Recession-Proof Healthcare Providers with Value-Based Decision Making
The Advisory Board State of Healthcare 2023 Report issued a series of ominous provider system trends, the implications of which need to be deciphered with care.
69% report below pre-pandemic performance
37% labor expense increase per discharge
92% increase in bad debt
What does this mean? Frankly, it means that health care systems are scrambling to increase margins and have to take a really, really hard look at the VALUE that ANY initiative is producing. Whether its workforce reduction, process and workflow optimization, renegotiating contracts, or any of a thousand other efforts that are in flight at health systems across the country focused on revenue generation or operational efficiency - providers typically struggle to actually produce an ROI on their activities, unless it goes straight to the top line.
The problem is that, as of now, providers don’t have a reliable way to make changes AND understand the impact that those changes have on, well, anything. Not looking back, and definitely not looking forward.
Providers are feeling the crunch and as a result, the demonstration of value and ROI is more critical than ever. To date, the inability of provider systems to accurately anticipate the revenue and expense impact of their interventions/decisions have left them underpowered and ill-equipped to grow margins, now worsened by a contracting economy.
Why are they ill-equipped? Well, despite access to petabytes of modern healthcare data, provider systems are plagued with information failures and data blind spots that undermine meaningful insight. Providers can often only see an incomplete portion of their patient's journeys and behaviors. As a result, systems cannot accurately measure the value or the ROI of their organizational change, let alone assess the causal relationships and impact on outcomes.
In order to stem the pain of economic downturns, both present and future, provider systems need to increase visibility, sharpen their articulation of value measurement and determine the true causal impact of their interventions and strategic choices.
📊 Visibility. The implementation of EHR’s, the rise of HIE’s, and the push toward value-based care and ACO’s has provided health care systems way more visibility into their patient’s journeys than ever before. However, there are still tremendous gaps in the data that constitutes the patient's care journey. This information asymmetry severely hampers any efforts to understand patient and provider behaviors in the micro and macro sense.
⚖️ Measure and Assess Value. Most times, changes are planned and deployed in an organization with at best a loose understanding of how the return on investment or delivered value of the change will be measured and assessed. This is typically due to one or more of the following factors.
☄️ A tangible link between the change and outcomes is not well defined or understood - this central theme to improvement is an endemic problem in US healthcare.
☄️ Measurement of change in metrics, when they are defined is not done, or not done with enough resolution to assess the change or pivot when the change isn’t having the effect desired.
☄️ Consistent data and articulate metrics can help healthcare systems create an intentional optimization strategy and long term strategy of change — the fire of change requires the oxygen of a robust data feedback loop that can tell you how you’re doing.
🎯 Understand Causal Impact. Healthcare systems and processes are complex and understanding all of the relationships between entities, processes, and protocols can very nearly be impossible to define and articulate. Therefore looking backward is the easiest way to try and assess what happened and why, but it would be really nice to look forward, ahead of a change, to understand what could happen and how all of the relationships could impact outcomes. The ability to explore causal relationships and project where and how change will impact the organization empowers both the retrospective identification of impact and the pre-assessment of change – with a lens on value, optimizing spend, investment, and resource allocations and making good decisions even when times are tough.
As the economy contracts and healthcare providers are focusing more and more on growing revenue and optimizing operations. They have to focus on delivering value with every being able to make decisions that are value-based and value-driven.
Gone are the days of spending without having a grounded, clear understanding of risk and value. Here, now, are the days of minimizing risk, quantifying value, and assessing return on every investment that is made - before initiatives start, as they progress, and as they conclude.
If you enjoyed this blog, have questions/comments, or would like to learn more about Monocle Insights, please email rdeiotte@monocleinsights.com, or visit our contact page to schedule a demo!
