Developing a Hospital Business Intelligence Strategy

Developing
a Hospital Business Intelligence (BI) Strategy
in a Value-Based Services World
Steven Berger, FACHE, FHFMA, CPA
Chairman
Healthcare Insights
510 Roosevelt Drive
Libertyville, IL 60048
847 – 772 – 9200
E-mail: sberger@hcillc.com
Website: www.hcillc.com
http://hcillc.com/community - blog
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Speaker Profile – Steven Berger
Steven Berger is Chairman of Healthcare Insights, LLC, which specializes in the teaching and consulting of healthcare financial management issues. In
addition, Healthcare Insights has developed INSIGHTS, a management accountability and decision support software solution for the healthcare industry.
Prior to his role at Healthcare Insights, Mr. Berger was Vice President, Finance for seven years at 250- bed Highland Park Hospital in suburban Chicago,
Illinois. Before Highland Park Hospital and since 1978, he has been a hospital or health system finance officer in New York, New Jersey and Missouri.
Mr. Berger has 40 years of healthcare financial management experience. He holds a Bachelors of Science degree in History and a Master of Science in
Accounting from the State University of New York at Binghamton. He is a CPA, a Fellow of the Healthcare Financial Management Association (FHFMA)
where he has served as President of the First Illinois Chapter. Mr. Berger also served a three-year term on the HFMA’s National Board of Examiners and
served as the Regional Executive of Region 7 of the HFMA. He is also a Fellow of the American College of Healthcare Executives (FACHE).
In addition, over the past several years he has presented many healthcare finance related seminars throughout the United States and Canada including
several two-day classes such as Fundamentals of Healthcare Financial Management, Advanced Topics in Healthcare Financial Management, Turning Data
into Useful Information and Hospital Financial Management for the Non-Financial Manager. He has also written articles on healthcare information
systems that were published in Healthcare Financial Management magazine, including a February 2007 Award – winning article on Treating Technology as
a Luxury – Ten Necessary Tools, August 2004 Award – winning article on the Ten Ways to Improve Cost Management in Hospital, an April 2002
management column and a February 2000 commentary in Modern Healthcare on the lack of training in the healthcare industry His most HFM article was
published in August 2012, titled, Back to the Basics: 5 Ways to Pick Low-Hanging Fruit.
Additionally, Mr. Berger is the author of “Fundamentals of Healthcare Financial Management,” originally published in 1999 by McGraw-Hill and the
Healthcare Financial Management Association. This book was written from a practitioners point of view and is a distillation of Mr. Berger’s many years on
the inside of healthcare institutions. The fourth edition of the book was published in July 2014 and is available at www.josseybass.com . Additionally, Mr.
Berger’s 2008 book, “Understanding Nonprofit Financial Statements, Third Edition”, was published by BoardSource and is available at
www.boardsource.org His book, “The Power of Financial and Clinical Metrics: Achieving Superior Results in Your Hospital” was published in March 2005,
by Health Administration Press, and is available at www.ache.org.
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Session Overview
• The Healthcare Financial Management Association (HFMA), in its Value Project, has identified
Business Intelligence (BI) as one of four major new capabilities that organizations should develop
to prepare for a value-based healthcare system as defined by the current and future PPACA.
• The HFMA defines BI as the ability to collect, analyze, and connect accurate quality and financial
data to support organizational decision making.
• Many hospitals have initiated attempts at developing a BI program.
• Some have not.
• This session will
• Highlight key BI concepts and tools that enable organizations to create a successful hospital BI plan, and
• Conduct an organizational assessment that will enable the hospital to use business intelligence
effectively.
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Developing a Successful BI Strategy Class –
Outline and Goals
• Outline
• Where can we find value in healthcare? HFMA Value Project – Phase 1
• How do we use BI to move from volume to value and create a data strategy?
• What are 10 components of a successful hospital BI strategy plan?
• What is the current state of healthcare value in healthcare regarding BI?
• What are essential BI skills in healthcare?
• What are the major BI tools that can be deployed to significantly improve hospital financial
and clinical outcomes?
• Goals
• To describe specific elements of the HFMA’s Value Project as they relate to BI
• To discuss the elements of a BI strategic plan, and
• To recognize the BI tools that can be deployed to significantly improve outcomes
4

Value Overview
• Value is driving a fundamental reorientation of the healthcare system around the quality and
cost-effectiveness of care.
• As in any industry, value in health care is defined through the relationship of two factors: the
quality of care and the price paid for it.
• Increasingly, key stakeholders—including government payers, commercial health plans,
employers, and patients—expect to know the value of the healthcare services they are
purchasing.
• They are seeking out providers who will give them this information and follow through with cost
effective care.
• In other words, they (the key stakeholders) expect to receive value.
5

