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The New Rules of Margin Improvement

Challenges often accelerate innovation—and in the era of COVID-19, the need for system-wide agility, integration and transformation are vital.

The healthcare landscape continues to evolve, and to remain competitive, organizations must find ways to reduce costs without sacrificing quality of care.

With renewed pressure on margins, consumer expectations and the electronic health record morphing into a clinical operations requirement, providers simply cannot rely on a traditional, incremental approach to performance improvement.

They need a transformative process that uses data-driven expertise and technology to improve and sustain the gains.

“I had data. I needed information and insights.”

McLaren Health Care recognizes the importance of improving margin, and at the same time, driving stronger clinical care delivery. The Michigan-based system, which includes 15 hospitals and a 490-member physician network, first engaged Premier in 2018 to coalesce its disparate data sources into a cohesive and accessible analytics infrastructure.

Over the next 18 months, McLaren is partnering with Premier to build a customized technology platform, inclusive of industry-wide benchmarking capabilities, robust business intelligence solutions and rich data analytics. This powerful engine will drive the clinical operating model to reduce clinical variation and unwarranted costs—and enable broader, more meaningful and more sustainable operational improvements.

By shaping its margin improvement plan around the clinical operating model, McLaren will level up its ability to:

  • Merge cost, revenue and clinical data to drill down to the encounter level and enable better benchmarking
  • Evaluate opportunity, inform action and sustain change via a personalized and accessible business intelligence infrastructure
  • Conduct retrospective analysis and forecast operational and clinical metrics
  • Accelerate organizational readiness and transformation into the future

McLaren CFO Dave Mazurkiewicz recently joined the Premier team for a Modern Healthcare webinar to discuss the Premier partnership to date as well as a look ahead at this important clinical redesign and margin improvement work. Check out the webinar here.

Building and sustaining margin improvement requires a technology-enabled and clinically focused approach across the entire organization.

Let’s take a detailed look at the elements central to this strategy:

Integrated Technology

Technology sits at the core of nearly every modern advancement, but true integration of healthcare technology—which hinges on effective management and meaningful interpretation of data analytics across an organization—often remains elusive for health systems.

And yet, integrated technology underpins sustainable performance improvement. It should:

  • Yield unparalleled business intelligence: Leading providers leverage advanced analytics and business intelligence that derive from a vast repository of hospital clinical, operational and financial data, including hospital discharges. Premier’s performance improvement technology, for example, contains data on 45 percent of all U.S. hospital discharges—and allows providers to measure, benchmark and easily compare both internal and external performance to shape strong decision-making. This includes benchmarking clinical and financial outcomes against peer hospitals; identifying care variation; reducing readmissions, complications and mortality; monitoring ongoing quality improvement efforts and resource utilization; and complying with regulatory reporting requirements.
  • Remove information siloes: Strong performance improvement technology offers organizations the capability to connect disparate data sets, including third-party systems, as well as funnel in vendor-agnostic, payer-neutral data. Today’s forward-thinking health systems and hospitals are working with partners to create turnkey, customized data tools and solutions specific to their comprehensive needs. Premier’s Advisory Services team, for example, is creating better-connected and more personalized technology solutions for our members, enabling them to remove siloes. The result? Clinicians, operators and administrators are communicating better, integrating workflows more holistically and optimizing resources in a way that is clear and actionable.
  • Directly tie data to opportunity areas: The combination of performance improvement technologies, clinical expertise, and supply chain analytics and insights enables an organization to understand its opportunities holistically. When performance improvement work is clinically integrated, our experience shows that providers realize greater financial impact, improve the quality of care across facilities, and sustain performance improvement practices that result in lasting, positive change.

Advanced business intelligence and analytics alongside integrated technology empower organizations with data-driven decision making and speed-to-value as a single source of truth.

A Strong Clinical Focus

Health systems that comprehensively review the fundamentals of their clinical operating model—including clinical governance and variation, care delivery models, service line strategy, physician engagement and more—will see deeper and broader improvement in their overall operational functions.

How? A focus on clinical redesign drives deeper and broader improvement in overall operational functions, including:

  • Workforce and physician enterprise
  • Supply chain, purchased services and pharmacy
  • Patient throughput
  • Population health and value-based care strategy
  • Strategic revenue design

Providers that rely on a robust business intelligence and data analytics ecosystem to review their clinical operating model will find that its strength predicates the success of the rest of the organization. This broader view aids organizations in overall quality improvement—weeding out unnecessary or excess services, additional costs and diminished outcomes.

With a strong clinical focus in mind, providers like McLaren and those in Premier’s quality improvement collaborative work together to reduce clinical variation and improve care quality across 37 states. Utilizing this powerhouse suite of integrated benchmarking and analytics tools, they transparently share, measure and scale best practices. In fact, providers using Premier technology score 21% higher in their Overall Hospital Quality Star Ratings and 9% higher in HCAHPS ratings.

A holistic and technology-enabled view of the clinical operating model yields substantial benefits to organizations.

Data-driven insights make patterns evident and best practices real, helping providers achieve meaningful improvement and outcomes.

Managing and improving margins in healthcare is a strategic imperative as the industry navigates a global pandemic and transitions to value-based care and payment models. A common challenge providers encounter when undergoing a transformation initiative is fragmentation, or the inability to connect various departments and teams in a way that gives leaders the tools and insights to transform together.

To overcome this challenge, decision-makers need trusted data analytics, insights and expertise across their ecosystem that are backed by a strong technology platform. Integrated technology combined with a clinically focused approach to transformation enables providers to flourish now and in the future.

Learn more about how Premier’s technology-enabled, clinically integrated approach is transforming care delivery by way of better outcomes and financial health.

This article was originally published in Becker's Hospital Review Oct. 1, 2020.
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