Four health data analytics initiatives to implement now

This article originally appeared on Managed Healthcare Executive in January 2016.

When it comes to business, the old adage still rings true: If you can’t measure it, you can’t manage it.

Screen Shot 2016 04 13 at 11.28.01 AM 256x300 Four health data analytics initiatives to implement now Photo

Read more in Vitals health data analytics white paper.

Luckily, in the age of big data there are few things that can’t be measured. Billions of terabytes flowing from nearly every facet of business allow companies to extract meaningful, actionable insights never before possible.

Health plan leaders are increasingly taking their cue from other consumer industry leaders who’ve utilized advanced analytics to optimize key business performance. For insurers the metrics include attracting and retaining members, increasing engagement, improving brand perception and driving down costs, at a time when revenues are being squeezed.

According to Deloitte, U.S. health plans should expect lower revenue margins in 2015 and beyond. Deflated performance can be blamed on several factors. For one, as the kinks get worked out with the Affordable Care Act (ACA), more plans are willing to participate in the exchanges. In fact, about 70 plans joined the market exchanges in 2015. In addition, the ACA also extended coverage through Medicaid, which typically pays less than commercial plans. Rising medical costs, competition from smaller plans and employers eliminating or reducing employee benefits have also chipped away at profits for insurers.

The cumulative effect of these factors is a driver in the recent wave of consolidation hitting the market. But while mergers can certainly increase efficiency and boost market share, innovation will be necessary to compete for consumers in the new market environment.

Using data effectively can help plans define themselves for this new market. Over the coming months and years, the health plans with staying power will be those investing in meaningful, actionable insights that can focus business investments and yield better, faster results.

The power of analytics

While consumerism and transparency have been key themes, few health plans have truly integrated big data analytics into their strategies. That’s a shame, since the insights derived from key metrics have transformed other industries online.

Consider the humble bookstore, as an example of the retail industry’s transformation. Previously, brick and mortar bookstores tracked books that sold well, and those that didn’t. Loyalty programs could connect purchases to individual customers. But beyond that, booksellers couldn’t glean much about their customers.

Then along came Amazon. Not only did Amazon track what customers bought, it could see what customers browsed and how they interacted with the site. They could measure whether promotions or coupons influenced their buying decisions. Using analytics to derive insights into all of that data, Amazon was soon able to build algorithms to predict what customers would like to read next. And those algorithms only performed better each time a customer responded or ignored a recommendation.  In short, through the power of analytics, Amazon eclipsed not just bookstores, but every other retail segment. In fact, in July 2015, it usurped Walmart as the world’s largest retailer.

As fierce competition grips healthcare, insurers need to understand how to leverage complex analytics in order to measure, track, and even predict consumer behavior as the industry shifts from wholesale to retail.  Analytics derived from big data can help health plans better target members, assess risk, drive down costs, contribute to both product and program development and assist in service and retention, all the elements necessary to transform their business.

For members, the path to better value care derived from data insights can start at the point of log-in. Historical site usage, claims data and demographic information can drive meaningful engagement and results at various stages. For networks, data can provide critical information about provider efficacy, giving payers deeper insights needed to craft high-quality networks and contract models.

In truth, nearly every facet of business can be transformed through analytics. Therefore it’s important for senior leaders to focus efforts on initiatives that can be implemented in the short, medium and long term.

Those initiatives can be focused on four key business goals:

1. A clear path to wellness

Payers can encourage members to make lifestyle choices that help them remain healthy, such as proper diet, exercise and preventative care.

For example, if a member has not had a physical within the last year, the plan can message the member to take the appropriate action. Insurers can also message patients to take preventive actions that can impact their well-being. Members with heart-risk can be reminded to take a daily aspirin. Mammogram reminders can be sent annually to women over 40. Smokers can receive information on smoking cessation programs.

2. Chronic disease management

Chronic conditions such as diabetes, heart disease, lung disease, and Alzheimer’s disease take a heavy toll on health. In addition, they cost insurers and the system vast amounts of money. Eighty-six percent of all healthcare spending in 2010 was for people with one or more chronic medical conditions.

Payers can uncover value by encouraging members to take an active role in the cost containment of their chronic conditions. For example, members with a diabetic condition can be identified to ensure they are utilizing lower-cost lab services on a timely basis, and if not, target appropriate messaging. Rheumatoid arthritis sufferers can receive therapy drugs for a fraction of the cost at infusion centers, rather than their local hospital. Predictive modeling can even help plans identify members for disease management programs.

3. Better provider choice

Beyond just helping members find high-quality doctors, health plans can match members to the appropriate medical facility and/or professional. Currently, many members are still unaware of the large price differentials that exist between medical professionals and facilities. Kiplinger’s reported that the hospital visit that averages $1,553 could cost only $200 at an urgent care clinic. Plans can use data analytics to help members identify facilities that can save them money on medical care.

For instance, an MRI at an imaging center could be thousands of dollars less than the same scan at a hospital. In addition, a routine checkup can often be performed by a nurse practitioner, rather than a doctor.

4. High-value networks

Analytics help insurers offer a strong network of affordable, quality providers. For one, insurers can use analytics to understand which providers offer the best value to members.

While procedure costs fall within a certain range, data can help plans identify providers that significantly overcharge for services. At the same time, it can help plans identify treatment patterns through claims to flag providers who aggressively over-treat patients.

Detailed analysis of provider activity enables insurers to decipher claim information, billing patterns and cost trends. In the end, this information can help insurers better negotiate rates and contracts.

And certainly there are opportunities that exist to impact the member experience (most directly with the health plan not the provider) through closer looks at call center and website activity – both providing the health plan the means to improve customer service by better tracking customer and staff behavior.

The future of healthcare has never been more dynamic.  Scale matters, innovation also matters, as it has become clear healthcare will need to answer to the consumer.  While the smartest plans know this all too well and will undoubtedly utilize many strategies to pull ahead, the industry should not overlook the treasure trove of possibility around how to use data to become better stewards of their business for both their members, employees and shareowners.

Rob Graybill is vice president, SmartShopper, at Vitals, a company focused on providing health plans transparency and cash incentive programs to increase consumer engagement, ROI and cost savings among and for its membership.