contact
Jody Amodeo, R.N.
Senior Consultant and National Strategy Leader Health Analytics and Health Systems
Willis Towers Watson
T 973.290.2507
jody.amodeo@willistowerswatson.com
Peter Bresler
Health System Consulting Practice Leader
Willis Towers Watson
T 312.201.5825
peter.bresler@willistowerswatson.com