How Should Providers Respond to the
Demand for Value?
• In interviews with leading provider organizations across the country and surveys
of the field, HFMA has identified four capabilities that organizations should
develop to prepare for a value-based healthcare system. These include:
• People and culture: The ability to instill a culture of collaboration, creativity, and
accountability
• Business intelligence: The ability to collect, analyze, and connect accurate quality and
financial data to support organizational decision making
• Performance improvement: The ability to use data to reduce variability in clinical processes
and improve the delivery, cost-effectiveness, and outcomes of care
• Contract and risk management: The ability to develop and manage effective care networks
and predict and manage different forms of patient-related risk
6

HFMA Identified Future Care Delivery Models
2012 Capability Grid – Post PPACA
HFMA’s Value Project Value in Health Care:
Current State and Future Directions
Phase 1. page 29, Reprinted with
Permission of HFMA
7

Dictionary Definition:
Business Intelligence
• The methods and technologies that gather, store, report, and analyze
business data to help people make business decisions*
• So, instead of
• Gather
• Store
• Report
• Analyze
• How about,
• Gather
• Store
• Monitor
• Analyze
• Report
• Take action
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*http://dictionary.reference.com/browse/business+intelligence?s=t

Business Intelligence Uses
• Information-savvy and data-savvy providers are using business intelligence tools and techniques
to
• Improve care at the bedside,
• Coach physicians to use resources more wisely,
• Manage populations of patients, and
• Improve financial performance
• BI information can allow providers to
• Combine data from a myriad of sources,
• Analyze it to inform specific processes, and
• Present it in easy-to-understand formats,
• Results include
• Improved efficiency,
• Lowered costs, and
• Saved lives
9

So…
What is BI Strategy…
And How Can We Adopt and Utilize It?
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What Can a Hospital Expect to Achieve With a
Successful BI Strategy?
• If the hospital proceeds to execute a successful BI strategy, there will be a
delivery of value to their stakeholders, specifically to:
• Patients
• Physicians
• Payers
• This value will be in the form of high-level quality which greatly exceeds its cost
• To recognize that the value has been achieved, the healthcare organization needs
to develop and deploy the most effective and efficient tools and techniques
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Building Value-Driving Capabilities:
Business Intelligence – Introduction
• Healthcare providers are on the verge of a transformation in the field of business intelligence.
• As providers work to implement and achieve meaningful use of electronic health records (EHRs), they are gaining access to
new levels of clinical data, the accuracy of which will be heightened by the switch to ICD-10.
• Meanwhile, the prospect of new forms of payment—including episode-based payment bundles, shared savings programs,
and capitated payment models—is exposing the limitations of traditional cost accounting methods.
• This has prompted providers to consider costing systems that can provide greater levels of detail regarding the costs
related to specific services, processes, and physicians.
• For example, the ability to “drill down” into the costs associated with
• bundled services,
• specific patient groups, or
• practice patterns
• can help decision makers better understand variation and costs related to variation—and make changes that will improve value.
• As healthcare organizations gain access to more and better data, their need for business intelligence—the ability to
convert data into actionable information for decision making—is growing.
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HFMA’S Value Project: Building Value-Driving Capabilities:
Business Intelligence, January 2012, Reprinted with Permission

