Business Intelligence in the Face of the Healthcare Volume-to-Value Shift
The US healthcare industry is changing its business model. Up to this point, healthcare has competed on providers and volume, while most other industries compete on customers and value. This is beginning to change. As healthcare continues to shift from volume to value, healthcare business intelligence (BI) must anticipate and adapt as well.
The current realities in healthcare have led the industry to change. Research demonstrates that current healthcare costs are an upside-down pyramid. 25% of the population—the chronically ill and at-risk—represents 80% of healthcare costs due to overutilization, noncompliance, complications and repeat care. Of that group, the most ill—those referred to as polychronic—is only 5% of the population, yet they represent 45% of all healthcare costs in this country. With these statistics, the current provider-centric business model driven by volume and fee-for-services is proving to be non-sustainable.
In a 2012 whitepaper, “The Volume-To-Value Revolution,” published by the firm Oliver Wyman, the authors predicted changes coming to healthcare in three waves:
- A shift to patient-centered care and population-health management
- A shift to consumer engagement with healthcare becoming like a retail consumer market
- A shift of innovation focus to the science of prevention
These fundamental changes to the healthcare industry will have a profound impact on the way the industry does business. Healthcare players that make the move from volume to value will need data and analytics to chart the path into largely uncharted territory. For example, in value-based healthcare, payments for services are more closely related to patient outcomes than in the conventional volume-based model. Thus, analytics of patient quality of life outcomes (both actual and perceptual) must be interwoven into cost reduction and service effectiveness key performance indicators.
In anticipation of the volume-to-value shift, healthcare BI can get ahead of the curve.
- Bring patient-centric BI to the forefront.
Patient-centric care needs patient-centric data and analytics. Healthcare companies shifting from volume-to-value will align resources to meet the needs of different patient segments (from the healthy to those with multiple chronic diseases) while reducing per-person spending in each category. Master data, predictive variables and performance metrics will vary by segment. Companies will use data and analytics to eliminate low-value add activities. To understand the values of activities, BI must move away from the transactional patient visit view and towards integration of data from other sources, including: therapy, social work, nutrition counseling, and fitness training.
- Leverage consumer engagement big data.
With healthcare shifting from volume to value, its players will want to know how patients care about the health services they receive as much as Amazon cares about how customers feel about its products and services. Prepare for healthcare companies to embrace big data and begin to compete on price, value and outcomes. Healthcare big data will focus on patient behavior and loyalty. Patients want to receive good value for their money and know that the provider cares about their outcomes. Healthcare organizations can use big data to improve and personalize patients’ experience, analyze and shape patients’ feedback and opinions, and segment and profile patients based on behavior.
- Prepare for the data science of prevention.
The aforementioned whitepaper and other sources predict that many of the healthcare innovations over the next 10 years will be information-based. Prevention is the ultimate goal of the value-based healthcare business proposition. Thus, expect data science to focus on it. Predictive models will be the source for new preventative care models of the future instead of trial-based research. Healthcare companies competing on value will want to be first out of the gate with innovative care that yields cost-saving value before their competitors catch on. Data science will be their competitive advantage.
Volume-to-value is considered by some to be the competitive differentiator in healthcare over the next 10 years. Healthcare innovators are developing operational solutions to implement value-based payment and insurance models. Innovative healthcare BI can help break down institutional barriers by demonstrating in the data how value-based models decrease overproduction in services and make healthcare more profitable for companies and affordable for consumers.
Disclaimer: This post was brought to you by IBM for Midsize Business and opinions are my own. To read more on this topic, visit IBM’s Midsize Insider. Dedicated to providing businesses with expertise, solutions and tools that are specific to small and midsized companies, the Midsize Business program provides businesses with the materials and knowledge they need to become engines of a smarter planet.