Service Line Analytics: Sound Decision-Making Starts with Reliable Data

From Our Sponsor Kaufman Hall

A different level of leadership engagement among finance, strategy, and quality leaders is needed.

When major initiatives such as cost transformation, post-merger integration, realization of scale economies, and portfolio rationalization emerge as top business priorities for healthcare provider organizations, increased demand for analytics to guide strategic and tactical planning decisions naturally follows. The type of analytics needed go beyond traditional operational views of financial performance that highlight monthly variances to plan, and instead must be more patient and service line centric.

Increased competition in the healthcare sector and a growing demand for transparency by the consumer is requiring that system leaders focus on outcomes that reflect performance across a broader set of measures, including volume, revenue, cost, quality, safety, satisfaction, and access.

Insight Needed to Guide Planning Decisions

Service line performance reporting has been an element of healthcare provider organizations since the late 1980s, with financial outcomes serving as the primary data points and the finance team functioning as the biggest consumer of these data. Today, access to performance analytics that are structured around clinical service lines are needed by a broader set of stakeholders to support planning and performance improvement activities.

At a more granular level, service line analytics may help answer the following questions:

• Which patients and services have the greatest impact on revenue?
• How are shifts in service mix and volume impacting the hospital or health system’s bottom line over time?
• How can physician/clinician behavior be influenced to reduce the cost of care?
• Can service duplication be reduced and value increased through service line delivery improvements?
• What are strategic investments needed to address competitive pressures and improve accessiblity of patient care?

While the finance team remains the primary consumer of these data, the formulation and implementation of strategic and performance improvement initiatives is increasingly a partnership with operational and clinical leaders.

Supporting a Culture of Accountability

The concept “You can’t manage what you don’t measure” describes the call to action healthcare professionals must heed when seeking to improve the effectiveness of their business performance reporting. When focused on the customer and care delivery process, service line analytics can provide leading indicators to performance challenges. These data also can help identify areas where risk and opportunity may exist and guide the coordinated activities required across operational and process improvement teams. With these analytical tools and reporting in place, many organizations are designating service line leaders who function as executives accountable for understanding these trends, ensuring that course corrective activities take place, and achieving appropriate outcomes.

As a first step, the introduction and timely dissemination of service line performance analytics should provide important insights into current trends that can be used to inform strategic and operational decisions. When used effectively, this information is integrated as a key dimension of planning models to support decisions related to strategic investment of capital dollars, simulation of impacts to revenue contracts, and growth and service rationalization.

Establishing a Reliable Source of Performance Measures

Enabling a trusted source of performance measures requires that data be gathered from a variety of different sources and domains. Ideally, this information presents a comprehensive view of performance in the context of the organization’s overall business goals and objectives.

As organizations leverage more modern tools and rethink their approaches to performance reporting, four key activities should be considered.

Update service line definitions. While historically service line definitions have been inpatient centric, organizations are now incorporating procedures and diagnoses to better represent service line attributes that span the continuum of care.

Incorporate more precise cost accounting methods. As more detailed analysis of cost-of-care trends and care variation is conducted, the demand to improve the accuracy of patient-level costs is increasing.

Establish a shared view of outcomes across financial and clinical leaders. As payment shifts to value-based care, finance and performance improvement teams must have visibility into outcomes in their respective areas.

Create a feedback loop that is more directly tied to strategic goals and objectives. With more analytics being measured across a greater number of sources, organizations must stay focused on the right analytics to measure the right things in the context of the strategy.

The stakes are high and the complexities considerable as health systems strive to balance the challenges of implementing initiatives related to strategic growth and cost and quality improvement. Effective service line performance reporting can provide much needed insight to drive decision making.

With more advanced and reliable data in hand, organizational leaders will be able to coordinate successfully across planning and performance improvement initiatives.

Jay Spence is vice president of healthcare solutions with Kaufman Hall’s Software Division.