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Four Keys to Sustainable Margin Improvement


As the healthcare industry manages through the COVID-19 pandemic and continues the transition to value-based care, health systems are looking for additional opportunities to improve margin.

Healthcare delivery relies on margin, but unfortunately, many providers live on slim ones. According to studies, about a quarter of total healthcare spending in the United States is waste, with failure of care delivery and care coordination accounting for $130 to $240 billion. Recognizing these realities, providers are making valiant efforts to standardize care delivery – but are doing so while facing the rise of numerous disruptors, including health plans, private-equity firms and shifting patient preferences.

Despite this constantly evolving landscape, leading health systems have found a margin improvement approach – and a partnership – that works.

The model that’s driving results is technology-enabled and clinically integrated. A clinically focused approach that’s built on business intelligence and a technology ecosystem:

  • Better integrates margin improvement activities throughout the entire operational structure – ensuring quality is not sacrificed for margin.
  • Drives process in workforce, supply chain, throughput and revenue design.
  • Sources the opportunities that are most impactful, both from a margin and quality perspective.
  • Ties data to opportunity areas, offering a framework to maintain the positive changes and continually advance results.

Here is how a technology-enabled, clinically integrated approach drives long-term success in providers’ margin improvement efforts.

1. It focuses on the clinical operating model to drive quality improvements.

Providers need insight into full cost to build a long-term strategy. And since we’re in a clinical business, margin improvement has to be built around clinical variation. A complete outcomes analysis must tie quality to revenue.

When margin improvement goes hand-in-hand with quality, changes are value driven as opposed to cost driven. For example, an evaluation of physician preference items should examine an implant not only by price, but by best price and the downstream impact on readmissions and critical care needs. Enabled with quality information, providers can partner closely with physicians to drive variation out.

Additionally, providers are able to sustain margin improvement by strategically incorporating the forces surrounding the clinical operating model. This encompasses population health initiatives, payer challenges, competition moving into the market, services shifting to outpatient and more.

2. It uses robust data analytics to transform data into actionable business intelligence.

Provider organizations that unpack their clinical operating models are often flooded with data. To avoid being data rich and information poor, they need the capability to transform the data into actionable, meaningful intelligence that identifies opportunities and creates a roadmap to improvement.

To solve for this – and ensure data enables intelligence and not ignorance – leading providers leverage advanced analytics and business intelligence that derives from a vast repository of hospital data.

Premier’s database, for example, includes 100 billion data points on clinical, financial and operational performance from all major facets of the healthcare ecosystem. Robust analytics generate the insights needed for providers to easily compare both internal and external performance to shape strong decision-making.

3. It brings in industry leaders to put all the pieces together.

After identifying existing variation within clinical operating models, providers need to strategically design performance improvement initiatives. Healthcare teams accelerate their results by partnering with industry leaders who specialize in the areas of clinical transformation and margin improvement.

Experts can mold business intelligence into a user-friendly platform, creating a customized framework that incorporates all of a provider’s data and benchmarks it against billions of data points. With robust analytics, providers can easily compare both internal and external performance to shape strong decision-making.

4. It yields a customized business intelligence asset that is built to ensure long-term sustainability.

After redesigning their clinical operating models, leveraging advanced analytics and implementing improvement initiatives, organizations must have a plan in place to sustain changes.

With Premier’s partnership, healthcare organizations can ensure long-term improvements by hardwiring changes via technology and cloud-based cascading dashboards. A “control tower” strategy offers an enterprise view of total system performance, down to the individual practitioner level, so that systems have a single, data-driven look into their operations. This allows health systems to see the entire ecosystem of care delivered to patients to pinpoint opportunities and prioritize specific changes.

This approach also integrates quality outcomes, workforce information, operational performance metrics and additional relevant insights into the electronic health record. Subsequently, physicians are empowered with customized technology that will continue to succeed well past the initial effort.

Driving Toward Stronger Financial Health

Providers ready to move to the next level of margin improvement are committing to removing clinical variation and hardwiring effective practices. In today’s environment, providers do themselves a disservice if they’re working without accurate and timely insights that are proven to drive better, safer care and ensure financial sustainability.

With the right data to fuel actionable business intelligence and a clinically integrated model, providers can achieve sustainable improvement.

Premier’s experts are ready to modernize your team’s margin structure and care delivery by way of greater efficiencies, better data-driven outcomes and stronger financial health.

Learn More

This article originally ran in Becker's on March 16, 2021.

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