Delivering timely analysis is important in healthcare generally and critically important in acute care.
According to healthcare leaders in the November/December 2019 HeathLeaders Intelligence Report, Investing For the Future: Analytics, AI, and ROI, the top three tactical challenges in performing analytics over the next three years are the need to deliver timely analysis (48%), overcoming insufficient skills in analytics (46%), and insufficient funding in light of other priorities (37%).
Interestingly, analytics technology sourcing and implementation is generally not a problem for respondents, but the human elements of its use, such as skills and staffing, can be.
Delivering timely analysis is especially important in healthcare generally and critically important in acute care.
Todd Stewart, MD, vice president of clinical integrated solutions and clinical informatics at Mercy Technology Services, the IT division of St. Louis–based Mercy, an integrated health system that includes more than 40 hospitals, 900 physician practices and outpatient facilities, and more than 45,000 employees, points out that an additional dimension of this challenge is where the analysis is actually delivered in the workflow.
"The other part to this challenge is the delivery of the actual insight," says Stewart. "If somebody has to go outside of their typical workflow to get it, there is potential for it to be over-looked. As an example, you could have a really great sepsis algorithm that is predicting things perfectly, but if you deliver it out of context or out of the workflow, it's going to be tough to get the impact you need."
Financial constraints also play a role in tactical challenges. Notably, two of the top three tactical challenges are either indirectly or directly related to financial resources—the solution to solving insufficient skills in analytics is further investment in training or adding analytics staff, and insufficient funding in light of other priorities needs no explanation. In addition, the fourth item on the list is insufficient staff, a challenge that also requires financial resources.
Analytics development
Respondents in our HealthLeaders Intelligence Reports (no matter the topic) consistently report that improving quality care and outcomes at their organizations is their No. 1 concern, and this analytics report is no different—62% of them say that clinical best practices is the most promising area of analytics development. Real-time delivery of actionable information (54%) and population health data (44%) complete the list of the top three most promising areas.
To download the full November/December 2019 HealthLeaders Intelligence Report, click here.
A new HealthLeaders Intelligence Report reveals what healthcare executives say are their top difficulties in the use of data analytics.
According to healthcare leaders in the November/December 2019 HeathLeaders Intelligence Report, Investing For the Future: Analytics, AI, and ROI, the top two data-related challenges in performing analytics are integrating internal clinical and financial data (50%) and integrating external clinical and financial data (46%).
In each case, providers must contend with the complex task of merging two unique data streams. Whether those data streams are internal or external appears not to matter—while conventional wisdom says that external data may be more challenging to work with, the survey results suggest both data types are relatively equal.
Notably, dealing with the long-standing problem of establishing/improving EHR interoperability (43%) places third on the list, the same position and response percentage as in our previous analytics survey in September 2017. This demonstrates some of the difficulty this challenge poses for healthcare providers.
At only 3% of respondents, the response for ethical concerns regarding the use of patient genetic data suggests that this particular challenge is off the radar for nearly all respondents. Of course, some of this can be explained by the low overall response rate for using patient genetic data (7%) when conducting patient-related data analytics.
Todd Stewart, MD, vice president of clinical integrated solutions and clinical informatics at Mercy Technology Services, the IT division of St. Louis–based Mercy, an integrated health system that includes more than 40 hospitals, 900 physician practices and outpatient facilities, and more than 45,000 employees, points out a more fundamental ethical concern, and that is with regard to the use of patient data in general.
"As an industry, we currently don't ingest a whole lot of genetic data for analytics," says Stewart. "But I would broaden this issue to include ethical concerns for using patient data of any kind, both internally and externally. At Mercy, we have a great concern about this topic, to the point that we actually have a task force that's been working on it for over a year and a half."
"The question is, how do we ensure the ethical use of patient data, whether it's for internal or external uses? Our mission leaders are working directly with our data management and technical people on this, and it's been an excellent interaction between those groups. Being a religious organization, we need to be especially cognizant of those ethical and religious requirements. So, it goes beyond the use of genetic data because there are substantial ethical concerns about data in general," he says.
