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Trisus® Healthcare Intelligence

How can Hospitals Manage the Financial Impact of COVID-19 pandemic?

How is healthcare reacting?

Healthcare organizations are responding with a heightened sense of urgency. At the time of this writing, many are experiencing peak effect of the infection in their communities, while many more are bracing for impact. Preparing for the COVID-19 pandemic to reach a community, while caring for their patients and staff is a monumental task.

However, surviving the COVID-19 crisis for hospitals and health systems will not depend solely on the quality of clinical care. Understanding the financial impact of public health emergencies, like the COVID-19 pandemic, is imperative. This article discusses the key facets of financial operations healthcare leaders need to think about now.

How does this information impact the financial status of a healthcare organization?

This is a complicated question because there are many unknown variables. Simply put, however, when the peak of the COVID-19 pandemic has passed, hospitals and health systems will face negative margins.

Quantifying the impact of COVID-19 on your organization is imperative.

However, surviving the COVID-19 crisis for hospitals and health systems will not depend solely on the quality of clinical care. Understanding the financial impact of public health emergencies, like the COVID-19 pandemic, is imperative. This article discusses the key facets of financial operations healthcare leaders need to think about now.

What are the most important considerations?

It is important to first categorize your patient population by medical condition, and relative volumes, as well as to distinguish between elective (E) and non-elective (non-E) procedures/services for each category. For each of the new groupings of medical condition (E and non-E), it is necessary to understand expected volume case-mix variance through reviewing historical data.

Additionally, you must analyze the variance of relative expenses – direct vs indirect – to understand what could potentially flex down and up.

Lastly, from a resource consumption and cost perspective, consider the skills and training of your employees. Can clinical staff that traditionally manage elective procedures provide patient care in other areas?

How is COVID-19 impacting hospital operations?*

Here’s what we know now

  • Patient Demographics: Elective admissions, both surgical and medical, are being postponed. Approximately 25 to 35% of all hospitalized patients with COVID-19 are requiring treatment in an ICU setting and ventilator support. This parameter is difficult to quantify because it is related to the admission criteria; areas with high COVID-19 infection rates will have an increased percentage.
  • Emergency Departments: EDs represent the first point of contact for all patients that have NOT tested positive for COVID-19. If a patient has previously tested positive, and is currently in quarantine at home, emergency responders are bypassing the ED for direct patient admission.
  • ALOS: the average length of stay (ALOS) for COVID-19 patients that do not require ventilatory support varies, with reports noting 8-10 days if no complications develop. COVID-19 patients in the ICU requiring ventilators have a minimum stay of 15 days.
  • Supplies: Personal Protective Equipment (PPE) and disinfectants, like hand sanitizer, are scarce and in high demand. The WHO and in the U.S., the CDC, have been rapidly ammending recommendations for healthcare professionals caring for COVID-19 as new information about the virus and global availability of PPE is available.
  • Drugs: Pharmacotherapy for COVID-19 continues to evolve. Researchers and doctors continue to pursue an effective regimen.

(*) This information was collected directly from hospital providers and the sole purpose of this data is to provide insights on the potential financial impact (cost/revenue) of COVID-19.

Healthcare Challenges with Reimbursement, Cost, and Margin

The current healthcare market in the US is full of increased mergers and acquisitions, system expansions, sequestration of federal and state funding of Medicare and Medicaid programs, global capitation and bundled care products, consumer pressure for price transparency, and more integrated delivery and finance systems. Knowing the true cost of care, and the margins after reimbursement, is imperative for hospitals to streamline care, reduce costs, increase margins, and improve the outcomes of the care provided to the patient.

Trisus® Healthcare Intelligence goes beyond traditional cost and accounting tools and provides insights into resource consumption on the patient level. These insights enable hospitals to find best practices through a data-driven approach to enable the organization to maximize financial outcomes for the organization and clinical outcomes for the patient.

Track the Patient Journey

Trisus Healthcare Intelligence enables healthcare providers to track the journey of the patient experience from a financial and operational perspective to understand the critical components of resource consumption and expenses across the entire episode of care. Understanding the cost and margin across departments and medical conditions is essential to revealing cost saving opportunities. With powerful visuals, the interactive, dynamic visualizations allow refinement of searches to uncover areas of opportunity and initiate process improvement projects.

Using operational information, combined with an Activity-Based Costing methodology, Trisus Healthcare Intelligence provides insights to drive process improvements to maximize clinical and financial outcomes in the following areas:

Actionable Cost Reduction and Alignment

As healthcare market drivers continue to change, organizations must implement cost reduction initiatives to remain competitive as well as fund capital needs. Without actionable, organizational, and patient-specific data, organizations are forced to implement less sophisticated cost reduction methods that are often imprecise, misguided, and ineffective. Some of these traditional methods include terminating services and applying across-the-board cuts.

Traditional costing models such as ratio of cost to charge (RCC) and relative value units (RVU) do not provide the accuracy to target true cost variation at a patient level, often masking direct cost by blending items into shell categories. The inability to accurately distinguish labor, support, and indirect cost consumption by the patient further dilutes the implications of process variation. Trisus Healthcare Intelligence is specifically designed to accurately and repeatedly identify cost variation at the patient encounter level.