• To drive value, healthcare organizations will need to use business intelligence to:
• Develop a business intelligence strategy focused on converting financial and clinical data into actionable,
accessible information that clearly supports an organization’s strategic goals and decision making
• Accurately capture and quantify the costs of providing services and the costs and benefits associated with efforts to
improve quality of care
• Develop business cases that prioritize and reliably quantify expected clinical outcomes, financial impacts, resource
needs, and “go/no go” points of value improvement projects
• Although business intelligence is still in its adolescence at many healthcare organizations, organizations
should begin to develop value with the data and resources available to them now, rather than wait to
improve value until they have implemented systems capable of providing more refined business intelligence,
organizations interviewed by HFMA’s Value Project agree.
• As Kevin Brennan, CFO of Geisinger Health System in Danville, Pa., notes, “The tools we have available to us
are sufficient to the task. We just have to redeploy them in a manner that supports value.”
Business Intelligence – Introduction
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Business Intelligence – Making Information Actionable
• HFMA’s January 2011 survey on the current state of value indicated that, while many organizations have begun collecting data in such areas
as costs of adverse events, financial implications of readmissions, and the financial effects of waste in care processes, few organizations are
using the data they collected as a basis for action. A significant number of respondents also indicated that they are not yet actively
measuring these costs. Although these numbers may have improved over the past months as the Medicare value-based purchasing
program draws closer to implementation, the findings of this survey indicate that many organizations have much room for improvement in
both collecting the data needed to measure quality and cost outcomes and making that data actionable.
• To move from a data-collecting organization to a data-driven organization, providers should:
• Create an enterprise-wide data strategy to ensure the accurate and consistent calculation and reporting of data across the organization
• Establish clear lines of sight from individual metrics for departments and staff to organization-wide goals and executive dashboards
• Make information available to inform the decision making of front line staff in as close to “real time” as possible, optimizing the possibility for interventions
that can avoid adverse events or waste and improve results
• Creating a Data Strategy
• For information to be actionable, it must be credible. And the credibility of information depends on several factors.
• First, all interested stakeholders must agree that what needs to be measured is being measured.
• Second, there must be assurance that metrics are being recorded and reported consistently—and, if more than one department is measuring the same
item, that each is doing it in the same way.
• Third, information needs context for meaning.
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Creating a Data Strategy
• Agreeing on metrics.
• Some metrics will be prescribed by government and private purchasers as a condition of reimbursement. In other
instances, organizations will want to define and track their own metrics to gauge the success of an initiative or
assess the quality or cost of care. In all cases, it is important that both finance and clinicians understand and
agree upon the metrics that should be tracked, where and how the information should be collected, and how
the data should be calculated and reviewed.
• Consistent reporting.
• Value initiatives may require tracking the same metric across different departments or, in the case of a system,
across different facilities. Organizations must ensure that information is being collected and reported consistently
if that information is to be credible, comparable, and, ultimately, actionable.
• Providing context.
• Simply reporting data on quality and cost outcomes is insufficient. Data should be presented within the context
of a dashboard or scorecard that defines clear performance goals and clearly illustrates progress toward those
goals. Users should be able to understand the significance of the data within the context of both internal and
external performance benchmarks and use the data to identify areas most in need of improvement and areas
where goals have been met or are being maintained
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Clinical / Financial Scorecard
Source: INSIGHTS Scorecard Software, www.hcillc.com
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Clinical / Financial Scorecard
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Each indicator is given a numeric and descriptive score
Score Numeric Score
• Excellent (<10th percentile) 5
• Good (10-25th percentile) 4
• Satisfactory (25-50th percentile) 3
• Needs Improvement (50-75th percentile) 2
• Poor (75-90th percentile) 1
• Unsatisfactory (90th + percentile) 0
% score is calculated by summing numeric score and dividing by
total possible score
Balanced Scorecard Scoring
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• Aligning Metrics with Organizational Goals
• Internal dashboards should create clear lines of sight between organization-wide goals and
the efforts of individual departments and staff. Many hospitals and health systems
interviewed for the Value Project noted the problem of “data overload” within their
organization:
• Too many targets and metrics are being tracked without a clear sense of their significance
to the organization. An effective strategy to counter data overload is to define a clear—and
concise—set of strategic goals for the organization. Improvement initiatives, and the metrics
and data collected to measure progress on them, can then be prioritized according to their
alignment with one or more of the organization’s goals. Dashboard metrics—from the system
level to the individual—should then be aligned beneath organizational goals so that everyone
within the organization can understand how their performance on metrics furthers the
organization’s goals.
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Dashboard Design
Source: INSIGHTS Dashboard Software, www.hcillc.com
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Select metrics that align with the organizational goals

