Healthcare Analytics: Has the Need Ever Been Greater

Healthcare Analytics
Has the Need Ever Been Greater?
September 2012
David White

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and
represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.
and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.
September 2012
Healthcare Analytics: Has the Need Ever
Been Greater?
In the USA, healthcare reform threatens to starve an industry that swallows
over $2 trillion of spend annually. Elsewhere, many developed nations with
government funded healthcare services are imposing austerity measures that
ultimately will result in cuts to services. This Analyst Insight is based on two
research surveys; the first, conducted in January 2012, gathered data on the
use of role-based business intelligence (BI), and the second, conducted in
August 2012, focused on smart healthcare. This research examines the
operational performance of healthcare organizations compared to other
organizations. It also shows how healthcare providers may improve their
operating performance by using business intelligence (BI) and analytics
better.
Healthcare Lags in Improving Performance
Aberdeen assessed the operational performance or survey respondents
based on four criteria (see sidebar). As Figure 1 shows, almost all
organizations that achieved Best-in-Class performance levels had been able
to improve their operational performance in the last year.
Figure 1: The Best-in-Class Demonstrate Strong Improvements
Source: Aberdeen Group, January 2012
56%
46%
54%
96%
98%
99%
0% 20% 40% 60% 80% 100%
Improved cycle time
of key business
processes
Improved employee
productivity
Improved response
time to customer
requests
Percentage of respondents, n=422
Best-in-Class
Healthcare organizations
Analyst Insight
Aberdeen’s Insights provide the
analyst's perspective on the
research as drawn from an
aggregated view of research
surveys, interviews, and
data analysis
Aberdeen Methodology
The Aberdeen maturity class
groups survey respondents into
one of three segments. In
Aberdeen's role-based business
intelligence survey, the Best-
in-Class organizations are the
top performing 20% of survey
respondents based on their
aggregate performance in 4
criteria:
√ Ability to improve their
customer response time in
the last year. 99% of Best-in-
Class organizations were
able to do so
√ Ability to improve their
employee productivity in the
last year. 98% of Best-in-
Class organizations were
able to do so
√ Ability to improve the cycle
time of their key business
processes in the last year.
96% of Best-in-Class
organizations were able to
do so
√ Y-Y Revenue growth - The
Best-in-Class achieved an
average growth rate of 28%
24 organizations from this
survey were from the
healthcare industry

Healthcare Analytics: Has the Need Ever Been Greater?
Page 2
© 2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
In contrast, only 54% of healthcare organizations had been able to improve
the time taken to respond to customer requests. While a similar number
(56%) have been able to cut the time required to execute business
processes, less than half (46%) report improvements in employee
productivity. And yet, many healthcare providers - in the United States and
elsewhere - are staring at a tsunami as they face significant cuts in their
traditional fee-for-service revenue. As revenue dries up, internal cost cutting
will become necessary. The profit and loss statement for almost any
healthcare facility will show that staffing is the biggest component of
operating costs. But, as Figure 1 shows, the majority of healthcare
organizations were not able to improve their employee productivity in the
last year. As a result, some providers will almost certainly cease to exist as
they are engulfed by the wave of healthcare reform and revenue loss.
Aberdeen's hypothesis is that healthcare providers' lack of insight into their
business is one of the reasons they struggle to improve operational
performance. Healthcare is a business, even for not-for-profit providers.
Whatever the mission statement, there is a fundamental requirement to
balance the books. In part, providers lack insight because business
intelligence is used so sparingly in many healthcare settings (Table 1).
Table 1: Analytics More Pervasive at the Best-in-Class
Function Best-in-Class Healthcare
Corporate
Management
67% 42%
Operations 58% 36%
Quality
management
53% 37%
Procurement
44%
26%
Human
Resources
34% 24%
Table 1 shows the percentage of responding organizations that cite strong
adoption of analytics in specific business functions. For example, 67% of
Best-in-Class organizations have a strong use of analytics within their
corporate management function. In contrast, this is true of only 42% of
those healthcare organizations taking part in Aberdeen's survey. Other
examples in Table 1 show the most widespread and relevant differences in
use between Best-in-Class organizations and healthcare organizations.
Overall, only one function at the majority of healthcare organizations uses
“This is a group that had only
financial metrics for 30 years
and never used operational
metrics in every work area.
Now with dashboards showing
operational metrics, people are
more aligned - everyone knows
what they do to move every
number.”
~ Practice Administrator,
US Healthcare Provider
Survey Demographics
32 healthcare providers took
part in Aberdeen's August 2012
smart healthcare survey. Of
these 32 survey respondents:
√ 59% were inpatient facilities
√ 9% were outpatient facilities
√ 3% were Integrated
Healthcare Delivery Systems
headquarters offices
√ 16% were long-term care
facilities
√ 13% were some other types
of healthcare provider

