Clinical analytics enables hosptials to combine clinical and financial data in developing better strategies for business intelligence and performance improvements

1. healthcare financial management
DECEMBER 2006
Ross Hammarstedt
Deborah Bulger
performance improvement
a “left brain meets right brain” approach
Clinical analytics enables hospitals to combine clinical and financial data in developing better
strategies for performance improvement.
In 1979, Betty Edwards introduced the Not surprisingly, most of us develop a dom- lack of community services, patient com-
world to a new drawing technique in her inant mode of thinking based on what is plications, and higher-than-expected
book Drawing on the Right Side of the Brain. more comfortable for us, which results in severity and conclude that the organization
The book, which shot to The New York Times lopsided problem-solving skills. needs more staff. The answer may lie some-
bestseller list within two weeks and stayed where in the middle, or better yet, may be a
there for more than a year, became popular Before flipping to the table of contents to matter of optimizing capacity and through-
for its easy-to-learn approach to drawing, make sure you’re reading the right publica- put by properly aligning existing resources.
which Edwards contends anyone can learn. tion, consider how these two modes of pro- Doing so requires developing a shared per-
It’s a matter of bringing out the abilities of cessing information might apply to the spective based on the ability to tie clinical
the right side—the “creative” side—of the financial and clinical sides of a hospital. outcomes to financial outcomes, also
brain, she says. Financial analysts focus on cost, budgets, known as clinical analytics.
credit rating, revenue, and patient days to
Developing a Shared Perspective
In addition to teaching millions of people determine the bottom line. Clinicians focus
with no apparent talent how to draw, on safety, compliance, and outcomes to Clinical analytics involves the application of
Edwards helped to popularize a new brain determine the quality of patient care. business intelligence systems to health
theory. To develop her drawing technique, Before the advent of pay for performance, care. Global corporations have been com-
she drew on the words of scientist and neu- there was very little overlap between these peting on such systems since the 1970s,
rosurgeon Richard Bergland (The Fabric of two perspectives. relying on them to mine vast stores of raw
Mind, New York: Viking Penguin, Inc., data and transform complex relationships
1985, p. 1): Take, for example, a hospital on the path to into easy-to-use metrics.
quality improvement whose average length
You have two brains: a left and a right.
of stay for heart failure and shock is run- The sophisticated mining and reporting
Modern brain scientists now know that
ning 1.25 days above benchmark. Given that power needed to compete in this way
your left brain is your verbal and rational
same information, a CFO and a chief nurs- requires a vendor-neutral data warehouse
brain; it thinks serially and reduces its
ing officer will typically draw very different that extracts, aggregates, and normalizes data
thoughts to numbers, letters and words
conclusions as to why. The CFO will look at from multiple transactional repositories.
... Your right brain is your nonverbal and
patient days, billing delays, claim denials, Rather than replicating entire systems, the
intuitive brain; it thinks in patterns, or
and deferred admissions and conclude that data warehouse extrapolates only data rele-
pictures, composed of ‘whole things,’
the organization needs more beds. The vant to that organization. Business logic is
and does not comprehend reductions,
CNO will see discharge planning failure, then applied that enables the organization to
either numbers, letters, or words.
hfm DECEMBER 2006 I

2. intimately understand its customers’ buying results, incision time and so on—are cre- language. These scorecards establish an
habits, for example, and personalize its ated during the care process and never used early warning system for clinical and finan-
products and services to maximize profit. again. When combined with other data cial variances, enabling stakeholders to
Data can be sliced, diced, and presented to points and imbued with clinical knowledge, head off errors and drive process improve-
stakeholders in the form of web-based they can provide great insight. ment.
