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A Profitability and Cost Management Strategy for Healthcare Providers

Experts from Perficient and Oracle discussed how leveraging advanced analytics to manage population health, develop risk models, and examine clinical outcomes based on cost will enable Accountable Care and improve the quality of care.
Attendees learned how to link strategies to plans and then execute and monitor financial and operational results against goals as we explored:
• How to apply analytics to drive enterprise-wide performance improvement
• An innovative approach to link costing, patient analytics, and variance analysis to productivity management in an Accountable Care Organization
• An overview of Hyperion Profitability & Cost Management (PCM) solution differentiators, including micro costing
• How the PCM solution relates to the Oracle enterprise performance management and enterprise health analytics platforms
• A demonstration of multiple reports and dashboards such as patient-level P&L and revenue and cost margin by payer

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A Profitability and Cost Management Strategy for Healthcare Providers

  1. 1. A Profitability and Cost Management Strategy for Healthcare Providers March 2013
  2. 2. Our SpeakersWilliam Bercik, Director of Healthcare, OracleWilliam has over 25 years’ experience in the healthcare industryand specialized in enterprise applications and technology solutionssince 1992. Mr. Bercik provides specialist product expertise anddevelops and executes solution strategies for the healthcaremarket. Prior to joining Oracle, Mr. Bercik was a former ChiefFinancial Officer of a 350 bed acute care hospital. .Tony Coffman, Director Oracle EPM, PerficientTony has over 7 years of ERP/BI experience in addition to his 9+years of Oracle EPM expertise within Healthcare, Oil & Gas andManufacturing. Tony’s areas of focus are in ProgramManagement/Strategy, Hyperion Planning, HyperionHFM, Hyperion Essbase/BI, and Master Data Management. 2
  3. 3. About PerficientPerficient is a leading information technology consulting firm serving clientsthroughout North America.We help clients implement business-driven technology solutions that integratebusiness processes, improve worker productivity, increase customer loyalty and createa more agile enterprise to better respond to new business opportunities. 3
  4. 4. Perficient Profile• Founded in 1997• Public, NASDAQ: PRFT• 2012 revenue of $327 million• Major market locations throughout North America • Atlanta, Austin, Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Dallas, Denver, Detroit, Fairfax, Houston, Indianapolis, Los Angeles, Minneapolis, New Orleans, Philadelphia, San Francisco, Northern California, Southern California, St. Louis and Toronto• Global delivery centers in China, Europe and India• ~2,000 colleagues• Dedicated solution practices• ~85% repeat business rate• Alliance partnerships with major technology vendors• Multiple vendor/industry technology and growth awards 4
  5. 5. Market Position Key Differentiators As compared to local boutiques:Project size, Breadth of Expertise • Bring solutions expertise & capital • Deep technology expertise • Disciplined project execution • Scale to handle large projects As compared to large integrators: • Highly experienced consultants • Local and national delivery model Depth of Expertise, Efficiency & Value, • Collaborative, not take-over Client Importance • Better value 5
  6. 6. Our Solutions ExpertiseBusiness Solutions Technology Solutions• Business Intelligence • Business Integration/SOA• Business Process Management • Cloud Services• Customer Experience and CRM • Commerce• Enterprise Performance Management • Content Management• Enterprise Resource Planning • Custom Application Development• Experience Design (XD) • Education• Management Consulting • Information Management • Mobile Platforms • Platform Integration • Portal & Social 6
  7. 7. Healthcare SolutionsAs a leading provider of services in the healthcare industry, Perficient has delivered both strategic consulting and advanced technology solutionsto many of the top provider, payor, life science and government healthcare organizations.Perficient Technology Solutions • Top tier partners of IBM, Microsoft and Oracle • Healthcare Analytics / Business Intelligence • Enterprise Performance Management solutions • Master Data Management solutions • Portal design and development • Multi-Sourcing solutionsPerficient Consulting Services • Business value assessment/financial sustainability modeling • Requirements analysis/product selection • Architecture planning and platform selection • Custom solution design and development • Implementation services • Usability testing and user-centered design • Consumer readiness assessments (PEMM) • ICD-10/5010 conversion • Technology enabled process improvement • Business integration • Process/workflow design • Enterprise Application Integration (EAI) 7
  8. 8. Oracle-Perficient Partnership 8