To download the full November/December 2019 HealthLeaders Intelligence Report, click here.
AI is still in the early stages of development and application, but modest growth is evident, according to a new HealthLeaders Intelligence Report.
While people and processes are critical in applying analytics to healthcare industry data, the growing use of artifical intelligence (AI) solutions has the potential to change the equation. For now, AI is in the early stages of development and application, and its impact is still playing out.
According to healthcare leaders in the November/December 2019 HealthLeaders Intelligence Report, Investing For the Future: Analytics, AI, and ROI, AI use has been steadily growing, with 22% of respondents saying that their organization uses a software platform that provides an AI capability, up eight percentage points from our previous analytics survey in September 2017.
This modest growth is expected to continue going forward—for example, 31% of respondents say they don't currently have this capability but plan to within the next three years.
On the other hand, AI is not for everybody, and 25% say they don't plan to have this capability. However, this response is 10 percentage points lower than in our previous survey, indicating that fewer respondents are ruling out the use of AI capability at their organizations.
Respondents report that the types of data they use with AI are comparable to analytics use in general—the top three data types on which their organizations currently use or plan to use AI capabilities are clinical data (81%), financial data (72%), and patient data (59%).
AI use across the enterprise
According to Todd Stewart, MD, vice president of clinical integrated solutions and clinical informatics at Mercy Technology Services, the IT division of St. Louis–based Mercy, an integrated health system that includes more than 40 hospitals, 900 physician practices and outpatient facilities, and more than 45,000 employees, Mercy's AI path originated in operations, although the company is shifting its AI strategies and applications so they're not driven by departments, which further fragments information in silos. Instead, AI at Mercy is viewed as a tool to address organizational challenges across the enterprise.
"If you go five to 10 years back at Mercy and look at our pioneering work, advanced analytics came through our supply chain experience and some early partnerships in machine learning," says Stewart. "That work evolved into standardization of medical supplies and then standardization of process, but much more from an operations standpoint. But it became very clear early on that there were significant financial and clinical impacts for that work as well, par-ticularly as Mercy gained insight through analyzing which medical devices were producing the best patient outcomes at the lowest cost. The efforts resulted in saving $33 million in only the first three years while maintaining a high level of quality care."
Note that AI and machine learning are being used across the full scope of the healthcare industry and are not limited to enabling breakthrough, headline-capturing innovations like curing cancer or enabling precision medicine through the use of genomics.
For example, a recent machine learning initiative at Mercy focuses on the fundamental challenge of patients not showing up for their appointments.
"The project was initiated by one of our regional chief operating officers who was trying to improve the problem of patients not showing up for their appointments," says Stewart. "We have a shortage of providers, like everybody else in the industry, and we wanted to make sure that we're using our provider resources as efficiently as possible."
"The initial task was to determine whether we could predict with a reasonably high probability that a given patient was not going to show up for their appointment. Could we, in certain operational circumstances, then do extra things to try to contact that patient to try to ensure that they would show up or get them to reschedule? The project goal was to generate a list of probable no-shows and provide that to the operational people at the local level," he says.
"The MTS data science team analyzed the existing data across many different dimensions and did some complex modeling. And, in the end, they did a really good job at creating a model that runs daily and feeds this information on a regular basis to the local leaders, allowing them to take steps to better ensure that the patients that are scheduled will actually be there."
According to survey respondents, scheduling efficiency improvement is of growing importance. It ranks fourth on the list (30%) of responses for most promising areas of analytics development, and its response is 13 percentage points higher compared with the previous survey, where it was ranked sixth.
To download the full November/December 2019 HealthLeaders Intelligence Report, click here.
Gains from analytics are not only about capturing additional margin. Return on investment for analytics can also be about improving the quality of care, reducing costs, and improving efficiency.
The healthcare industry is being remade in radical new ways through the increasing use of sophisticated analytics and artificial intelligence (AI)/machine learning solutions. Providers and payers alike are ramping up their investments in analytics software and human capital, and for good reason.
