Putting power in the numbers game

By Richard B. Siegrist Jr. President and CEO

HealthShare Technology

Acton, MA

We've all heard the phrase "knowledge is power." This has never been more true in health care than at the present time. With the recent mergers and consolidations of payers and hospitals and the rapid formation of physician group practices and integrated delivery networks, the power of information is an increasingly essential part of an organization's success.

One of the most effective business tools for health care facilities is comparative information on internal performance as well as competitive operations. Many decision support systems are adding ways to compare a facility's own performance to other institutions, whether they are key competitors or providers with desirable standards of performance.

Comparing strategies through benchmarking

Benchmarking is one current trend of bringing standards from other facilities into a decision support system and comparing statistics. To leverage the most from the analysis and achieve greatest benefits, you must address certain questions:

· What kinds of comparative analyses will be most important and revealing?

· With whom should we be comparing ourselves?

· How can we be sure that the data are really comparable?

Comparative analysis can help a facility gain perspective on its business. Where comparisons reveal significant differences, health information professionals can begin to ask questions internally to determine the causes. Comparative information can stimulate managers and clinicians to work as a team, digging deeper into internal systems to further identify problems and take action.

For valid comparisons, facilities should be using the same definitions for data elements and applying similar coding standards. Where this is not possible, a decision-support system must have ways to adjust data.

Since internal costing systems may use widely different methodologies, standard procedures should be applied to all institutions in order to calculate costs for comparative analysis.

Most important for comparative analysis is adjustment of the clinical case mix. Average length of stay per case is not comparable, for example, if one institution includes a procedure in the patient mix, while another does not.

Even where the patients being examined have the same clinical diagnosis, there can be differences in severity of illness which can have significant impact on treatment costs and outcomes. For legitimate comparisons, lengths of stay, charges, and costs must be severity-adjusted.

A critical aspect of comparative analysis is making sure that comparisons are "apples-to-apples." Standards from teaching hospitals cannot be applied to community hospitals without adjusting for medical education costs, for example.

Typically, comparisons will examine hospitals competing in the same primary service area or geographic region. However, it can also be helpful to look at a "standard" from outside the immediate market area, such as a prestigious, best-practice hospital or community hospital averages in a state such as California.

Comparative information is a powerful catalyst for management initiatives, and is the foundation of win-win negotiations with payers, employees, physicians, administrators, and government.

Analysis that goes beyond simply providing rows and columns of numbers, to offering interpretation of information and quantification of savings, can be especially helpful for decision support.

There are literally thousands of possible areas for cost savings and quality improvement. Managers need decision support systems to target those areas that are most worthwhile to investigate. And comparative analysis is a proven method for zeroing in on decisions that can make the most difference.n