Financial Dashboard Drilldowns
Source: INSIGHTS Dashboard Software, www.hcillc.com
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• Timeliness of Data
• For data to be actionable, it must be put in the hands of decision makers in time for them to take action on it.
Different data have different life spans.
• For quality measures — especially those affecting patient safety and clinical outcomes—an organization’s ultimate
goal should be to make reporting as close to “real time” as possible. At Geisinger, which has an advanced, integrated
electronic health record in place, evidence-based practices and treatment protocols for various procedures and
conditions are embedded within the system. The system’s monitoring and tracking capabilities allow section leaders
to identify noncompliance within a day, often allowing corrective action while a patient is still in the hospital.
• For example, after 40 separate criteria for coronary artery bypass graft (CABG) procedures were embedded within the
system, compliance with all 40 criteria increased from 59 percent to 99 percent, infection rates declined by 21 percent, and
readmissions fell by 44 percent.
• (This is a fantastic result – and a primary outcome of a very good BI system – SB)
• Data on costs need not be supplied on a daily basis, but quarterly or annual cost reports are not sufficient, especially
in high-volume areas where wide variations in physician preference items can quickly drive overall costs up or down.
• Section leaders need to be able to regularly monitor trends in the cost of supplies and labor on at least a monthly—if not
weekly—basis.
• To the extent that healthcare organizations are exposed to financial risk through a bundled or capitated payment model, the
need for more timely cost reports will intensify.
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Creating a Data Strategy –
Conclusion
• An organization’s ability to deliver timely data will be driven largely by
the degree to which data collection and analysis can be automated.
• As healthcare organizations work to implement electronic health
records and healthcare IT systems, the ability to deploy these systems
to drive timely reporting of quality and cost data should be a priority
from both a clinical and financial perspective.
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Business Intelligence Strategic Objectives
• Hospitals should be constantly rethinking their BI objectives
• Assume that initial BI goals and objectives may have been some operational improvement areas built around labor
management or supply chain management
• It may also have had some applicability towards improvement throughput in some areas that are:
• High variability
• Clinical costs
• Outcomes
• High cost
• High volume
• High revenue
• High defects
• Low satisfaction
• A long-term BI strategic objective should:
• Resolve to keep improving in those areas cited above, and
• Continue to use BI concepts to standardize around Key Performance Indicators (KPIs)
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Principles of Values-Based Healthcare Delivery
• Prevention of illness
• Early detection
• Right diagnosis
• Right treatment to the right patient
• Rapid cycle time of diagnosis and
treatment
• Treatment earlier in the causal chain of
disease
• Less invasive treatment methods
• Fewer complications
• Fewer mistakes and repeats in treatment
• Faster recovery
• More complete recovery
• Greater functionality and less need for long
term care
• Fewer recurrences, relapses, flare ups, or
acute episodes
• Reduced need for ER visits
• Slower disease progression
• Less care induced illness
Quality improvement is the most powerful driver of cost containment and value
improvement, where quality is health outcomes
Better health is the goal, not more treatment
Better health is inherently less expensive than poor health Value-Based Health Care Delivery
Professor Michael E. Porter
Harvard Business School
www.isc.hbs.edu
HBS Health Industry Alumni Conference
October 18, 2012
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Business Intelligence and Strategic Planning
• So, the real question is,
• How do we use BI to move from volume to value and create a data strategy
• Hospital organizations need to make a commitment to BI if they want it to be
successful
• They are a variety of ways that hospital leadership can ensure a successful BI plan
if they first develop a strategic plan
• The next two subsections of this class will delve into hospital strategic plans in the
following manner:
• Ten components of a successful hospital BI Plan and,
• Selecting a BI system in the modern world
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10 Components of a
Successful Hospital BI Strategy Plan – Checklist
1. Define BI for your hospital
A. Just reporting, analytics and dashboards?
B. All of the technical elements, as well?
2. Based on answers in the first component:
A. If just reporting, you need to define linkages, dependencies, overlaps and integration with all of the latter
B. If the latter, then significant technical materials will be needed to be incorporated in the plan, as well
3. Ensure senior business executive commitment and top down mandate.
4. Establish high-level governance offices and roles in the organization
5. Document the current state of your BI environment
6. Envision and propose a target state for what the BI should look like
7. Identify gaps between the current state and the target state
8. Based on the target state requirements and the gaps that need to be closed, build a vendor/technology shortlist, considering potential
multiple vendor co-existence scenarios.
9. Design a road map to close the gaps and achieve the target state
10.Select software vendor(s) and (if necessary) systems integrator
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1. Define BI For Your Hospital
• In your hospital, do you want BI to be:
• Reporting, analytics and dashboards of clinical and financial information, only, or…?
• Also involving the technical elements that allow BI information to flow, such as
• Extracts, Transformations and Loads (ETL),
• Data Warehouses,
• Access Portals,
• Master Data Management (MDM)?
• Another way to think of this is,
• Should the executive leadership team be building a BI strategic plan that only
involves the outputs from BI information, or should the SP also involve the inputs?
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2. What to Do When You Decide If BI is Just
Reporting…Or Much More!
• If the decide that BI is just reporting and monitoring the
• you will need to define, with the technical information
• linkages,
• dependencies,
• overlaps and
• Integration, including coordination with the higher level enterprise architecture efforts
• If you decide that BI does, if fact, involve all the technical elements
that allow for the reporting and monitoring
• Then the organization will be building a much bigger SP, and in doing so, it will
