Extra! Extra! Free data available on the Web
Extra! Extra! Free data available on the Web
Competition, technology are changing health care data industry
You’ve always heard there’s no such thing as a free lunch. So you probably wouldn’t expect a vendor to give your hospital something valuable for nothing. But in one particular case, you’d be wrong: Data that you need for your benchmarking efforts are increasingly becoming available for free or at least for much less than you’re used to paying.
One reason is simple economics: As more companies get into the data business, the extra competition brings costs down. Another explanation is that advancements in technology have made data so much more accessible. And a third reason is that the data companies are putting their money where their mouths are — they’re betting on the fact that you realize you need more than hard numbers if you want to do some serious benchmarking. What you need is to find out what to do with the numbers to create successful change in your organization, and the data companies are hoping you’ll spend your money on their value-added services instead of on the data itself.
That’s good news for hospitals and other health care providers. If all you need is the data — because you have in-house people who know what to do with it — then you should be able to get a deal. And even if you need more, you’ll probably be able to spend your money where it counts — on the consulting, instead of the data.
One company that’s betting on this idea is Market Insights, a six-year-old firm based in San Francisco. In March, Market Insights began offering free hospital benchmarking data on its Web site (www.marketinsights.com) through a tool called the National Hospital Almanac. Click on "free data" and you can select up to six hospitals for side-by-side comparisons of such information as:
staffing (by job type);financials (common income statement and balance sheet information);
inpatient costs, charges, length of stay, mortality, and complications (by DRG, product line, and department);
outpatient costs, charges, and reimbursement (by ambulatory surgery and APC service line).
Rick Louie, founder and director of business development for Market Insights, is the first to point out that you have to pay $1,200 a year to get access to the company’s most recent data. Much of the free data on Market Insights’ Web site dates from 1996.
But depending on what you’re looking for, the free data might just do the trick. If it’s not enough, of course, the company stands ready to provide customized reports from its database, 80% of which comes from the public domain such as the Health Care Financing Administration (HCFA), and 20% of which comes from client data. Market Insights has five years worth of such data on every hospital in the country.
Louie is also the first to point out that the free data offering — which will remain on the site indefinitely — is a marketing strategy designed to draw more people to Market Insights. But it’s also an outgrowth of a paradigm shift in the data industry, he says.
"These data are becoming a commodity item, like a safety pin or a clothes hanger that isn’t really differentiated by the manufacturer," Louie says. "Firms that try to profit from them aren’t sustainable. You need to offer value-added services on the data to be viable. We just think it’s ridiculous when you see one company charging X for a DRG database and another company charging 2X for the same data with no value added."
Louie describes Market Insights as a hybrid between a data reseller and a consulting firm. Rather than simply repackaging data and selling it in a cookie-cutter format, the company strives to analyze the data and show clients where they need to focus their efforts. Market Insights doesn’t send employees for on-site consulting but can answer specific questions, such as how many of a hospital’s admissions are coming through the emergency department in a given month and how that hospital compares with its competitors on that issue.
Will Market Insights’ approach affect its competitors in the data industry? Louie says other companies likely will downplay what Market Insights is offering but they also might be forced to change the way they do business. "Our approach is threatening to a lot of companies," Louie says. "They could say, You’re right, we can’t make any more money off these data.’ I’m amazed at everything I can get through the Internet now that I would have had to pay for five or 10 years ago. Today’s technology is pushing data down to a commodity level."
William Cleverley, founder of The Center for Healthcare Industry Performance Studies (CHIPS) in Columbus, OH, agrees that data are becoming a commodity and says that CHIPS also offers some limited 1997 data free on its Web site. If you’re willing to pay, you can get much more data on the subscriber Web site for $495 a year.
He says that Market Insights’ offering is of some concern to companies like CHIPS who deal mostly with publicly available data. "If you can get something for free, why pay for it? We have a lot of the same data elements they have," Cleverley says. "If you can give something away for free but it entices them back, then you may try and do it. If we all begin to do that, we’ll strangle each other. I think there’s going to be some bloodletting at some point in time. You’re going to see many of these companies consolidating with one another or else going out of business."
Cleverley points to two factors in the current marketplace that have led to this commodity data idea:
High fixed costs/low marginal costs."Someone produced an information product. People liked it, and they wanted it. It’s based on publicly available data so anyone can get it, but [not everyone knows] how to generate what’s going to be meaningful," Cleverley says. "So you’ve got to have some capital invested. Once you’ve done that, however, the marginal cost of additional units is not very high. You get more and more entrants to the field. With very high fixed costs and very low marginal costs, they’re all looking for more volume."
