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Practice Analytics: Selecting the right tool to measure efficiency of operations and value of care

May 2016

As the healthcare industry continues to change, community-based specialty physician practices are under growing pressure to demonstrate to the purchasers of care (patients, payers, employers, etc.) that they can deliver high-quality healthcare services at an affordable and competitive cost.

To create a clear picture of value, practices need sophisticated software systems that enable them to analyze data and draw measurable conclusions. But not all data analytics platforms are equal.

As practices consider an investment in a data analytics solution, they should carefully weigh their options to ensure that the system they select has the flexibility and interoperability to meet their needs today and in the future.


The U.S. healthcare system is changing in countless complex ways – but perhaps no change is more far-reaching than the move to value-based care. As reimbursement models shift from being volume-based to focusing on achieving the best patient outcomes at the lowest cost, healthcare providers are beginning to make fundamental changes to the management of their practices.

This is particularly true for specialty care providers, who routinely incur significant costs as part of their day-to-day management of patient care. As expectations around value-based care grow, specialty practice leaders will need to clearly demonstrate the quality of care they deliver to those responsible for purchasing—patients, payers and employers—to ensure fair reimbursement.

Of equal importance, as margins become smaller, specialty practices will require the ability to assess and quantify the real costs associated with each aspect of patient treatment—from sites of care, to procedures, to devices and drug therapies—so they can minimize waste and inefficiencies that are a drain on their balance sheet.

To create a clear picture of value, practices must be able to quickly and efficiently harness the data they manage on a daily basis—clinical, financial and operational—and organize it in an understandable and actionable way. Increasingly, specialty practices are recognizing the benefit of data analytics software that can translate raw data into powerful business insights and help practice leaders to make more effective decisions.

The power of analytics

Other industries have routinely relied on business intelligence tools to access and query large quantities of data, but physician practices have not experienced the same pressure to digitize their patient records until recently. With the speed of healthcare’s transformation to new payment models that reward providers for value not volume, today’s practice leaders need to not only understand the economics behind the decisions they are making, they need the ability to demonstrate that the care they are delivering is both high quality and affordable.

When deciding whether to make an investment in data analytics, practice leaders should start by defining the information that is most needed by internal and external stakeholders and identifying the questions that are most critical for the practice to answer. Some examples may include:

  • Am I capturing all of my drug charges? Analytics can provide clarity on how drugs move through the practice – from purchase to utilization and billing – as well as insights on how to improve charge capture.
  • How many outstanding claims and denials do I have? Understanding how and when the practice is being paid is critical. Analytics tools can help identify payers that reimburse quickly and reliably, as well as shed light into what claims are being denied and for what reasons.
  • How large is my patient population for a particular diagnosis? Analysis on the practice’s treatment patterns (by diagnosis, visit, types of services and costs) can help enhance clinical decision making and inform business planning.
  • How are my drug margins changing compared with Medicare Average Sales Price (ASP) and Average Wholesale Price (AWP)? Whether looking across all procedure or NDC codes, or focusing on a single code, practices can use analytics to determine if they are buying at the lowest-cost available, and if they are being fully compensated.
  • How am I getting paid compared to my peers? What are my days to payment? Benchmarking data can help practice leaders to determine whether their compensation is aligned with other specialty practices, and help prepare them to negotiate with payers to maintain or increase reimbursement levels.
  • What steps am I taking to reduce audits? Ongoing assessment of E&M codes helps practices to decrease their risk for a Medicare audit by identifying how physicians are coding office visits compared to the nation, their region and their peers.
  • What services am I providing to specific patient populations? Monitoring procedures and services to specific patient populations helps to standardize practice patterns and reduce variations that may exist, ensuring that services are in compliance with guidelines of care.

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Choosing the right analytics tool

Once practices have defined the information and insights they need, weighing the various analytics tools becomes easier. A wide range of software platforms are available with the functionality to deliver a better understanding of volume, costs and quality, but practice leaders should carefully weigh their options to ensure that the system they select has the flexibility and interoperability to deliver the optimal return on investment—both today and in the future.

A few of the critical questions that should be considered before selecting an analytics tool are.

  • Is my data protected? It may seem elementary, but the security of data should be the first question practice leaders ask when evaluating potential analytics tools. Encryption is always a good measure in making sure data are protected, preventing disclosure of either stored (data-at-rest) or transmitted (data-in-flight) information.
  • How often is my data updated? Getting information sounds so simple, but it can be so hard. Practice leaders need to understand the different types of data sources collected and how often this information is updated. Practices need a system that allows each user to easily get the specific, up-to-date information they need in the desired format.
  • Is the system customizable? Every specialty practice is unique, so it follows that every practice has unique needs when it comes to data analytics. Before making an investment, decision makers should investigate whether the system will allow them to run customized reports around specific data sets that are important to their practice.
  • Are there hidden restrictions? Some analytics platforms may be offered at a low entry cost, but with restrictions. For example, they may require the practices to give up rights to the data ownership or they may have limited interoperability with other systems and tools, thus restricting the ability of practice leaders to partner with their preferred companies. Independent community practices need flexibility because their needs may change over time, so they should opt for tools that do not limit their choices.
  • How does software licensing work? Over the last decade, software licensing models have evolved as hardware costs have declined. While there is no cookie-cutter approach to this discussion, there are some fundamental questions to ask. How long does the software license last? Is it a perpetual license that doesn’t expire or will it expire after a specified period of time? What is the licensing method? Are you limited to a total number of concurrent users or do you have unlimited use? What is the scope of the license? Is it limited to a single location or enterprise wide? Approach the software licensing negotiation process with a look at the long-term benefits and be willing to compromise to ensure successful results.
  • Does the tool include training and support? The value delivered by any analytic tool will be largely dependent on how comfortable the practice staff feels with the software and their proficiency in running reports and pulling data. Basic training services will be included in any tool, but practice leaders should look for one that will provide ongoing training and support over the life of the product.
  • Will the software developer continue to provide updates to the system? The needs of specialty healthcare practices are continuing to evolve. The ideal analytics system is one that will continue to be updated with more sophisticated functionality as technology advances and market dynamics change.

The pace of change within healthcare is accelerating and as it does, specialty practices are going to feel increased pressure to redefine their businesses as the industry redefines value. Having a solid understanding of the performance of their business across all aspects of care and operations will be critical to good decision making. Not all practices will invest in gaining these insights, but those that do will be well positioned to prosper in the years ahead.

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