  9. 9. Oracle EPM11+ Year RelationshipWorking closely with Oracle product management to provide feedback forsoftware enhancementsOracle Platinum Partner/Authorized ResellerCertified on the latest Oracle product platforms and technologies, as wellas implementation and migration best practices.Oracle Certified Education PartnerCertified to deliver the official Oracle course curriculum to customers viaonsite training classes. Perficient owns and operates one of the nationalOracle training facilities listed on the Oracle websiteOracle BI/EPM Specialized PartnerCertified by Oracle to deliver and sell the Oracle BI and EPM applications. 9
  10. 10. Select Healthcare Clients 10
  11. 11. Case Study 1 CHALLENGE • Budget cycle lasting 6-8 months • Consolidated financial statements required 24-48 hrs• Ranked #6 Pediatric Hospital by USNWR • Operating target negotiations began after• 1.7B Revenue, 6500+ Employees the budget was finalized• Leader in Neonatology, Pediatric Cardiology, Oncology EPM SOLUTION• “Integrated Delivery System” includes: • Phase I – Core Planning application for •Texas Children’s Health Plan IDS, replacING Peoplesoft EPM / Excel. •Texas Children’s Pediatric Associates Implemented top-down revenue, margin •Texas Children’s Health Centers targets. Deployed enterprise-wide, •Texas Children’s Women’s Specialists driver-based budgeting for revenue, salary, opex. Calendar year forecast updated monthly and self-service management reporting. • Phase II – Planning application for TCPA. Driver-based revenue model. 11
  12. 12. Case Study 1 EFFICIENCY METRIC BEFORE AFTER GAINSVariance Budget vs. Target First Pass First Pass 77%(First Pass) $90M $20MPrep Time (Operating Targets) 12 Hrs 2 Hrs 83%Consolidate Data 24 Hrs 15 Min 99%Budget Season 8 Months 4 Months 50%Cost Avoidance (3 Staff) $225K $0 100% 12
  13. 13. Case Study 2 CHALLENGE • Multiple GL systems including Oracle EBS, Lawson, Yardi, MAS 200, McKesson, Peachtree, and Great Plains. Meditech EMR. • Offline databases and XL models for IC elims, account reconciliation, and ETL • Hyperion Enterprise reaching end-of-lifeChristus Health is a Catholic, not-for-profithealth system comprised of almost 350 SOLUTIONservices and facilities including more than • Replace Enterprise/Ledgerlink with Hyperion50 hospitals and long-term care facilities. • Financial Management and Financial Data QualityRanked among the top ten Catholic health Managementsystems in the United States by size, the • Created financial reporting packages/SVChristus Health system in North Americaincludes facilities in eight US states andMexico. BENEFITS • Common, rationalized financial master data • Automated business logic and performance metrics via HFM rules • Robust web-based architecture for reporting and analysis 13
  14. 14. Transforming HealthcareWith Oracle’s DecisionSupport SolutionWILLIAM BERCIKDirector, Healthcare North America14 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  15. 15. Safe Harbor Statement The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.15 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  16. 16. Performance Management Excellence: The Next Competitive EdgeCompetitiveAdvantage Link strategies to plans and execution, EPM Monitor financial and Historical, Current and Forward operational results against goals, and apply analytics to MANAGEMENT EXCELLENCE Drive enterprise-wide performance improvement. Transactional Systems Historical and Current Data OPERATIONAL EXCELLENCE Time 16 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  17. 17. Defining a Business Decision Support System • A fully integrated business and clinical repository • Gives executives and managers the tools to: • control cost • increase quality • improve productivity • achieve successful clinical outcomes • manage change • plan strategically in an increasingly competitive and volatile health care environmentBusiness Decision Support Systems Clinical Decision Support Systems • Retrospective and prospective • Real-time access (planning) view EDW • Care process and results • Merges clinical and financial orientation information17 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  18. 18. Need for Profitability & Cost Management in Healthcare18 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  19. 19. DSS is Key to Enterprise Management Reporting Executive Quality Physician/Clinical End Users Financial Managed Care Team Management Management Information Information Information Information Information Value Delivered Views Views Views Views Views  Presentation, Personalization Enterprise Portal (Provides a single, secure and integrated point  Access / Authorization of access to reports, content, and applications) Online Analytical Processing Business Intelligence  Pre-Defined Data Cubes (Provides reporting and analytic capabilities  Pre-Defined Reporting across varying levels of granularity and timeliness (e.g., historical, operational, predictive and what-if analysis)  Data Consolidation Data Aggregation and Storage  Historical data (Comprises the data repository of historical details and summary transaction data)  Data Extraction Data Integration  Data Cleansing (Comprises the processing engine to collect, cleanse,  Data Loading transform, and aggregate data from different sources)  Data Sources, Real time data Data Acquisition Revenue Decision (Comprises internal, external, reference, CIS ERP  Certain operational reports Cycle Support and shared sources of data)  Hardware, Software  Network Infrastructure (Comprises the infrastructure platform  Operations to host, maintain and operate the BI solution)19 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  20. 