According to respondents in the November/December 2019 HealthLeaders Intelligence Report,Investing For the Future: Analytics, AI, and ROI, 85% describe their organizations’ return on investment (ROI) on analytics as either acceptable (41%), good (30%), or very good (14%). Only 16% say that it is either poor (12%) or very poor (4%), an indication of the positive return analytics has provided organizations overall.
Todd Stewart, MD, vice president of clinical integrated solutions and clinical informatics at Mercy Technology Services, the IT division of St. Louis–based Mercy, an integrated health system that includes more than 40 hospitals, 900 physician practices and outpatient facilities, and more than 45,000 employees, points out that while analytics certainly offers the potential of financial rewards, the gains are not only about capturing additional margin. ROI can also be about improving the quality of care, reducing costs, and improving efficiency.
“There are two components to ROI,” says Stewart. “There’s the R and then there’s the I. At Mercy, we have a very large effort working on the "I" part of this, which includes manpower, labor, and financial investment. But the "R" is also really, really important. And that gets to the concept of data as an asset. We do quite a bit of work trying to think through that. How do we define it? How do we define return on data, which is essentially what analytics is?”
“We carefully consider both sides of that equation because we want to maximize our mission to deliver quality care, and we cannot do that without generating margin. However, just as our organization may invest in places that we know we’ll never get a financial return, such as establishing a clinic or maintaining a health facility in a rural community, there are aspects of analytics where we know we’ll never get a positive financial return, but we’re going to do it anyway because it is the right thing to do,” he says.
Analytics investment outlook
The outlook for investment in analytics is quite robust, with almost two-thirds of respondents (63%) in our survey indicating that their organizations plan to increase investments in analytics for the next three years, and more than one-third (35%) saying that investments will stay the same. Only 2% say that their investments in analytics will decrease.
Stewart says that Mercy plans on increasing its investment in analytics over the next few years, but he points out that this covers a range of aspects, not just software licenses and hardware.
“I would say that at Mercy the increase is probably not so much in software licensing or hardware-related things,” says Stewart. “The total spend may even go down on the technology and software side, but we expect to invest a lot more on the people and process side.”
“The technology alone will never deliver the answer. It will always involve people and processes,” he says.
To download the full November/December 2019 HealthLeaders Intelligence Report, click here.
The importance of cultural compatibility is a common theme in any discussion of M&A success or failure, as is establishing a basis for trust between organizations.
When healthcare organizations enter into merger, acquisition, and partnership (M&A) activity and begin the difficult task of performing due diligence, there are no guarantees that a formal agreement will be concluded. There are a number of ways that a potential deal can fall apart, both financially and operationally, and both sides must come to a consensus for a deal to move forward.
According to a recent 2019 HealthLeaders Mergers, Acquisitions, and Partnerships Intelligence Report, on the financial side, respondents say that the top three reasons that an M&A involving their organization was abandoned before or during the due diligence phase are concerns about assumption of liabilities (23%), regulatory issues (22%), and concerns about risk/revenue sharing (20%).
Note that the response for regulatory issues is nine percentage points higher than in last year’s survey, suggesting that recent high M&A activity may be attracting government attention.
On the operational side, respondents indicate the top three reasons that an M&A involving their organization was abandoned before or during the due diligence phase are mistrust between parties (30%), concern about governance (27%), and incompatible cultures (21%). This represents a change in sequence over last year’s survey where the order was incompatible cultures (30%), concern about governance (24%), and concern about operational transition plan (21%).
The importance of cultural compatibility is a common theme in any discussion of M&A success or failure, as is establishing a basis for trust between the two organizations.
Kevin Brown, president and CEO of Piedmont Healthcare, a Georgia-based nonprofit health system with 11 hospitals and nearly 600 locations, and advisor for the HealthLeaders survey, says that it’s critical to do your homework up front on these key issues, and he says not to underestimate their importance or assume that differences can be easily overcome later.
“We do a lot of work on the front end to make sure that it’s going to be a success on the back end,” says Brown. “If we can’t get through the front end, we move on to other opportunities.”
Several results from a recent HealthLeaders survey suggest that M&A activity levels may be on the verge of easing.
