Health Care: Measuring What Matters to You

by Alan Probert
Patrick Morrissey, Business Objects

July 16, 2004

In today’s turbulent health care industry, payer organizations need a solution to helpthem better manage business challenges. Enterprise performance management may justbe that solution.

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A Changing Environment

The dramatic changes occurring within the health care industry are throwing
the roles of payer, provider, public, and private organizations into a state
of flux. Clearly, this era of change will provide both opportunities and challenges
as the ecosystem redefines itself. To a large extent, success or failure will
come down to each health care organization’s ability to manage its own performance
and satisfy its customers. This means keeping a close eye on key performance
metrics, reacting quickly to risks and opportunities, and improving customer
service while keeping costs under control.

Business intelligence (BI) technology – reporting, query and analysis, and
performance management tools – can help: Management and executives can gain
a consolidated view of key business metrics and analyze variances or trends
to keep the organization on course; customers can access the information they
need in easy-to-use, Web-based reports.

Enterprise Performance Management: Helping Payers Achieve Their Business Objectives
EPM Defined

Enterprise performance management (EPM) is a slippery term that is difficult
to define. It has a few aliases, such as corporate performance management (CPM)
and business performance management, but what is it and how can it help health
care organizations? Simply put, EPM is a strategic approach to improving business
performance. Gartner Inc., a research and analyst firm, defines EPM as “an umbrella
term that describes the methodologies, metrics, processes, and systems used
to monitor and manage the business performance of an enterprise. CPM is an important
concept: It represents the strategic deployment of business intelligence solutions.”


EPM is made up of three fundamental ingredients: metrics (that represent key
indicators of corporate performance), business intelligence software (designed
for tracking, understanding, and managing performance information) and an underlying
EPM methodology (see Appendix: EPM Revisted).

Figure 1. Key business indicator solution for health care group provides
easy monitoring and trend analysis of 24 business metrics.

EPM and Health Care Organizations

In response to the challenges faced within the health care industry, leading
providers of business intelligence have invested in developing health care EPM
solutions for health care organizations. In doing so they have teamed up with
subject matter experts, from leading system integration firms, to ensure the
solutions track the most appropriate metrics and those metrics can be linked
to top line business strategy and goals. These solutions enable a single coherent
view of what matters to each executive according to their mission and priorities,
regardless of where the data is created or stored, and whether it originates
from inside or outside their organization.

Health care organizations can use dashboard and scorecard solutions to closely
monitor key metrics including profit, revenue, and cost by line of business
or provider to ensure the business stays on track. Membership segmentation and
performance, including trends in member counts, utilization, and health costs,
can also be monitored. Critical measures such as premium and membership changes
can also be managed, by analyzing actual results against planned, and tracking
longer term trends.

Management can be automatically alerted when a result occurs outside a predefined
threshold, by their scorecard or dashboard solutions. They can look into key
metrics for analysis and identify the root cause of changes or problems. Early
diagnoses of a potential problem can mean the difference between a small, contained
reduction in operational efficiency, and a major impact to operating margins.

The Customer Face of Payer Organizations

Health care organizations understand the importance of improving their customer
satisfaction levels. According to McKinsey & Company, 40 percent of consumers
have trouble with customer service; specifically accuracy, speed, and interactions
with representatives. And 40 percent of consumers had problems with claims,
including clarity of communication and accuracy.1

By using business intelligence software, payer organizations can automate the
collection of data and provide answers to customers in simple, easy to understand
formatted reports. Giving customers the ability to track the status of their
own claims speeds up response times, improves customer satisfaction, and reduces
costs. This inevitably drives competitive advantage in the long term.