scorecards that enable them to drill down
into key metrics and quickly draw conclu- The exhibits below and on page 103 illus- A good scorecard focuses attention on only
sions. trate the incremental value of combined the most meaningful metrics for that stake-
clinical and financial data. Suppose you holder. Physicians and other clinicians
Clinical analytics requires a similar want to determine the impact of periopera- must be able to see a clear connection to
approach: extracting clinical, financial, and tive care on the cost of a total hip replace- their daily practice. A nurse manager, for
operational data from multiple repositories ment. Relying on financial data alone, you example, would be interested in metrics
and loading it into a warehouse optimized could determine whether the patient was related to barcode medication administra-
for reporting and root cause analytics. Many charged for an anti-infective and a glucose tion compliance on her unit that provide
hospitals overtax the reporting features of test on the day of the surgery—information ongoing feedback regarding whether care is
their clinical repositories, which are useful only from a cost perspective. Clinical improving as a result of barcode scanning
designed to manage real-time clinical work- data alone will allow you to determine, (e.g., whether her nurses are responding
flow related to individual patients during through time stamps, whether the prophy- appropriately to alerts). Metrics are mean-
episodes of care, not for reporting beyond ad lactic anti-infective and glucose test were ingless as ends in themselves; their value is
hoc queries to help clinical supervisors administered according to evidence-based in helping stakeholders know where to
organize care. In contrast, data warehouses guidelines and how long the surgery lasted. drive process changes that will ultimately
are designed to aggregate data retrospectively This information is somewhat more useful. be reflected in higher scores.
and help the enterprise achieve desired out- Only by combining financial and clinical
comes for populations of patients across a data and applying embedded clinical Creating a metric-driven culture also
continuum of care. Embedded clinical knowledge, however, can we get at what we requires data integrity. Besides being
knowledge, or healthcare-specific business really want to know. Using clinical analyt- expensive and time-consuming to collect,
logic, transforms the normalized data into
actionable information.
Clinical analytics provides the long-elusive
Five Ways to Compete on Quality
transparency needed to directly
Clinical analytics provides the long-elusive
link care and cost, thus introducing
transparency needed to directly link care
and cost, thus introducing a tremendous
a tremendous competitive advantage.
competitive advantage. As a result, organi-
zations can compete on quality in five
important ways. ics, we can determine the degree to which manual data provide only a snapshot in
procedure duration and noncompliance time for a sample of the population. Manual
Clinical analytics enables clinical performance with guidelines impact readmissions, total data are generally gathered to meet specific
to be measured using clinical data. For more cost of care, percentage of postoperative reporting requirements or answer specific
than 20 years, we’ve measured performance infections, and other important measures, questions. Should a new requirement arise
using cost accounting, largely because such as complications by payer and patient or the data gathered beg a new question, it’s
charge codes with Uniform Bill-92 billing satisfaction. back to the charts. In contrast, clinical ana-
codes have been readily available and fairly lytics has a rapid refresh rate because data
Clinical analytics supports a metric-driven cul-
inexpensive. However, the inadequacy of are regularly feeding the warehouse. This
ture.
administrative data to provide insight into enables ongoing trend analysis for an entire
the quality and appropriateness of care, A key characteristic of high-performing population. It can also eliminate objections
including errors of omission or commis- organizations is the ability of every about sample size when a given clinician’s
sion, has long been acknowledged. Clinical employee to articulate the meaning of qual- performance is questioned. As new ques-
analytics taps data produced as a byproduct ity in their organization and the impact they tions arise, the data can always be re-
of patient care rather than as a consequence have on quality. Via scorecards, the quality mined.
of patient billing. Thousands of data imperative can be communicated deep
points—on medication administration, lab within the organization using a common Finally, scorecards should enable users to
healthcare financial management
II DECEMBER 2006

3. quickly identify variances and drill down to month collecting data for the Joint ized short-term mortality rates. How do we
determine the cause with little or no analyt- Commission on Accreditation of Healthcare explain the other 94 percent of variation?
ical training. Returning to what we know Organizations’ core measures for acute The researchers concluded that “multiple
about left brain/right brain thinking, it’s myocardial infarction, heart failure, and measures that reflect a variety of processes
important to let users customize views of pneumonia, and another 23 hours a month and also outcomes, such as risk-standard-
their data to accommodate how they process analyzing the data, with total associated ized mortality rates, are needed to more
information. Visually oriented right brain- costs of up to $100,000 a year (Anderson, fully characterize hospital performance”
ers may respond to radar charts that look Kristine M., and Sinclair, Susan, “Easing (Bradley, Elizabeth, et al., “Hospital Quality
like ink splats to number-crunching left the Burden of Quality Measures Reports,” for Acute Myocardial Infarction:
brainers, who live and die by spreadsheets. Hospitals and Health Networks, Aug. 15, Correlation Among Process Measures and
2006). Relationship with Short-Term Mortality,”
JAMA, July 5, 2006, pp. 72-78).
