Margin vs. mission

Margin vs. mission

When walking the show floor at HIMSS each year, I’m always amazed to see how quickly the trends and buzzwords shift within the healthcare technology industry. Data has always been the central theme, but in the past five years alone we have moved from “interoperability” to “clinical analytics” to “big data” to “actionable data at point of service.” And what’s the latest fashion? This year I saw a ton of flyers on “population health.”

In line with this latest trend, IBM has been on a shopping spree, acquiring Truven, Explorys and Phytel, all healthcare population analytics companies. Premier also went on an acquisition binge, snapping up Healthcare Insights and CECity, a North Carolina-based practice analytics vendor. And the trend shows no signs of slowing down — Agilum, the healthcare BI company at which I was CEO, was purchased by Deerfield Beach, Florida-based Sentry Data Systems, already a proven leader in the 340B solutions market.

So why all the current fuss over population health and analytics? In my opinion three fundamental elements are driving our market:

  1. A desire to deliver quality service (patient care)
  2. A requirement to have the right resources in place to deliver quality service (cost)
  3. The need to deliver quality service in a profitable way

Good financial analytics can help identify key issues where these elements can be fine-tuned, improving the overall patient quality and experience.

Several years ago I fell head over heels for analytics . . . but at first I put the cart before the horse. I believed that if we could just aggregate clinical information in a meaningful way, we could provide real improvement at point of care (service). While we absolutely can achieve such a goal, the challenge in doing so is two-fold when it comes to healthcare.

First, clinical data is all over the place, and changing physician workflow to use that data is simply a non-starter. Even if it were easy to get the data, what difference would it make if our facilities went out of business because we did not understand the actual cost to deliver the service? No margin, no mission.

No one can deliver quality of care if the effort drives you into bankruptcy. Last year alone, over 65 rural hospitals had to close their doors. Some want to point the finger at the Affordable Care Act, while others would blame the rising cost of insurance, facility, energy and labor. But the more interesting – and telling — consideration is whether any of those hospitals really knew what their total costs of care were in the first place?

Like clinical data, financial data is found in several different places, including a general ledger, patient financial systems, time and attendance systems and practice management systems. Most of the time, the C-level suite at smaller hospitals struggles to get meaningful data out of these disparate systems. But it’s not for lack of trying.

The outdated approach of throwing resources at the data to manually try and manage analytics with a bunch of Excel spreadsheets is no longer a viable option. Hospitals are realizing that, in order to survive, they need to replicate the business practices of traditional industries like manufacturing and banking.

Being a business is not a derogatory term – after all, healthcare is itself a business. And it’s a business that needs to be financially healthy. Because we know what happens without a good balance sheet . . . no margin, no mission.