need to incorporate a great degree of technical materials
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Getting Started With A BI Culture
• The business intelligence pioneers profiled in this article share other lessons they have discovered in their journey:
• Do not try to engage physicians in the start-up phase. “During that time, there’s really nothing for anybody to decide. You’re just building data maps and
dictionaries and the basic foundational elements of the warehouse,” says Veltri. “If you put organizational leaders or physicians into this upfront process, they get
bored because there is little progress toward the things they want, such as dashboards or reports.”
• Appoint the right group of people to set priorities, depending on your organization’s needs. At Northeast Georgia, an Enterprise Priority Council is made up of
the system’s vice presidents and medical staff members. “Based on what we are trying to accomplish strategically, they help prioritize the next opportunity,
whether that is developing a new dashboard tool or taking on an improvement project with some technology need,” says Cummings.
• In Denver, clinicians and revenue cycle leaders serve on the Warehouse Advisory Council that sets priorities. “They prioritized colorectal cancer screening as the first
registry that we would build—even over diabetes,” says Veltri. “The primary reason was that a key stakeholder had received a grant to support a colorectal cancer
screening project, which paid for some of the development. Without such a council, IT never would have known that this direction was acceptable to the physicians.”
• Share dashboard data broadly.
• At Hartford Hospital, the chief physicians of every department and every division have access to all the data—as do the nurse managers. “Any nurse who is managing a
floor can go in and look at my physicians and I can go in and look at her floor,” says Lindberg.
• “That allows us to have a conversation on how the different things are impacting one another. We can brainstorm together and come up with good solutions, working as
a collaborative management team.”
• Document how EHR data can be used to drive clinical improvement.
• Because this capability is so new, everyone is a trailblazer, making mistakes as they gain experience. “I would encourage others that want to embrace a program like this
to document the processes and the failures and successes and how we can improve this,” says Smith. “We can all learn from one another as we go forward.”
• Veltri believes business intelligence answers the question: Can hospitals improve quality and charge less for that quality? “The answer is: ‘Yes, Denver Health has
proven this can be accomplished,’” says Veltri. “But the organization must manage the use of quality data, and use this data to make informed decisions based on
data.”
Using Business Intelligence Intelligently, by Lola Butcher
Summer 2012 HFMA Leadership magazine
Publication date: Friday, May 25, 2012
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3. Ensure Senior Leadership Commitment
• If Senior Leadership commitment cannot be obtained, STOP!
• It will not do any good for the organization if the big bosses do not buy-in
• The leadership team commitment will help to ensure that all of the work that needs to be done in developing the BI
tools and techniques will pay-off
• There are several ways to attempt to obtain the BI commitment
• Create a BI Return on Investment (ROI).
• Remind them of the millions of dollars that have been invested in the EMR systems, which is likely to return close to zero
additional dollars on the bottom line.
• It is only with BI outcomes that the EMR investment will pay off
• So build a high level business case
• Show them the kinds of benchmarking that can be utilized to establish competitive advantages
• There are many different types of benchmarks available in the hospital industry that can be used for competitive
purposes
• Clinical benchmarks are obtainable
• Quality benchmarks are obtainable
• Patient satisfaction benchmarks are obtainable
• The required Senior Leadership top down mandate will only work if accountability is attached to the
commitment!
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4. Establish High Level Governance Offices and
Roles in the Organization
• Establish a hierarchy charged with successfully selecting and implementing a BI
strategy
• Select a team leader
• Make ‘live’’ the BI definitions already established in previous steps
• If necessary, develop a BI project management office to move forward strategy
and operations of the BI plan
• Develop BI governance rules for actual actions to take place
• Need standard definitions
• What is a billable visit?
• How are provider incentive payments calculated?
• Need to get clinical and business leader to define
• Communicate
• Monitor
• Retrain
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5. Document the Current State of Your BI
Environment
• Using individuals and systems from the governance offices, determine
• Internal environmental conditions
• What are the elements of a BI Plan that already exist
• Market share analysis
• Product line analysis
• Human resources analysis
• Technology analysis
• Financial analysis
• Medical provider analysis
• Supplier and partner analysis
• External environmental conditions
• Determine what is happening outside the hospital’s four walls, in relation to the BI Plan
• Emerging technologies analysis
• Competitor analysis
• Payer analysis
• Place the analysis and results in perspective
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6. Envision and Propose a Target State for
the BI Environment
• BI Information Technology architecture
• Technical
• Security
• Data Requirements
• Integration (with other applications, processes, portals) architecture
• Information delivery (desktop, portal, mobile, disconnected , etc.)
• BI operational, training, and support requirements
• BI requirements for all:
• Business and IT standards
• Output styles (reporting, ad hoc querying, OLAP, dashboards)
• Roles
• Business roles
• IT roles
• Decision types (strategic vs. operational)
• End-user self-service requirements
• Process requirements
• Multi-healthcare facility requirements
• BI Return on Investment
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7. Identify Gaps Between Current and Target State
• As in traditional strategic plan gap analysis, the hospital organization
needs to
• Determine exactly what they want to achieve
• Why they want to achieve it
• Where they are right now
• Assess internal environmental conditions
• Assess external environmental conditions
• Describe the strategic gap from the desired to the current position in relation
to organizational and environmental variables
• So, that the organization can create action plans to achieve their goals
• Identify competencies and resources needed to close the gap
• Allocate capital and/or operating dollars to each initiative
35