20. Decision Support Systems Help Answer Critical Questions Strategy  In what services do I make money? Lose money? Why? Development  How do my hospitals services compare across the health system?  How can I optimize service location? Should I consolidate services? Capital  What services should I invest capital? What financial return can I expect? Allocation  What incremental ancillary capacity will be affected by additional capital purchases? Revenue Cycle Management  What impact to my bottom line will a rate change create? Can I afford to sign this managed care contract?  What types, how much and where are my denials originating?  Are my payors paying correctly? Timely?  Can I compare my payors profitability and score them?  Am I charging for all the services I am performing? Operations  What is my profitability across service lines by hospital? Improvement  Where should I focus my cost reduction initiatives? How do I track success?  Why are costs for X service increasing, is it labor, supplies or physician practices? How can we decrease these costs?  Are patient care processes following protocols? Why not? Is it physician or patient complexity driven?20 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  21. 21. Hyperion Financial Decision Support Solution Decision Support Analytics tightly integrates cost accounting, contract modeling, patient analytics and performance management through budgeting, flexible variance reporting and productivity management to support data driven decision making and advanced decision tools for forecasting and planning. Decision Support Analytics Cost Accounting Flex Variance Forecasting / Contract Reporting/ Modeling / Productivity Planning Modeling Patient Analytics21 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  22. 22. Key Product Capabilities for Cost Accounting Function Hyperion Financial Decision Support Product will include all of the basic and industry standard capabilities seen in other products along with a series of key differentiators that will take the tool to the next level and provide hospitals with a competitive advantage Cost Accounting Differentiator  Integration of cost accounting with patient analytics, budgeting, and contract modeling ties clinical quality and performance  Ability to use documented activities or supplies for management costing purposes even if they are not charged to the  Cost data is critical for planning , forecasting patient and monitoring function needed to be Industry Standard  Time based standards built from clinical system competitive data capture, e.g., average time per Radiology exam, Recovery Room hours per patient  Actual hours attributed to costing activities through the clinical system interface  Unlimited sub categories for costing  Automated reconciliation between GL amounts,  Flexibility to move dollars across cost centers or inventory, and charge based cost items, e.g., accounts Basic implants, pacemakers, etc.  Automated integration of source system data, thus  Ability to link capital items to specific procedures eliminating the need for extracts and spread non-clinical items in a different way  Ability to define Other Operating Revenue as (e.g., evenly) contra-expenses and link to specific account(s) to  Predefined costing structures that can be easily  Default RVUs using charge, even, or sum of offset other cost types as the RVU customized but reduce implementation and  Process alerts to identify new cost centers, maintenance efforts  Ability to load existing RVUs accounts, job codes  Ability to cost labor data based on day of week  Fixed & variable classifications  Automated update of product listing from the  Change RVU values mid-year for actual costs  Job Code detail for labor charge master with an alert that costing activities  Indirect allocation process need to occur  Costs associated with chargeable activity Core Functions Advanced Functions Designed with newer tools and capabilities22 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  23. 