While the 2019 HealthLeaders Mergers, Acquisitions, and Partnerships Intelligence Reportfinds that most healthcare respondent organizations experienced positive impacts from their merger, acquisition, and partnership (M&A) activity, high levels for "don't know" responses and mediocre results for increasing quality outcomes leave the door open to an interesting question: Would respondents say their organization would choose to participate again in their most recent M&A activity?
Revealingly, two-thirds (66%) of respondents say that their organization would choose to participate again in its most recent M&A activity, a positive finding given the costs and complexity of such undertakings.
Note, however, that this result is down seven percentage points over last year's survey. In a similar vein, 16% of respondents—double last year's percentage—indicate that they would not choose to participate again.
These data points will be something to watch in subsequent surveys.
Case for softening growth
While the outlook for continued growth in M&A activity appears strong and the majority of survey data suggests several more years of growth, there are a handful of results that suggest that activity levels may be on the verge of easing.
One such example is the survey question that asks about the nature of respondents' most recent M&A activity. While the results show slightly increased activity in acquiring another organization (31%)—up five percentage points over last year—and slightly decreased activity for a contractual relationship, but not M&A (23%)—down six points, the most interesting result is for no activity.
Nearly one-quarter (23%) of respondents say that their organization has had no activity recently, almost double last year's result (12%). Whether this is an indication of some softening in the M&A trend is certainly subject to debate, particularly given the strong data from other questions in the survey related to M&A activity.
Another example of softening is the survey result for cumulative total dollar value of the M&A activity organizations will be exploring over the next three years. Respondents indicate that 55% of the cumulative total dollar value falls below $50 million, and 22% is $50 million and above.
Compared with last year's survey, there appears to be a shift toward lower cumulative total dollar value: the less-than-$50-million range is eight percentage points higher (55% versus 47%) than last year, and the $50 million and more range is eight points lower (22% versus 30%). Translation: respondent M&A budgets appear to be decreasing slightly.
In general, healthcare executive respondents indicate that M&A activity has had a positive financial impact on their organization, with 76% saying that net patient revenue either increased (57%) or remained the same (19%), and only 8% indicating that it decreased. Similarly, 66% say that operating margin either increased (32%) or remained the same (34%), and 17% say that it decreased.
However, survey respondents are less positive about the impact on the cost of providing care, with 59% saying that costs either increased (20%) or remained the same (39%). Viewed another way, a nearly equal percentage say that costs increased (20%) as decreased (21%), which suggests that M&A activity has not always succeeded in the important mission of bringing down costs.
Kevin Brown, president and CEO of Piedmont Healthcare, a Georgia-based nonprofit health system with 11 hospitals and nearly 600 locations, points out that increasing scale through M&A activity doesn't necessarily yield cost efficiencies in every aspect of a healthcare organization, and that the most attractive opportunities are not at the bedside.
"I don't think you get a lot of efficiency from scale directly at the bedside, such as in terms of labor costs. You get efficiency from scale for things like drug costs and eliminating the duplication of expensive services, hardware, and software. The supporting cast for capturing efficiency from increased scale comes from costs that are away from the direct bedside, such as the electronic health record platform or from having a single payroll system that allows you to process payroll at the lowest possible cost," he says.
Clinical impacts
The story for clinical impacts from M&A activity is also promising, with respondents mostly reporting positive views on the impacts their organization experienced after its most recent M&A activity. For example, a greater percentage say that patient readmissions decreased (18%) than increased (8%), although a large percentage (44%) report that this remained the same. And a greater percentage say HCAHPS scores increased (11%) than decreased (6%), although 48% say this remained the same. Lastly, a greater percentage say quality outcomes increased (23%) than decreased (8%). Forty-six percent indicate this remained the same.
For the 8% of respondents who experienced a decrease in quality outcomes and 46% that report this remained the same after an M&A, Brown questions the merit of making this sort of financial commitment. "Why would you do this if you can't improve quality?"
