Hospital Spend Analytics™
- Find out what’s the right data and how to analyze it,
- Make sure the data is accurate, and
- Customize the presentation based on who you’re presenting to.
For example: The way you present the same data to a physician is different from how you present it to a CFO, and that is from how you present it to a vendor.
The purpose of analyzing your data is to arrive at a decision, so you need to make sure that you present the right data, to the right person, in the right way.
Hospital Spend Analytics™ is a data skill that is growing exponentially and could be an excellent opportunity for new cost-effective approaches for healthcare providers. When health systems, supply chains, and patient care facilities invest in data analytics, it’s easier to break down hospital costs and expenditures to help improve profits and eradicate bad debt. With predictive analytics, you can also forecast health system performance, review data margins, and offset higher costs.
Many hospital systems are slower to adopt new technology, software solutions, or platforms. However, as the recent year navigating COVID-19 has shown, emergent technology is often critical for U.S. health care services. With emergent technology, it’s easier for you to optimize your revenue cycle, develop more effective hospital services, and employ more robust health plans for your patients.
Before you invest in data analytics platforms for your health system, it’s essential to understand how to follow healthcare industry best practices, mainly when working with big data. We will describe some of the top metrics and methods you can use to analyze spending data with United States hospital financial professionals.
Hospital Spend Analytics™ encompasses a vast discipline of analyzing spend and utilization data in different aspects such as pricing, utilization, and specific comparisons of hospitals. You can leverage this data within predictive analytics models to empower your health system, spot uncompensated care, and reconcile complex financial data. When you’re able to find cost-savings opportunities, you can work to eliminate bad debt, invest in innovative solutions, improve supplier and vendor relations, and focus on optimal patient outcomes. Whether you provide inpatient clinician assistance or outpatient services, it’s essential to enforce greater financial visibility.
Many different areas can be analyzed and strategies that you can use to increase the efficiency of healthcare spending. However, the American Hospital Association (AHA) also notes that many U.S. providers, pharmacy services brands, and outpatient clinics struggle to misuse data analytics. This can lead to uncompensated care, readmission, investment depreciation, and even higher out-of-pocket costs.
Sometimes healthcare providers have difficulty finding the best strategies to reduce spending without affecting the quality of care and patient experience. With our expertise in hospital analytics, we can help you find cost savings while maintaining quality care.
Some Hospital Metrics to Use in Analytics Include:
- Utilization metrics: This is an essential aspect in analyzing the financial data of hospitals by looking at specific areas of the hospital’s operational budget, such as supply costs and staffing costs. The primary metric used for this type of analysis is Case Mix Index (CMI).CMI looks at the difference in patients, and you can use both acute and long-term care settings in a hospital. Although it is essential to measure how your hospital performs relative to other hospitals, you can see areas where you can improve efficiency. Whether you’re a for or non-profit hospital, it’s crucial to understand how to review your hospital cost reports. When you see how you and similar U.S. hospitals spend on medical supplies, medications, medical devices, emergency department services, and more, you’re able to adjust your facility accordingly.
- Pricing metrics: Health care providers can use hospital pricing metrics for different analyses depending on what type of data they want to analyze. The main metrics that health care providers use for hospital pricing metrics include Revenue Per Bed (ARPB) and Hospital-Specific Volume Growth Percentile (HSVG). These two metrics are excellent methods for analyzing pricing percentage growth rate and comparing pricing performance between hospitals. With pricing and cost reports, healthcare analytics enables you better to understand your profit margins throughout the fiscal year.
- Supply Chain and Purchasing Invoices metrics: This includes productive hours, labor costs, supply costs, and other spending variables. The primary metric used in this type of analysis is Productivity Rate (PR). With cost data, you can streamline care delivery and help offset higher hospital bills. When working with vendors, distributors, and other supply chain professionals, it’s essential to understand expenses.
- Cost-Volume-Profit (CVP) metric: This method can determine the break-even points for a specific hospital department. You can look at reimbursement rates about the cost of providing care. One significant aspect of the CVP model is ensuring that your hospital isn’t charging above-market rates for procedures or services that are not necessary. Whether they’re inpatient or outpatient services, it’s essential to observe market pricing trends closely.
Some Strategies That You Can Use for Analyzing Spending Data:
- Reverse Pricing: In this strategy, healthcare sector businesses can determine what are the most profitable procedures. You can do this by setting a price per service or a maximum service cap, ensuring that you are not charging higher prices for services that do not provide as much value as other procedures or elective surgeries.
- Payer Mix Analysis: Payer mix analysis is used to compare the number of insured patients to uninsured patients against specific payers and underinsured patients against plans. This allows you to see how much money or spending goes towards a particular type of payer and thus see where your hospital can adjust its pricing strategies and focus more on patients with coverage. This is particularly beneficial when you work with higher volumes of Medicare and Medicaid patients. Since Medicare and Medicaid services have comparatively unique invoices, you must know how to analyze the payer mix to determine the spread of insurers.
- Payer Analysis: This analysis considers all of your reimbursements by payer type and compares them against the total revenue generated for each payer or insurer type. The primary purpose is to ensure that your hospital is not overcharging one specific payer or insurer type. This is beneficial when you’re reviewing hospital bills but also helps you form a personal connection with private insurers and public insurers.
- Productivity Analysis: Productivity analysis allows you to determine how productive a department is in comparison to other departments within the hospital. This process compares labor cost per case against other departments or even the same department and can track productivity trends over time. Mainly if you manage a non-profit hospital or you rely heavily on taxpayer dollars, it’s essential to know how productive your surgeons, technicians, and inpatient care coordinators are. When you track departmental productivity, it’s much easier for you to manage labor costs, avoid unnecessary overtime, and minimize hospital charges.
We can help support your Hospital Spend Analytics™ projects in four ways.
- Work behind the scenes and provide your team with Hospital Spend Analytics™ so you can utilize it for your cost savings initiatives. This can help you spot the best price points for services, avoid overpayments, and see how spending has impacted your population health management over the last year. With this information, you can take the next step towards more significant spend analysis that can improve clinical outcomes.
- Work with you and your team on spend analytics projects. This includes hospital operating costs analysis that can factor in numerous data sources, including patient revenue, drug prices, emergency room services, and other expenses that impact modern healthcare leaders. We will work with your data and present cost savings opportunities that you can immediately achieve. In addition, we provide the cost savings funnel and roadmap for your cost savings goals. This is a necessary tool to understand hospital profit margins better while simultaneously addressing hospital revenue concerns.
- Provide outsourced Hospital Spend Analytics™ professionals. These professionals understand how to review hospital finances, help implement cost control protocols, and find ways to empower hospital leaders throughout the healthcare sector. When you don’t have to worry about trainer acquisition, it’s easier to focus on your facility’s areas of opportunity.
- Provide spend analytics training for your team. Our analysts can help your team members spot workflow inefficiencies and find ways to use historical data to encourage lower costs. Whether you’re training a network administrator, your human services team, or a supply chain management specialist, it’s essential to use spend analytics in healthcare to promote better outcomes.
Three Ways to Work with VIE Healthcare
- Benchmark a vendor contract – either an existing contract or a new agreement.
- We can support your team with their cost savings initiatives to add resources and expertise. We set a bold cost savings goal and work together to achieve it.
- VIE can perform a cost savings opportunity assessment. We dig deep into all of your spend and uncover unique areas of cost savings.