Organizational Assessment
• Just as providers who deliver care directly need to assess the financial implications of clinical intervention, operations staff members need
to assess the clinical implications of their financial decisions.
• To begin moving their organizations toward integration of clinical operational, and financial information, finance leaders should
undertake an organizational assessment.
• Specifically, finance leaders should ask three basic questions:
1. Is my organization ready?
2. How can I prepare my organization for the necessary change?
3. How can I get cross-functional buy-in?
• Before starting the transition, a finance leader should understand where his or her organization currently stands and how ready it is to
embrace the paradigm shift.
1. Are the nurses completely aware of supply costs?
2. Do the organization’s accountants have a baseline understanding of clinical quality?
• This assessment will provide the information needed to identify steps to promote the organization’s readiness for the necessary changes,
such as increasing educational opportunities, providing data at point of care, or simply starting a dialogue with department leaders.
• The assessment also can help the finance leader identify the best way to ensure cross-functional buy in for the change.
What Finance Needs to Know About Using Technology to Improve Value
Sanjaya Kumar, January 3, 2011,
http://www.hfma.org/Templates/InteriorMaster.aspx?id=24368
Reprinted with Permission of HFMA
36

Gap Analysis -
Where Are You, Where Do You Want To Be
• We need to begin by determining what capabilities exist at your
hospital today
• As we do this, let’s review
• Some BI job competencies that the HFMA have identified through focus
groups
• A BI checklist of what is really needed at hospital organizations to minimize
their implementation time and cost and maximize their outcomes
• Then, let’s see what we may need to do to set up the
implementation, and why it needs to be done
37

BI Competencies and Capabilities -
Job Description
BI levels
1. Reporting – data pull
2. Analysis and tracking
3. Consulting – listening to strategic leadership: what do they want to do? Then formulate
the appropriate questions and identify the data perspective to address the questions.
BI
responsibility
level
Organizational
influence
Tasks Professional
responsibility
Decision
Making
Data pull Operational:
tracking
performance to
business goals
Capture,
extracting,
reporting
Formulate data
search
Tools and report
forms
Analysis, track,
monitor
Tie to business
processes
Model Healthcare
processes: -
analytics,
- regulatory,
- patient
processes,
- integrating care
Consulting Strategic: where
do we need to go
Structuring info
for decisions;
formulating the
“next”questions
Synthesize and
Apply
Knowing what
the questions
are/should be
The document is a framework-structure regarding the levels of business intelligence and tasks associated with each of the levels.
This is from the HFMA’s BI Advisory Group discussion in August 2012. The group identified 3 levels of BI responsibility with level 3
[consulting] as the current frontier.
Original
Definition
• Gather
• Store
• Monitor
• Analyze
• Report
• Take action
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Business Intelligence Checklist
Fill Out Back At Your Desk Business Intelligence Capabilities Checklist
Your Your Desired
Level One - Data Pull Current System Future State
Data Mining
How good?
How often?
How useful?
Storage Capacity
Is it big enough?
Response Time
Is it fast enough?
Level Two - Analysis and Reporting
Monitoring
End-user friendly
Finance department friendly
IT friendly
Friendly links for benchmarks and goals
Analyzing
Easy to manipulate for end-users
Easy to manipulate for finance staff
Answers questions you did not know you had
Easy links for benchmarks and goals
Reporting
Easy to set-up
Understandable outcomes for the end-user
Understandable outcomes for the Finance staff
Outcome links for benchmarks and goals
Level Three - Consulting
Helps to make forward-looking decisions
Answers questions you did not know you had
Helps to bridge the gap between actual results and goals
Utilizes outcome links for benchmarks and goals
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Take Away –
BI Request Checklist
Required Questions to be Asked Outcome That Can be
Produced
Benefits That Can Be Derived
1. Is there agreement on what to
measure?
2. Can anything be done to affect
the measure?
3. Are there specific goals or
targets?
4. Are there defined critical
thresholds?
5. Is an upward or downward
trend “better?”
6. Is there such a thing as “too
good?”
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8. Build a Multi-Vendor/Technology Shortlist,
Based on Target State Requirements and the Gaps That
Need to Be Closed
• Determine the vendors and/or technologies that your hospital wants
to review based on the target requirements
• RFI vs. RPQ
• Buy vs. Build
• Outsource vs. Employees
• Software as a Service (SaaS) / Cloud Computing vs. Client Server
• Bandwidth
• Each of these decisions will have a big affect on the success (or
failure) of the Business Intelligence outcomes
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9. Create Action Plans to Close the Gaps
• Design a road map to close the gaps and achieve the target state with:
• A clear understanding of priorities and dependencies
• Strategic and tactical steps (including proofs of concept and prototypes )
• A mix of top-down vs. bottom-up design approaches
• Plans, such as:
• Change management
• Quality Assurance
• Risk management
• Scope management
• Communications
• Now that all the plans and details are in place, you can proceed with building a
detailed BI business case
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10. Select Software Vendors and System Integrators,
If Necessary
• Despite enormous advances in information systems, the process by which most hospitals and health systems
select them has remained virtually unchanged for decades: the “Request For Proposal (RFP)”
• Unfortunately, vendors have learned ways to minimize the value of RFP feature checklists, to where they
little today about system functionality
• A 40+ year Hospital IT management consultant describes a modern selection methodology that replaces the
RFP with
• Scored demos,
• Reviews of vendor user manuals, and
• Mathematically structured reference checking
• This is adapted from articles by:
Vincent Ciotti
Partner, H.I.S. Professionals
A Management Consulting Firm
7 Ave Vista Grande,
PMB 169, Santa Fe, NM;
Telephone: 505/466-4958;
E-Mail: vciotti@hispros.com
43