“Real-time enterprises have the ability to get the right information to the
right person at the right time. Health care payers that establish a real-time
strategy will improve their efficiency, but they must realize this is a short-term
differentiator (one to two years) as the industry becomes commoditized. Health
care organizations that adopt a collaborative model for patient care will improve
profitability by 10 percent by 2007 while maintaining a competitive advantage.”2

CorVel Corporation deployed Crystal Decision’s BI software (now part of Business
Objects Corporation) to improve its service to clients. CorVel Corporation is
a national provider of leadingedge managed care service and solutions. CorVel
applies online communications, a national office network, and advanced information
technology to improve the management of health care in the workers’ compensation,
auto, and disability insurance markets.

“As a critical component to the services we offer our clients, our Crystal
Decisions solution has created a high degree of interest among our more than
1,500 clients, including employers and insurance carriers,” said Gordon Clemons,
president and chairman for CorVel Corporation. “Crystal Decisions’ user-friendly,
online reporting enables CorVel to design reports that allow our clients to
access and focus on high levels of important information on a daily basis. Our
customers use this up-to-the-minute information to make informed decisions and
therefore are able to manage their claims management programs more efficiently.
Using Crystal Decisions has increased our client’s confidence in the services
CorVel provides and improved our market-value.”3

Conclusion

Payer organizations need solutions to help them manage through the business
challenges in today’s turbulent health care industry. Gradually, health care
organizations are building EPM systems and client service applications by deploying
business intelligence software strategically across the enterprise. The cross-functional
discipline of EPM, connecting goals, metrics, and people in a closed-loop process,
drives improved productivity, transparency, and alignment for enhanced performance.
Selfhelp information systems for clients not only improve customer satisfaction
but also reduce cost. Using business intelligence can turn business information
into a strategic asset, enabling payer organizations to manage and improve their
own performance.

Appendix: EPM Revisited

EPM is made up of three fundamental ingredients:

Metrics – EPM can intelligently sort the most important metrics and
indicators from the vast amount of data in an organization to provide focus,
insight, and answers that translate into action. Management can be provided
with up-to-theminute snapshots of key performance indicators in personalized,
Web-based dashboards or scorecards to enable fast, proactive decisions and organizational
agility.

Business intelligence – A manager will often want to know more about
the business dynamics behind key data points: Why are premiums up? Which is
our fastest growing provider? Why are our health costs rising? BI software enables
decision makers to manage by exception, stay informed with alerts, and drill
into data to examine the root cause of business conditions. Critical to any
EPM solution is an integrated, enterprisewide view of data drawn automatically
from various sources – finance, sales, operations, and more – that would otherwise
have to be cherrypicked by hand.

Methodology – A systematic and sustainable means of tracking, measuring,
and improving business performance, applied top-down throughout the enterprise.
The methodology used can help an organization determine which metrics are most
important and define how these metrics should be measured.

The EPM Process

The EPM process is based on the wellestablished business routine of setting
goals then monitoring progress against those goals (see Figure 2).

Figure 2. Healthcare Provider Business Intelligence Portal aligns metrics
and analysis with individual users‘ goals.

Set goals – Executives and management throughout the entire organization
set goals and objectives that then cascade down to drive the daily activities
of individual employees in each department.

Monitor metrics – You can’t manage what you can’t measure. In order
to achieve a goal, you need to measure daily activity in support of goals and
track progress toward results. With scorecards and dashboards, each employee
and department can view the metrics that are important to them and manage to
individual targets (i.e., premiums by region, membership targets, margin, etc.).

Analyze – It is critical to not only know that something is happening,
but to also understand why. A successful EPM approach involves more than monitoring
metrics; it also requires deeper analytic capability to perform root cause analysis
down to the detail level.

Decide – Connecting goals to metrics to people in order to monitor day-to-day
activity results in business transparency and smart decisions at all levels.
All employees will be armed with the information they need to drive activity
and actions in support of high level goals.

Endnotes

1 McKinsey & Company, The Gathering Storm, A Perspective on U.S. Payer Industry
Challenges and Their Strategic Implications, 2002.

2 Gartner Research, Health Care Payer Predictions for 2003, Dec. 11, 2002.

3 Crystal Decisions press release, Aug. 7, 2002.

4 Computerworld, Dec. 2, 2002.

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