Page 3
analytics extensively - finance and administration. On the other hand, over
50% of top-performing companies use BI widely in eight business functions.
Today, many enterprises are drowning in data. As Aberdeen's 2012
research into data management (Data Management for BI) noted, on
average companies are managing 2.5 times as much data as they were 3
years ago. Often, this data is simply accumulated as a normal part of doing
business. In commercial companies, sales are recorded, shipments are
made, phone calls are placed, and cash is withdrawn. Likewise, in a
healthcare setting, physicians orders are noted, tests performed,
medications administered and supplies procured. However, all too often
when healthcare providers record those activities, they record them on
paper, not electronically. That unfortunately makes the use of analytics in
healthcare difficult.
Fortunately though, the HITECH act (see sidebar) aims to remedy this
shortcoming - at least partly - in the USA through the introduction of
electronic medical records. As increasing amounts of data are captured
electronically, the potential for analytics to eliminate waste and improve the
quality of care is enormous. The next section highlights how healthcare
providers can follow the path beaten by Best-in-Class organizations to make
the use of BI truly pervasive.
Pervasive BI - How the Best-in-Class Achieve It
Figure 2 shows just some of the areas in which Best-in-Class organizations -
those with the greatest improvement in operating performance -
significantly outperform healthcare enterprises that already use BI.
Organizational and cultural factors play a significant role in the successful
use of analytics. Unfortunately, many healthcare organizations appear to lack
both the organizational culture and the organizational structure to excel
with BI. First of all, Best-in-Class firms are twice as likely as healthcare
providers (59% vs. 30%) to have defined key performance indicators (KPIs)
to measure performance across all parts of the company. Not only are
those KPIs defined, but the data required to measure performance is
regularly collected. That data in turn is used to refresh and populate BI
reports and dashboards so that operational performance can be assessed
and corrective action taken where necessary.
Top performing enterprises are also more than twice as likely (55% vs. 26%)
to have solid analytical knowledge and experience in roles beyond the
information technology department. This too is important for achieving
widespread use of BI. In the past, skilled IT practitioners had to create and
refresh business intelligence reports and charts for a select group of
business executives. No longer. Aberdeen's July 2012 research into agile
business intelligence (Agile or Fragile? Your Analytics, Your Choice)
highlighted the growing trend toward self-service analytics. This approach
allows business managers to take a greater role in finding, shaping and
analyzing the information they need, hands-on. Most Best-in-Class
organizations put in place formal education programs to teach non-technical
The HITECH Act
The American Recovery and
Reinvestment Act, signed into
law in February 2009, included
$19bn to promote information
technology in healthcare (the
HITECH act). The Office of the
National Coordinator for
Health Information Technology
(ONC), within the department
of health and human services,
has taken on the goal of
ensuring that information on
every American is included in
some form of Electronic Health
Record (EHR) by 2014. To
achieve this ambitious goal, that
$19bn from the stimulus act is
set aside for incentive
payments to induce healthcare
providers to adopt, and make
"meaningful use" of, EHR
technology.
PPACA
The Patient Protection &
Affordable Care Act (PPACA)
is commonly known as
healthcare reform. Passed in
March of 2010, the immediate
focus is as much about
healthcare insurance reform as
it is about healthcare delivery
reform. Much of the long term
focus on healthcare delivery
reform is embodied in the
Center for Medicare &
Medicaid Innovation (CMI). The
CMI will be charged with
testing new payment and
service-delivery models to
reduce Medicare and Medicaid
costs without adversely
affecting the quality of care –
and hopefully improving it.

Page 4
staff about analytics. The scope of such training may include the overall
concepts of analytics, as well as the specific BI tools available. Ideally, hands-
on tuition with data from the manager's specific job role should also be
included.
Figure 2: Laying the Foundation for Best-in-Class Analytics
Best-in-Class organizations are also 4 times as likely as healthcare
organizations to have tools in place to assess and improve the quality of
their data. Often, when Aberdeen interviews IT executives at companies
that use analytics, we hear that one aspect of the project was much more
difficult than anticipated: data quality. Typically, business intelligence tools
provide the first real insight into the quality of data as a whole—or the lack
of data quality. While managers of individual business units may know that
records are not always entered fully or accurately, the overall impact of
poor data quality is not seen until BI collates and summarizes data from
different parts of the organization. A single supplier of medical supplies may
appear to be many different suppliers simply because that supplier's name
has been misspelt, or entered in an abbreviated form. A supplier formally
called "Acme Medical Supplies Incorporated" may be recorded in a
procurement application as:
• Acme Medical Supplies Incorporated
• Acme Medical Supplies
• Acme Medical Suplies
• Acme Medical
0%
26%
14%
30%
50%
55%
58%
59%
0% 20% 40% 60%
Ability to measure
'time-to-information'
for end users
Strong analytical
knowledge within
non-technical roles
Measurement tools
to capture data
quality issues
All line-of-business
KPIs measured
and reported
Best-in-Class
More Best-in-Class Capabilities
Other notable capabilities that
Best-in-Class companies are
more likely to possess than
healthcare organizations
Regular line-of-business
operational performance
reviews - 74% vs. 39%
√ Formal training on the
importance of data quality -
50% vs. 14%
√ Single, central repository of
financial performance
information - 71% vs. 43%
Automated Analytics
The 32 healthcare providers
that took part in Aberdeen's
August 2012 smarter
healthcare survey compile and
distribute care quality and
patient safety metrics in the
following ways:
√ Compiled from paper
records and distributed as a
paper report - 10%
√ Compiled from paper
records and distributed via a
spreadsheet - 6%
√ Manually aggregated from
computerized records and
distributed via a spreadsheet
- 23%
√ Automatically aggregated
from computerized records
and distributed via BI static
reports - 32%
and distributed via
interactive BI tools - 26%
and wirelessly distributed to
mobile devices - 3%