A good scorecard focuses attention on only the Beyond required reporting, how do
most meaningful metrics for that stakeholder. you explain care variations for your
most costly populations—and elim-
Physicians and other clinicians must be able to inate them while improving overall
quality? A recent study found that
see a clear connection to their daily practice. the likelihood of adverse events
from anesthesia varies with the
Clinical analytics can be used to manage regu- time of surgery, with procedures scheduled
latory initiatives. If you don’t manage regula- Adding insult to injury, a recent study pub- at 9 a.m. having the lowest rate of anesthe-
tory initiatives, they end up managing you. lished in JAMA concluded that the publicly sia-related events such as pain and postop-
Yet few hospitals know how much time and reported AMI process measures for both erative nausea and vomiting. Adverse
money they spend collecting and analyzing JCAHO and the Centers for Medicare and events were slightly more likely to occur at 7
data. In one study, a sample of providers Medicaid Services capture a scant 6 percent a.m. than at 9 a.m., and pain management
spent between 50 hours and 90 hours a of the variation in hospitals’ risk-standard- events were four times more likely to occur
PERIOPERATIVE ANALYSIS USING FINANCIAL DATA
Financial Result
Charge Code/Cost UB Px Code
Cost and volume of anti-infective
525678 Rocephin 1 GM 81.51 Total hip
and lab test on day of surgery
743210 Glucose Test replacement
PERIOPERATIVE ANALYSIS USING CLINICAL DATA
Clinical Result
Medication Surgery IS
> Prophylactic anti-infective
Administration Left hip replacement
administered > 30 minutes
Data Incision time 10:45
before incision
Rocephin 1 GM Close time 12:55
> Glucose > 150 mg/dl
10:04
> Procedure duration > 90 minutes
Lab Results
Glucose, fasting
175 mg/dl
06:00
hfm DECEMBER 2006 III

4. at 4 p.m. than at 9 a.m. (Wright, M.C., et al., profit leaders in cardiology and orthopedics million per year (Bates, D.W., et al.,
“Time of Day Effects on the Incidence of bearing the brunt of the rebasing impact. “Effect of Computerized Order Entry and a
Anesthetic Adverse Events,” Quality and Can you predict the potential impact on Team Intervention on Prevention of Serious
Safety in Health Care, August 2006, pp. 258- your organization based on your surgery Medication Errors,” JAMA, Oct. 21, 1998,
263). Interesting aggregate data for the volume and complications? pp. 1311-1316).
sample population, but what is the experi-
Clinical analytics enables you to document the
ence in your ORs, and can you affect it? You can use clinical analytics to tap this and
value of your IT investment. Calculating a more information from your own latent
In addition to meeting today’s reporting hard-dollar return on investment for health data stores.
requirements, providers must be able to IT remains elusive. One positive conse-
Clinical analytics provides a basis for redefining
evaluate the impact of future measures that quence of the current focus on quality and
your business strategy. Another key charac-
will address more diagnosis and procedure safety is a broader definition of ROI. In
codes and cut across more clinical areas. addition to net present value, organizations teristic of high-performing organizations is
CMS has promised to phase in a new diag- must now consider how the investment will accountability for quality at the CEO and
nosis-related group weighting system that affect quality indicators as well as physi- board level. These individuals are actively
accounts for patient severity. Unless a sec- cian, patient, and staff satisfaction. As early involved in building scorecards that reflect
ond diagnosis is present on admission, you as 1998, the Adverse Drug Events the culture they are trying to shape, and
may be paid less for complications such as Prevention Study Group used financial they take responsibility for each element.