23. Key Product Capabilities for Patient Analytics Patient Analytics Differentiator  Integrates cost accounting, finance, contract modeling and planning  Provides the core set of demographic, coding, utilization, outcomes, billing and collection data Industry Standard  Highly flexible and easy to use reporting tools coupled with advanced BI tools  Integration of physician and other provider data  Drillable Service Line Profit and Loss, DRG/MDC, including: charges, cost and outcomes Basic Payor and Physician Reports  Physician contribution, ACO performance and care  Summarization of department cost routine function continuum quality and cost (i.e. Lab, Rad, OR) for cross facility comparisons  Patient & Physician Level Activity Based P & L and benchmarking  Geographic representations and visualizations  Readmission analysis and reporting (service maps)  Quality and outcomes reporting  Integration with clinical data warehouse, data  Integration of modeled/expected revenue, mining and automated data quality check (i.e. payment experience and other sources of revenue coding errors, lost charges, billing edits) (i.e. Medicare settlements) for net revenue  Automated reporting of clinical quality measures  Cost analysis by DRG, Payor and Physicians including data mining, manual data fields and throughout the revenue cycle  Reporting by clinical population groups, tracking  Integrated reconciliation reports between patient demographic data and services provided  System driven alerts to indicate unmapped data for data, cost accounting and GL  Routine demographic, coding and billing data standard and customized (user specific) grouping  Clinical grouping and event assignment based on tables for all fields fields routine billing and coding data  Integrated coding and grouping tools  User defined population groups based on all  Extension to encounter record (user defined fields) data feeds with description and grouping  Standard and user specific grouping tables for all fields (i.e. MS DRG, Payor/Plan Codes, Age, Zip Codes, etc. Core Functions Advanced Functions Designed with newer tools and capabilities23 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  24. 24. Key Product Capabilities for Budgeting and Flexible Variance Analysis Function Budgeting and Flexible Variance Analysis  Integration of cost accounting with patient analytics, and contract modeling enhances and informs the planning and Differentiator budgeting process  Budgeting and Flexible Variance Analysis are critical parts of the planning  Automated direct care staffing requirements by day and monitoring of performance and key of week, skill level and activity projections initiatives  Smart modeling that creates scenarios to maximize Industry Standard revenue, cost and productivity  Automated modeling of cases based on best practice rather than average for all patients in that sector (e.g., service line)  Ability to generate pricing strategies to maximize  Patient centered revenue, variable cost and net revenue and minimize overall price increases chargeable volume projections integrated with GL  Trend analyses that compares modeled scenarios and labor budgets Basic to prior year actual  Multi-year planning with an ability to apply  Models summarized to facilitate comparison to changes from a point going forward or only to a external benchmarks particular year  Supply flex variance down to the account or product  Flexed variable job codes and accounts based on level  Comparison of budget to actual projected activity levels  Labor flex variance at the job code level with  Flex based on budgeted time and actual  Integrated reporting that combines product level breakdowns by day of week or shift volumes detail impact on accounts or job codes  Rolling twelve months analyses  Separate worked time from non-worked time  Customizable rollup structures to support patient such as vacation, sick and holiday level forecasting  Flex variance by various breakdowns of variable cost categories  Service line variance against budget Core Functions Advanced Functions Designed with newer tools and capabilities24 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  25. 25. Key Product Capabilities for Productivity Management Function Productivity Management  Integration of clinical activities, utilization, cost and outcomes ties staffing decisions to clinical out comes and service cost Differentiator  Standard cost and expected time services (RVUs) built for cost accounting can be leveraged to understand labor resource  Productivity by shift, day of week, resource level demands  Actual time spent by resource accumulated from Industry Standard clinical systems and integrated into decision support productivity tool  Activity based productivity not limited to chargeable items  Productivity statistics automatically imported from billing, clinical, departmental or any combination,  Productivity by subsets of direct patient care job not limited to what is used for costing code groupings (e.g., RN vs. Aide)  Charge-based productivity analyses Basic  Integration of external agency time  Ability to exclude earning codes from productive time, e.g., orientation  Capability to monitor productivity for non-patient  Comparison of budget to actual care or chargeable areas, e.g., laundry, food  Flex based on budgeted time and actual service, etc. volumes  Separate worked time from non-worked time such as vacation, sick and holiday Core Functions Advanced Functions Designed with newer tools and capabilities25 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  26. 