Page 5
• Acme Medical Inc.
• Acme
While we humans intuitively recognize these different database entries as a
single company, simplistic computer systems do not. While this inaccuracy
may be acceptable for ordering supplies, for business intelligence
applications it is not. For example, imagine that hospital executives wish to
understand their annual expenditure on physician-preferred items to
consolidate spending and maximize volume discounts. It is impossible to do
this accurately when errors (such as those described above) exist in the
underlying procurement data. In the case above, the true spend with Acme
appears to be spread across multiple smaller suppliers. As if this situation
wasn't difficult enough, it is compounded in organizations such as Integrated
Health Delivery Systems (IHDS). An IHDS typically includes multiple
healthcare facilities. If each facility has its own purchasing process (and
supporting procurement or financial management software) then
understanding spending on medical supplies across the entire IHDS can be
much harder to achieve.
Addressing data quality, then, is an essential pre-requisite for powerful
analytics. The best place to fix data quality issues is at the point of
introduction. Otherwise, a snowball effect can ensue, where an error
introduced during data entry is replicated in many downstream applications.
Not only are Best-in-Class companies four times as likely to have tools to
check data quality, but they also work harder to instill data discipline at the
point of capture. Half (50%) these organizations have formal training
programs in place to educate staff on the importance of accurate record
keeping and steps that can be taken to improve data quality. Conversely,
only 14% of healthcare providers provide similar training.
Finally, as Figure 2 shows, when analytics is used in healthcare, there is no
feedback cycle to ensure that information is being delivered in a timely way.
Understanding whether the IT plumbing is delivering the right information
to the right people at the right time is fundamental to the success of any
business intelligence implementation. For example, a clinical care director
may need to review updated care quality metrics every month to improve
patient safety and clinical outcomes. However, if the IT organization is only
able to refresh that data quarterly, then the care director's "time-to-
information" needs are not being met. Although the business needs fresh
data every month, it is only delivered every three months. Other situations
may warrant much more frequent updates to data. For example, a nursing
manager may want to see the patient census updated several times a day, to
optimize staffing levels. Without a current patient census, a staffing manager
can only guess at the number of nurses they need to schedule for an
upcoming shift. The result: either patient safety is jeopardized, or the
healthcare facility incurs excessive staffing costs. While half of Best-in-Class
organizations measure "time-to-information", no healthcare providers do so.
Without this fundamental measure of BI performance, the team responsible
for delivering analytics to managers has no way of knowing if they are even
close to hitting the target.
Definition of Terms
√ Dashboard: Dashboards are a
form of BI tool that are
typically highly graphical and
can show many KPIs or
metrics on a single screen. As
such, they can provide a
powerful way for executives
and managers to rapidly
comprehend the state of
activities that are most
important for their role.
√ Drill-down: Enables a business
user to rapidly navigate from
highly summarized data to see
the underlying detailed data. In
can be a powerful way for
users to start to understand
cause-and-effect relationships.
For example, if the clinical care
director notices a jump in the
30 day re-admission rate, he or
she could drill-down to see if
the increase was related to a
particular surgery, physician,
facility, or even day of the
week.
Fast Facts
√ 19% of the survey
respondents to Aberdeen's
August 2012 smarter
healthcare survey are
working for providers that
are already part of an
Accountable Care
Organization (ACO)
√ A further 41% work for
providers that are actively
considering forming or
joining an ACO