Selecting a Business Intelligence System
in the Modern World – Check List
1.Develop a Top 10 features list
2.Issue a Request for Price Quotation (RPQ) with a features list
3.Obtain system demonstrations from appropriate software vendors
4.Make phone reference calls
5.Review the user manuals
6.Obtain preliminary costs
7.Produce semi-finalists rankings
8.Go on site visits
9.Engage in contract negotiations
10.Select the system that meets the tests
44

Focusing on BI Analytics is A Key
to the Future of Healthcare Finance
• We know that analytics focus on
• improving operational performance,
• ensuring effective management of operations,
• gaining efficiencies and reacting to surrounding conditions more quickly, and
• projecting the future or trends.
• To differentiate and demonstrate leadership, finance can continue to enrich reporting and analytics aligned with organizational and departmental strategies.
• And we know that investments in people, process improvements, and technology are typically required to help organizations become leaders in the finance
analytics domain.
• Healthcare organizations that believe a new economic model for healthcare payment is coming soon should start developing capabilities to succeed in the new
environment.
• The revenue cycle may never be the same.
• As discussed above, obtaining the greatest strategic value from BI requires the ability to leverage:
• New metrics
• New models
• New methods
• The execution of business strategy is often hampered by a lack of reliable information.
• The uncertainty about issues ranging from the future of healthcare reform legislation to local market transformation adds to the challenge.
• In this environment, gaining continuous market and business insight and acquiring the agility to react quickly are increasingly critical to business success.
Edward J. Giniat, National Healthcare Sector Leader of KPMG
Reprinted with permission of HFMA
45

What Finance Executives Should Do
• What should healthcare finance executives be doing to lead in determining their organization’s BI strategy?
• Finance leaders should be helping their organizations
• define the right KPIs, metrics, and measures for the business,
• understand the operating model and processes required to create an enterprise-wide information culture, and
• change the way they use technology and data to enable this transformation.
• They should recognize the linkage between financial measures and reporting and clinical intelligence for quality measurement,
reporting and clinical decision support, and the role advanced data analytics can play.
• Finance leaders should begin today to design the organizational structure and talent acquisition plans necessary to operate in a risk-
based capitated world.
• New relationships are developing among payers, providers, and suppliers.
• New entrants are changing the game.
• New competencies may be needed to perform many of the functions in an insured environment.
• The opportunity is to find ways to connect disparate data and use them to “do better with less” and on a broader scale.
• In fact, in a recent study, McKinsey Global Institute estimated that using advanced data analytics could save this industry $300
billion (Big Data: The Next Frontier for Innovation, Competition, and Productivity, May 2011).
Edward J. Giniat, National Healthcare Sector Leader of KPMG
Reprinted with permission of HFMA
46

Deploying the BI Strategy –
What BI Tools Are Currently Available?
• Clinical / Financial Reporting
• Scorecard
• Dashboards
• Cost Accounting
• Service Line Reporting
• Labor Management Analysis
• Supply Chain Management Analysis
47

Meanwhile, Numerous New Payment Methodologies
Require the Use of Clinical / Financial Reporting
• A successful provider organization in a value-based environment will need to operate under payment
systems that have moved away from fee-for-service to some form of shared financial risk involving a variety
of upside and downside risk options.
• Among the Pioneer Model, the MSSP and the PGPTD, there appear to be at least eight different payment
models in play, and there are other variations being tried in the private sector.
• At the same time, provider organizations are being required to measure and report outcomes and patient
satisfaction in accordance with a variety of measures, and to be transparent about it.
• Private sector arrangements are adopting these measures as well as others, and new measures are being
developed continuously.
• All of these emerging payment arrangements will demand, and reward, effective clinical and financial
integration among providers across the continuum of care, and punish the failure to do so.
48

Clinical / Financial Integrated Reporting
Simple Pneumonia
BI Tools –
Clinical/Financial
Reporting
Source: INSIGHTS Enterprise Edition, Cost and Clinical Reporting, www.hcillc.com
49

Clinical / Financial Integrated Reporting
Major Joint Replacement - Hips
BI Tools –
Clinical/Financial
Reporting
50

Profitability Analysis –
Top 10 Service Lines Based on Cases
BI Tools –
Service Line
Reporting

Profitability Analysis –
Pulmonary Service Line – DRG Profile
BI Tools –
Service Line
Reporting

Profitability by Physician –
DRG 193 – Simple Pneumonia
BI Tools –
Service Line
Reporting