Cost pressures."We’re all dealing with a marketplace where the primary clients — hospitals particularly — are experiencing cost pressure so they want to get maximum value per dollar spent," he says. "We’re getting squeezed just as they’re getting squeezed. We’ll probably wind up doing the same thing, [offering data for free]."
Survival techniques
So, how will data companies survive? Cleverley says the survivors will redesign formats or introduce new products to make their services unique. CHIPS has already begun that process with new services such as a report that will identify the potential impact of the new Ambulatory Payment Classes (under HCFA’s proposed prospective payment system) on a hospital’s profitability. CHIPS also recently began offering a balanced scorecard review that offers customized reports that identify areas to improve financial performance.
Cleverley says CHIPS will continue to increase the analysis it offers. "A lot of users have too much data and too little time to interpret them."
Another key issue in the changing data industry is technology, particularly the new capabilities the World Wide Web brings, says Dennis Dunn, senior scientist with the Sachs Group in Evanston, IL. "Everybody’s being forced to make the investment to come up with Web-based delivery methods of their information and analysis," he says. "The industry is moving away from desk-top delivery of information to Web-based delivery. That way you can have wider access within organizations instead of just one person having access."
While this may be creating extra work for the data companies, it’s making life easier for benchmarkers. "This can only benefit planners," Dunn says. "Data will be more widely available, and the pressure will keep the cost down. It’s so much easier to comparison-shop on the Web. That is particularly true for public data offerings. People used to charge hundreds of dollars for a report that you can now get on Market Insights’ Web site for free. It’s simply not going to be possible for a company to offer a $1,000 provider comparison report."
Dunn cautions that the type of free data you might find on the Web — even Sachs offers some on its site — is probably not enough for serious benchmarking. "It might be useful for people who are making the first baby steps into benchmarking or for occasional data users who need quick information, like who is the biggest player in a certain market," he says. "But people with serious market size will need more."
He also warns planners not to believe everything they find on the Web. "Taking information at face value can be very dangerous," Dunn says. "This is typically information that is being submitted to fiscal intermediaries, some of whom clean the data a lot and some of whom don’t. The quality really varies."
John Morrow, senior vice president for Baltimore-based HCIA Inc. agrees that planners should check out a company’s reputation before putting stock in its data offerings. He says many of the public data sets that come from HCFA are not reliable enough to merit HCIA’s trust.
"There are probably a dozen places you can go on the Internet and get some data, and I’m not sure I would trust any of it," Morrow says. "If I’m a business person making business decisions based on data, I’d better really have a strong conviction about the source of the data, the efficacy, and the utilization of that data. We as Americans are consumed with statistics, and we’ll believe almost anything we hear."
Morrow says HCIA also offers some free data in the hopes that clients will be willing to spend more for the extra value the company offers. "HCIA pretty much started this industry in 1985," he says. "Now our business is centered around value-added services. The real insight is in the findings, not the data."
Eleanor Anderson-Miles, director of corporate communications for MECON Associates in San Ramon, CA, says the key issue for all data companies in the current market is providing information on how to use the data. "Statistics don’t mean anything if you don’t know what they represent," she says.
Since January, MECON’s customers have enjoyed an absolute Web-based technology that allows them to access the company’s data warehouse through the Web. "They can look at the entire database and do their own slicing and dicing," Anderson-Miles says. "We’ve spent two years re-architecting our entire information resource. What we did that was so revolutionary was to make the Internet the vehicle that you can use along with your laptop to actually get into the data warehouse itself. You are not getting anything pre-coded. You use standard industry browsers to access the actual data and play with it in real time."
Starting in June, MECON is introducing technology that will enable clients to go to the Web site and find benchmarking partners. "We will have discussion boards for people working on the same issues and a way to spotlight best practices like never before," Anderson-Miles says.
[For more information, contact:
• Rick Louie, Founder, Market Insights, 1000 Brannan St., Suite 211, San Francisco, CA 94103. Telephone: (415) 553-8888, ext. 104. E-mail: [email protected].
• William Cleverley, Founder, CHIPS, 1550 Old Henderson Road, Suite S-277, Columbus, OH. Telephone: (800) 859-2447.
• Dennis Dunn, Senior Scientist, Sachs Group, 1800 Sherman Ave., Evanston, IL 60201. Telephone: (847) 475-7526.
• John Morrow, Senior Vice President, HCIA, 300 E. Lombard St., Baltimore, MD 21202. Telephone: (410) 895-7539.
• Eleanor Anderson-Miles, Director of Corporate Communications, MECON, 200 Porter Drive, Suite 100, San Ramon, CA 94583. Telephone: (800) 356-3266, ext. 7906.]
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