26. Enterprise Performance Management COMMON REPORTING AND INTERACTION Strategy Management Planning & Forecasting • Long Range Planning • Net Revenue • Operations and Administrative Expense Management Financial & Operational BI Profitability and Cost • Market Margin Analysis Management • Payer Margin Analysis • Service Level Margins • Labor Productivity • Patient Margins • Encounter Margins ORACLE BUSINESS INTELLIGENCE ENTERPRISE EDITION Data quality and consistent dimensions Data Supply Patient PeopleSoft Files/Excel/XML Business Warehouse Chain Accounting Process26 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  27. 27. Oracle’s Enterprise Performance Management Sets a new bar in cost accounting, modeling & planning27 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  28. 28. Oracle Hyperion Profitability & Cost Mgmt What is HPCM? HPCM enhances business performance by using drivers to create a betterunderstanding of cost and profitability, empowers users with visibility and flexibility, and improves decision making.28 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  29. 29. Oracle Healthcare Analytics & DSS Overview System Architecture Security App Exchange Clinical Systems Patient Cohort Analytics Clinical Systems Operating Room Reporting (EMR 1) Essbase Analytics Tools Ad Hoc Query Exec Oracle Clinical Oracle Healthcare Smart View Extract Interface Healthcare Systems Analytics Data Warehouse Enterprise (EMR 2) Tables Data Integration Foundation Data Marts Performance Crystal Ball Management Admin Workspace Clinical Planning Systems (EMR 3) Cost Accounting OLAP Profitability Data Mining Financial Common Reference Data and Integration Services Clinician Systems OLAP Cubes Predictive Analytics Custom ApplicationsAdministrative Systems Optimization Researcher Partner Applications Research Systems Enterprise Healthcare Data Integration Data Warehouse Model Financial, Clinical Analytics & Reporting Oracle Data Integrator Oracle Database and Essbase Server EPM Shared Services Oracle Business Intelligence Foundation 29 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  30. 30. Potential Hospital Cost flow Application of Services to Patient Episodes30 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  31. 31. Benefits of HPCM Business User-Driven Profitability Modeling Application31 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  32. 32. Case Study: University of Pittsburgh Medical Centers Company Overview Benefits & Value Achieved UPMC is comprised of a network of 20 Hospitals,  Improve assignment of costs based on the actual International Specialty Hospitals and an Insurance drivers of expenses division with over $10B in revenue  Determine a better understanding of the profitability They are the #1 employer in Western PA with of departments, patients and other relevant headquarters in Pittsburgh dimensions (hospital, physician, etc) Need to perform analysis by hospital department and  Automated generation of Customer and Product service and to drill down to individual patient cost Profitability data collection and reports detail  Support of standardized hospital costing Additionally, analysis needed to support standardized  Provided flexible model structure to allow for growth hospital costing and provide underlying cost detail for other payer-provider initiatives 32 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  33. 33. REPORTING AND ANALYSIS33 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  34. 34. Start the Analysis - Financial Summaries34 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  35. 35. Reporting and Analysis on Encounter Margin Models Market Margin Analysis • Volumes • AcuityEncounter/ ServiceProfit Data • Gross Revenue • Net Revenue • Direct Costs • Indirect Costs • Profit Physician Margin Analysis 35 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  36. 36. Balance Scorecard – KPI Alerts36 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  37. 37. 37 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  38. 38. 38 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  39. 39. 39 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  40. 40. 40 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  41. 41. Margin by Department  By Encounter41 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  42. 42. Drill to Encounter42 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  43. 43. Metrics by Payer43 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  44. 44. Rev, Costs, and Patient Days by Physician44 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  45. 45. Encounter Revenue, Cost, & Margin by Payer45 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  46. 46. Patient P&L46 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  47. 47. Visibility and Traceability into Cost Sources47 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.
  48. 48. TONY Work: 713.554.4021WILLIAM Cell: 404.353.685148 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.