Page 6
Compared to Best-in-Class enterprises, many healthcare providers also lack
key analytics technologies (Figure 3 and sidebar).
Figure 3: Healthcare Providers Trail in Analytics Technologies
The lack of pervasive analytics noted earlier is apparent in the relative lack
of dashboard usage, for example. Best-in-Class organizations are 55% more
likely to use executive (or strategic) dashboards than healthcare providers.
When it comes to operational (or tactical) dashboards - used to provide
insights into daily operations - the gap between healthcare providers and
top performing organizations is even greater. While only one quarter (25%)
of the healthcare organizations using BI use operational dashboards, 57% of
Best-in-Class enterprises do so.
Dashboards can provide a rapid update on key metrics for executives and
managers - and for those truly on the run, can even be displayed on
smartphones or tablet computers. Dashboards can also provide some
measure of interactivity, such as "drill-down" capabilities (see sidebar
definitions). The ability for managers to manipulate data directly, hands-on,
can significantly impact the time required for them to understand an
emerging situation and react accordingly.
Key Takeaways
Like it or not, healthcare delivery in the western hemisphere is embarking
on radical change. Healthcare is going to be value-oriented and data-driven.
Healthcare providers should consider the following courses of action:
• Drive the pervasive use of analytics. Without reliable,
consistent measurement of operating performance across the
organization, continuous incremental improvement in performance
is immensely hard to attain. One of the reasons that Best-in-Class
companies have been able to drive operational improvements in so
many parts of the business is because the use of analytics is so
25%
38%
57%
59%
0% 20% 40% 60%
Operational
Dashboards
Executive
Dashboards
Best-in-Class
Best-in-Class Technologies
Other notable technologies
that Best-in-Class companies
are more likely to possess than
healthcare organizations
include:
√ Drill-down capabilities - 45%
vs. 30%
√ Data management and data
quality tools - 64% vs. 38%
"PPACA will force hospitals,
including mine, to monitor and
improve patient
outcomes. Initially, the
legislation will result in
decreased profitability."
~ Melissa Knudsen,
Manager,
Performance Analytics and
Business Intelligence,
Truman Medical Centers

Page 7
pervasive. Over 50% of Best-in-Class enterprises use business
intelligence widely in eight business functions. Conversely, the sole
business function where analytics is commonplace in healthcare
organizations is in finance and administration.
• Organizational culture is king. Many healthcare organizations
have operated in a fee-for-service world where improving
operational efficiencies was a low priority. Healthcare reform will
change that - and organizational culture must change along with it.
Healthcare providers must put a strong cultural emphasis on being
data-driven. Choosing a technology for analytics is the easy part -
changing individual and corporate mindsets can be much more
challenging. For example, Best-in-Class organizations are over 3
times more likely to have instilled the need for data quality, and
twice as likely to have KPIs defined for all aspects of the enterprise,
compared to healthcare organizations. Changing attitudes to data
quality and measurement needs to be initiated at the executive level.
• Don't just invest in analytics, invest in complementary
technologies too. Top-performing organizations are more than
twice as likely as healthcare organizations to invest in analytics
technologies, such as operational dashboards (57% vs. 25%). But,
other technologies should not be overlooked. For example, 64% of
Best-in-Class firms invest in data quality tools, while 53% invest in
corporate-wide portal that can help to disseminate key performance
indicators throughout the organization.
For more information on this or other research topics, please visit
www.aberdeen.com.
"Making things more visual and
interactive for managers means
then that when they have that
‘a-ha’ moment they can actually
do something about it instead
of just setting up a meeting
with IT. There’s been a
noticeable change in meetings
because the data isn’t static and
it’s something that people can
interact with and get answers
in close to real-time while the
key decision makers and
thought leaders are in the
room."
~ IT Manager,
Large Consumer Packaged
Goods Manufacturer

Page 8
Related Research
Agile or Fragile? Your Analytics, Your
Choice; July 2012
Beyond Agile Analytics: Is Agile Data
Integration Next; June 2012
Managing the TCO of BI: The Path to
ROI is Paved with Adoption; May 2012
High Performance Organizations
Empower Employees with Real-Time
Mobile Analytics; April 2012
Picture this: Self-Service BI through Data
Discovery &Visualization; March 2012
SaaS BI: The Compelling Economics of
Cloud-based Analytics; February 2012
Operational Intelligence - Part 1: Driving
Performance with Tactical Visibility;
February 2012
Migrating from Reports to Dashboards:
Upgrading your Business Intelligence;
August 2011
Surviving Healthcare Reform with Data-
Driven Decisions; May 2010
BI in Healthcare – A Prescription for Good
Financial Health; December 2009
Author: David White, Senior Research Analyst, Business Intelligence,
(david.white@aberdeen.com)
For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class.
Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide
organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why
our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of
the Technology 500.
As a Harte-Hanks Company, Aberdeen’s research provides insight and analysis to the Harte-Hanks community of
local, regional, national and international marketing executives. Combined, we help our customers leverage the power
of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional
information, visit Aberdeen http://www.aberdeen.com or call (617) 854-5200, or to learn more about Harte-Hanks, call
(800) 456-9748 or go to http://www.harte-hanks.com.
This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc. (2012a)

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