"First and foremost, Piedmont Health's M&A activities focus on care delivery and creating a more integrated product for the communities that we serve. The goal is to have an integrated product where everything is coordinated and connected, and through that we deliver a higher-quality, lower-cost model for our patients," he says.
Another somewhat troubling survey finding for clinical impacts are the high response rates for "don't know." The responses are 30% for patient readmissions, 36% for HCAHPS scores, and 23% for quality outcomes, indicating a disconcerting lack of respondent awareness of these important metrics.
"We look at the approximately 26 metrics associated with the Leapfrog Composite, which allows us to see performance in real time," says Brown. "And we've been able to determine that everybody that has joined the Piedmont family demonstrates improvement in these metrics fairly quickly. And not only that, many of the organizations that join us do some things around quality that are actually better, and we adopt those practices as well."
Despite continued and sometimes unsettling M&A activity in the industry, the fundamental mission of healthcare has not changed.
Merger, acquisition, and partnership (M&A) activity within the healthcare industry shows no sign of diminishing, with nearly all indicators pointing to continued consolidation, according to a 2019 HealthLeaders Mergers, Acquisitions, and Partnerships Intelligence Report. The fundamental need for greater scale, geographic coverage, and increased integration remains unchanged for providers, and this will sustain M&A activity for years to come.
Evidence of the M&A trend's resiliency is found throughout the HealthLeaderssurvey. For example, 91% of respondents expect their organizations' M&A activity to increase (68%) or remain the same (23%) within the next three years, an indication of the trend's depth. Note that only 1% of respondents expect this activity to decrease.
Likewise, 38% of respondents say that their organization's M&A plans for the next 12–18 months consist of exploring potential deals, up six percentage points over last year's survey, and another 35% say that their M&A plans consist of both exploring potential deals and completing deals underway. This means that nearly three-quarters (73%) of respondents will be exploring potential deals during this period.
Megamergers and industry impact
While steady healthcare industry M&A activity has been with us for some time, a series of new and rumored megamergers and partnerships is capturing the headlines these days. This recent M&A movement toward vertical integration involving nontraditional partners suggests that the healthcare industry is undergoing a major transformation, one that will likely alter the landscape in unanticipated ways.
The majority of respondents in our survey say that they expect significant industry impact from these megamergers, led by CVS Health's merger with Aetna (68%), Walmart's potential deal with Humana (57%), and Amazon's partnership with JPMorgan Chase and Berkshire Hathaway (49%). While information regarding the latter two developments is still in short supply, respondents see the potential for large-scale impact.
Faced with such far-reaching and transformative new relationships, what are healthcare providers to do? As things currently stand, even the largest health systems lack the scale to negotiate on equal footing with most insurers, and these new hybrid organizations combine scale, technology, and innovative structures.
However, there is no need for providers to panic—these megamergers are still in the early stages of implementation, and the fundamental mission of healthcare has not changed.
"I don't think people fully understand the real business purpose of this type of activity yet, or what these organizations are trying to get out of their connections," says Kevin Brown, president and CEO of Piedmont Healthcare, a Georgia-based nonprofit health system with 11 hospitals and nearly 600 locations. "Time will tell regarding the impact they will have on the industry landscape and its different segments."
"I haven't spent a lot of time thinking or worrying about these new developments. Generally, I spend my time thinking about what we are doing on a day-to-day basis as an organization to fulfill our mission and take care of the communities we serve. I'm certainly aware of these developments, but it's important not to get distracted from our core purpose," Brown says.
In a recent HealthLeaders research report, respondents achieved a fairly high level of strength where they have redesigned care delivery with the intent of supporting population health management.
Care redesign is an essential component of population health development, and nearly all providers are involved in this activity to some degree or another, according to a 2018 HealthLeaders Media Population Health Survey.
Survey results indicate that the top three delivery of care areas that have been redesigned with the intent of supporting population health management are care management with risk-based patient panels (59%), clinical programs organized by disease state (57%), and telemedicine (51%).
Compared with last year’s survey, the three areas showing the greatest increases in response are telemedicine (51%, up 11 percentage points); care goals, incentives aligned across continuum (44%, up 10 percentage points); and systems to identify gaps in care (48%, up eight percentage points).