Cost Accounting Analytics –
Cost Variance Analysis to the Mean
Cost Reduction Increase in Quality
 $872 – Cost Reduction per Case
 19% - Cost Reduction %
 $29,648 – Total Cost Reduction
 27% – Reduction in Re-Admissions
 25% - Increase in Home Discharges
What if 6 of the Top 10 physicians achieved a Direct Variable “cost
per case” equal to the MEAN of their peers?
BI Tools –
Service Line
Reporting

Cost Accounting Analytics –
Cost Variance Analysis to Best Practice
Cost Reduction Increase in Quality
 $2,251 – Cost Reduction per Case
 50% - Cost Reduction %
 $76,534 – Total Cost Reduction
 100% – Reduction in Re-Admissions
 79% - Increase in Home Discharges
What if 6 of the Top 10 physicians achieved a Direct Variable “cost
per case” equal to the BEST PRACTICE of their peers?
BI Tools –
Service Line
Reporting

Overtime Earnings Codes –
Efficiency and Rate Variances
Overtime Earnings Code - Efficiency and Rate Variances
OPERATING ROOM Cost Center
Overtime Earnings Code by Pay Period PP 24
Actual Hours 117.53
Budgeted Hours 179.00
HOURS - Variance (61.47)
HOURS - Efficiency Variance Percentage (52.35%)
Actual Average Hourly Rates 40.57
Budgeted Average Hourly Rates 40.06
RATES – Variance 0.51
RATES - Variance Percentage 1.28%
Actual Total Dollars 7170.00
Budgeted Total Dollars 4768.30
DOLLARS - Variance (2401.70)
DOLLARS - Variance Percentage (50.37%)
BI Tools –
Labor Management
56

Take Away Checklist–
BI Request Checklist
Required Questions to be Asked What Can You Do With
These Outcomes?
What Benefits Can Be Derived With
These Outcomes?
Are you able to calculate these ratios
instantly (10 minutes after your biweekly
labor stops crunching?)
Are you able to instantly calculate this for
every department, at the subdivision,
division, administrative and executive level
rollup?
Are you able to present (report) the results
back to those individuals responsible at the
department, subdivision, division,
administrative and executive levels in a
format allowing them to drill down to the job
code and individual employee levels?
Are you also able to automatically and
instantly generate biweekly labor alerts to
the managers responsible for any non-
compliance, as well as also generating these
alerts to their bosses? 57

Detailed Pay Period Analysis –
Overtime Dollar Amounts and Paid Hours
Total $7,170 .00 179.00
BI Tools –
Labor Management
58

Overtime Actual Trend (to Budget) Analysis
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
H
o
u
r
s
p
e
r
u
n
i
t
s
o
f
s
e
r
v
i
c
e
Operating Room Department - Overtime Trend
Hours Per Units of Service (Productivity)
For the Fiscal Year Ended September 30, 2011
Pay Period 24 Analysis
Acual
Budget
Page  59
BI Tools –
Labor Management

Automated Email Alerts for
Out-of-Compliance Conditions
• In a Low Hanging Fruit environment, department managers and their
bosses will be able to realize real savings through change management
decisions.
• Again, this can be done through a series of Excel spreadsheet analysis or
much more easily and timely through commercially available software
Page  60
ALERT
October 14, 2014
Total Salaries per Workload Unit – Major High
Has created a Major High Alert
Data Date: October 14, 2014
Projected: 22.50
Actual: 25.00
Difference: 10.0%

Class Survey
• Do you have a BI strategic plan?
• If so, does it include many/most of the plan steps described in the class?
• Have you developed a formal plan to select a new BI system?
• If not, is it because,
• You already have a system
• You just completed an acquisition of a new system
• Using formal plans is not what your organization does?
61

Action Items
• Make sure that you have a BI system, with essential skills, that allows the hospital
to understand:
• Cost of adverse events
• Margin impact of readmissions
• Cost of waste in care process
• Develop a BI strategic plan, if you have not already done so, that ensures the
organization will be able to optimize many of its clinical/financial integration
processes
• Analyze your hospital’s current tool kit and determine if the hospital is ready to
accept the 21st century tools necessary for improved financial, operational and
strategic outcomes in a value-based world
62

Conclusions
• Operating a hospital is tough!
• In the new era of the ACA, moving from volume based leadership to value based leadership will test the
skills and resources of the hospital organization
• Finding the value is not hard, but it is a process
• While the HFMA has been in the forefront of developing programs describing for its hospitals how to move
for volume to value, it is still up to the hospital organizations to create action plans and then implement
those action plans
• For hospitals to take full advantage of its opportunities, the organization must
• Develop very good strategic plans,
• Make use that the plans are carried out
• Use the (favorable) outcomes of the plans to make good improvement decisions for
• Quality indicators
• Clinical outcomes
• Financial performance
• Do it, use it, improve it, claim it
• It is all up to you!
63

Developing a Hospital Business Intelligence Strategy

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