hospital-acquired infections. variables (cost reductions, length of stay, Boards of high-performing organizations
revenue enhancements, risk avoidance) as spend much more time on quality issues
CMS is also looking seriously at cardiac and well as clinical and organizational variables than boards of typical hospitals, often
musculoskeletal complications. To prepare (improved outcomes, decline in mortality, opening their meetings with scorecard
for the change, Baptist Healthcare System, fewer medical errors, improved stakeholder reviews. Ideally, the board-level scorecard
based in Louisville, Ky., used clinical ana- satisfaction) to calculate the ROI for com- is the rudder that keeps your organization
lytics to determine the potential impact. puterized provider order entry. The system steered in the direction charted by the
Vice president and CFO Carl Herde predicts cost of $1.9 million plus $500,000 in strategic plan. Managing to metrics
more than a $7 million reduction in CMS annual maintenance fees was estimated to requires you to strictly define your goals
reimbursement, with traditional procedural be offset by a net savings of $5 million to $10 and be disciplined in your daily operations.
PERIOPERATIVE ANALYSIS USING FINANCIAL AND CLINICAL DATA
Charge Code/Cost UB Px Code
Combined Result
525678 Rocephin 1 GM 81.51 Total hip replacement
743210 Glucose Test
> Readmission % when prophylactic
anti-infective administered > 30 minutes
> Total cost of care for glucose > 150 mg/dl
Patient Satisfaction Score Encounter Detail
> % post op infections when procedure
Hospital = 98 Physician = 76 Age = 56
duration > 90 minutes
Payer = Blue Cross
> Complications by payer
> Patient satisfaction tied to periop care
Surgery IS
Medication Administration Data
Left hip replacement
Rocephin 1 GM 10:04
Incision time 10:45
Close time 12:55
Lab Results
Glucose, fasting 175 mg/dl 06:00
... into easy-to-use metrics
Transforming complex data relationships ...
healthcare financial management
IV DECEMBER 2006

5. Hospitals frequently engage consulting A., et al., “Hospital Quality: Ingredients for be charged with managing the nerve center
firms to gather and analyze the data neces- Success—Overview and Lessons Learned,” between the two halves of the organization’s
sary to address a particular issue, like ER The Commonwealth Fund, July 2004). brain.
overcrowding. When the consultants leave,
A New Role: Chief Performance Achieving Left Brain and
so does that level of attention and insight.
Officer Right Brain Harmony
To properly manage your business, you
must be able to measure the impact of every In 1983, the prospective payment system The unprecedented ability to directly link
decision you make regarding stents, beds, rocked our world. Hospitals grappled with everything that happened to the patient to
IT—every aspect of care. Clinical analytics how to optimize payment and minimize the total bill—and to determine whether the
lets you decide and execute on the right risk. Overnight, the role of DRG coordina- services delivered achieved the desired out-
strategy based on solid information, not tor emerged. As public and private pay-for- come: keeping the patient out of the hospi-
best guesses. “The best hospitals not only performance programs move beyond pilot tal—is enough to turn the most left-brained
collect data on outcomes and cost, but also phases, CMS introduces DRG reweighting, analysts into quality champions, if not
pull apart the numbers on surgeries, tests and the Bush administration calls for trans- artists. Clinical analytics is an important
and other procedures to identify each step parency in price and quality for consumers, strategy to consider in closing the gap
in the process where less-than-optimal we may see another new role emerge: the between clinical quality and financial out-
medicine is practiced,” states a chief performance officer. Working closely comes.
Commonwealth Fund report (Meyer, Jack with the CEO and board, this person would
About the authors
Ross Hammarstedt
is vice president, benchmarking
solutions, McKesson Provider
Technologies, Hadley, Mass.
(ross.hammarstedt@mckesson.com).
Deborah Bulger
is vice president, product market-
ing, performance management
solutions, McKesson Provider
Technologies, Hadley, Mass.
(deborah.bulger@mckesson.com).
Reprinted from the December 2006 issue of Healthcare Financial Management.
Copyright 2006 by Healthcare Financial Management Association, Two Westbrook Corporate Center, Suite 700, Westchester, IL 60154
For reprint information, call 1-800-252-HFMA
hfm DECEMBER 2006 V