The good news is that respondents report having achieved a fairly high level of strength in those areas where they have redesigned the delivery of care with the intent of supporting population health management.
For example, combining responses for very strong and somewhat strong yields the following ranking: clinical programs organized by disease state (64%), care management with risk-based patient panels (62%), and team-based care in patient-centered medical home (55%).
On the other hand, remote monitoring (60%), telemedicine (54%), and care registries organized by disease state (50%) receive the highest responses for combined very weak and somewhat weak responses, an indication that their role in population health is still evolving.
Triple aim goals
Some aspects of developing population health competencies are further along than others, and industry progress in this area is not necessarily linear or uniform in its progression.
As an example, respondents indicate that their organization’s level of strength for population health’s triple aim goals is stronger for improving patient experience of care (79% very strong or somewhat strong combined) than improving the health of populations (63% very strong or somewhat strong combined), and reducing the per capita cost of care (55% very strong or somewhat strong combined).
It is not surprising that reducing the cost of care turns up as the weakest of the triple aim goals—it doesn’t matter whether reducing the cost of care is associated with population health activities or any other healthcare initiative, this particular aspect of healthcare is especially vexing for providers.
And it is likewise not surprising that improving patient experience of care is the strongest aim, given the emphasis that providers and the Centers for Medicare & Medicaid Services currently give patient experience.
“If it were easy, if it was all about waste, we’d have had this thing fixed a long time ago,” says Frank E. Belsito, DO, MMM, chief physician executive, and chief population health officer at Metro Health – University of Michigan Health.
Based in Wyoming, Michigan, and affiliated with University of Michigan Health, Metro Health is an integrated health system that features a 208-bed acute care hospital and numerous outpatient locations throughout western Michigan.
“The problem is, you’re dealing with individuals. Everybody in a global sense can identify what we need to do, but as patients, we all want X, Y, and Z, and we want it now,” he says.
The general trend demonstrates a preference for structures with shared risk in the near term, with a gradual move toward assuming greater downside risk in the longer term.
When it comes to the assumption of risk in population health programs, particularly downside risk, providers continue to proceed with a high degree of caution. The stakes are too high to do otherwise. The general trend demonstrates a preference for structures with shared risk in the near term, with a gradual move toward assuming greater downside risk in the longer term.
For example, in the 2018 HealthLeaders Media Population Health Survey, respondents say that shared savings programs with payers (47%) and bundled payments (46%) are the top two financial risk structures their organizations currently use in caring for an identified population.
These results are nearly identical to last year's survey (48% and 47%, respectively), and are nearly double the results for risk structures with downside risk such as capitation (25%) and shared profit and loss with payers (24%).
The responses for capitation and shared profit and loss arrangements with payers are also almost identical to last year's survey (25% and 23%, respectively), further evidence that respondents are reluctant to assume risk-sharing financial models with downside risk.
Looking to the future
Respondents say that shared savings programs with payers (54%, up seven percentage points) and bundled payments (54%, up eight percentage points) will remain the top financial risk structures their organizations use in caring for an identified population in three years.
However, the biggest gain in response for the results in three years is for shared profit and loss arrangements with payers (41%, up 17 percentage points), which moves to third position on the list of responses, up from fifth currently. This is a clear indication that respondents expect to assume greater financial risk in the next three years.
Frank E. Belsito, DO, MMM, chief physician executive, and chief population health officer at Metro Health – University of Michigan Health in Wyoming, Michigan, agrees and also points out that direct contracting with employers has the second-largest increase in response at 16 percentage points.
"We started doing direct contracting about seven months ago. I think if we can demonstrate consistent price controls for their healthcare costs and keep things reasonable for self-insured businesses and employers, you're going to see those numbers jump further," he says.
Affiliated with University of Michigan Health, Metro Health is an integrated health system that features a 208-bed acute care hospital and numerous outpatient locations throughout western Michigan.
"I believe health systems have to become the disrupters, not the disruptee, if you will. We need to be more disruptive about the care process and around population health," says Belsito.
