Decision support software identifies fiscal problems

Helps managers make hard choices

Bankruptcy was only three months away when The Long Island College Hospital (LICH) closed its fourth consecutive year of $2 million monthly losses. Without a management information system (MIS), administrators were hard-pressed to identify and quantify fiscal problems.

That's what faced Don Snell when he became president and CEO of the Brooklyn, NY, facility in late 1996. He says, "There were a few laptops around as well as desktop computers in the labs and finance area. That was all."

As far as Snell knew, an MIS would cost $4 million to $5 million. But in late 1997, he learned differently when his assistant mentioned HealthShare One, a software package manufactured by HealthShare Technology Inc. of Acton, MA.

During a four-hour product orientation, LICH's management team got more comfortable using the software. Ease of use and a relatively low sticker price ($30,000) persuaded them to buy. (See sample user screen for "Severity Adjustment Report," p. 138.)

Turning a hospital around by its data

As a State University of New York teaching hospital, LICH is noted for its expertise in allergy and asthma treatment and research, women's health, and emergency medicine. But when Snell took over, it was struggling to get its feet down in New York state's emerging free market health care economy. Managed care companies swiftly moved in as the state phased out its rate control system. But without cost accounting, physician profiling, and other vital information, LICH was in no position to negotiate for managed care contracts.

The ease of generating those as well as a host of other reports won Snell's enthusiasm about HealthShare One. Since January 1997, the hospital's vice president of Medical Affairs has tracked utilization, costs, and income by department. Before that date, though, he couldn't have told you which services were assets and which were liabilities.

Listed below are three other data analyses included in the package, and examples of how LICH uses them:

4 Physician profiles identify the benchmark providers whose care practices combine good patient outcomes with cost effectiveness. The software also measures the potential cost savings if aberrant providers aligned their practices with the benchmarks.

4 DRG cost accounting reports are indispensable in managed care negotiation. For example, an HMO offered the hospital $750 a day for each Medicare patient. "We turned them down," Snell says, "because we know it costs us $890 a day for every Medicare patient. In the past, we would have taken the offer because we didn't know what our Medicare costs were. Now we can generate these types of reports in half an hour."

Another time-saving feature that Barbara Stahura, assistant to the president, says she likes is the program's Decision Consultant Report feature. "People usually won't sit still long enough for us to interpret the tables and graphs for them, so this report explains it on one sheet." Best of all, she adds, "We don't have to sit down and work these summaries every time, the program does it for us."

4 Physician loyalties reports show how many patients LICH's doctors admitted there compared to admission rates to other hospitals in the market.

Information management tools such as those helped Snell turn LICH around. "We have a $2 million positive bottom line as of the end of May," he reports. "We're still paying for the sins of the fathers, but we're living on our monthly cash flow. And, at least we know they're not going to put plywood on the windows in three months!"

Using his new-found data analysis capacities, Snell has targeted additional quality improvements. One is to cut the length of stay in certain DRGs by two days, bringing it in line with Medicare national averages. "That would be a $2 to $3 million savings," he says. With data management capabilities (see chart on "Length of Stay," p. 139), he can tell exactly how LICH compares not only with national averages, but with local competitors.

Recycling public data back into action

As raw data for products such as HealthShare One, HealthShare Technology uses nonproprietary, hospital performance statistics routinely compiled by the regulatory departments of state governments. For instance, the state of New York collects patient data on each inpatient admission. The company applies its proprietary algorithms to produce severity-adjusted analyses of these factors:

4 cost;

4 charges;

4 market share;

4 case volume;

4 payer mix;

4 demographics.

As a HealthShare One client, LICH receives updated databases every six months. Snell had in hand the full year 1997 data by April 1998. At the time QI/TQM went to press, data for the first half of 1998 was expected "any day."