Trisus Healthcare Intelligence aggregates key operational information and associated costs of a patient encounter, highlighting differences in how patients are treated. Detection of patterns across the continuum of care demonstrate variation across physicians, departments, and other resources which can be used to better understand variances in margin. As a result cost cutting initiatives can be specific and measurable, providing a reproducible result to drive culture change and maximization of margin.

Moving Operational Analytics Upstream from Operations

When healthcare organizations are faced with competitive markets, sequestration of government funds, margin pressures, unavailability of capital, and capitation, profit and loss strategies often come into play. In these situations hospital department leaders with profit and loss responsibility can find themselves in “analysis paralysis” from the abundance of data from different systems. Responding to request from finance without clear insight into the resource consumption of their departments can lead to cost cuts of important areas needed for patient care.

Trisus Healthcare Intelligence enables leaders to engage with data discovery on every operational area to find and test hypotheses. Analysis can pinpoint precise situations, patterns, or behaviors that lead to poor margins. With these insights, informed decisions can be made to correct issues that cause poor P&L.

As an advanced analytics decision support solution, Trisus Healthcare Intelligence combines the most accurate known costing methodology with world-class business intelligence. Results deliver actionable insights to hospital finance and administrators in a way clinicians approach patient care, so decisions around margin improvement are informed and in-line with better margins and better patient outcomes.

Cost Variability in Physician Practice

Variations in physician practices can have a major impact on service line profitability and other outcomes in the healthcare environment. Healthcare administrators spend time navigating through multiple software applications to prepare reports to explain variances within their budgets.

Physicians are competitive by nature and respond well to data, especially when the data represents their own patients. Trisus Healthcare Intelligences gives an organization the ability to demonstrate how individual physician practice patterns vary amongst peer groups. Then, practitioners can consider variability and agree onF best practice standards of care which drive the best outcomes and are provided in the most appropriate setting for the lowest cost.

Trisus Healthcare Intelligence provides clear visibility into physician practice patterns by showing resource consumption and reimbursement at the patient encounter level. The solution also provides clarity into whether programs and services are performing according to business case projections. Variances are displayed by resource consumption of the specific departments and cost centers within a patient population, distinguishing specific areas for margin improvement and optimization.

Risk Based Reimbursement and Bundled Payment Models

As the healthcare industry continues to move toward value-based care and away from the fee-for service model, new reimbursement models and bundled payments are increasing in frequency. An understanding of the true cost of an encounter and/or episode of care is necessary for determine risk corridors and profitability.

Directionally correct models which use ratio of cost to charge (RCC) or relative value units (RVU) do not minimize the risk of retrospective paybacks. Hospitals also may not have a system to model financial performance in a risk-based or bundled payment model. Trisus Healthcare Intelligence utilizes patient-level operational data not influenced only by charges.

Trisus Healthcare Intelligence utilizes resource consumption and costs to deliver precise performance monitoring allowing for corrective actions when data shows margin is at risk. The solutions allow an organization to understand its risk corridor and target price so predicting financial outcomes is apparent before entering into a contract. Encounter-based data also identifies cost and performance variations by physicians, so targeted corrective actions to improve performance can take place before risk contracts are executed.

Negotiating with Payors

Continually negotiating with payors is a necessity for healthcare organizations to ensure they continue to care for their patient community served by those payors. Knowing that a contract will not only cover costs, but be profitable instead of a loss of revenue is key to serving the community.

Payors are using advanced analytics and data tools to provide or deny payment, so they understand their negotiating position very well. Trisus Healthcare Intelligence provides operational and financial analysis at the same level as the payors to ensure hospitals are maintaining the necessary revenue margins.

Trisus Healthcare Intelligence ensures payor negotiations are truly profitable by giving hospitals the knowledge of the cost of the service down to the patient encounter level. These financials can be aggregated by insurer, product type, and services. This solution helps you negotiate on the same footing as the payor, enhancing and protecting the revenue from negotiated contracts.

Physician Preference Items and Product Standardization

Supplies and pharmaceuticals are a significant portion of a health system’s operating expenses. Hospitals often scrutinize procurement and vendor management to secure lower costs and favorable contracts. Hospital procurement experts are challenged by cost reductions or standardizing purchasing in a clinician-driven area of preference cards and pick lists. Standardizing at a centralized supply chain level is no longer providing optimal value, without also considering patient outcomes and alignment to physician preference items at the individual patient level.

Trisus Healthcare Intelligence utilizes actual patient, provider, and cost information to deliver precise product performance monitoring that can be aligned with outcomes. Organizations understand how specific patient factors and physician practices impact the outcomes associated with physician preference items, drug therapy, and implantable devices. Associating accurate cost data to product performance and patient outcomes allows for alignment of standardization efforts with procurement practices for optimal margin maximization. Accurate and comprehensive data models provided by Trisus Healthcare Intelligence reduce the risk of purchasing practices based solely upon clinical preference and contracting nuances.

Business Development and Market Growth

Healthcare system mergers, acquisitions, and expansions continue to grow in today’s landscape. Any decisions to invest financially in expansion activity need to be rooted in sound market share data analysis. Growth can also be based on expanding programs and adding new procedures to an existing service location.

Trisus Healthcare Intelligence provides geo-market analysis to assist in determining expanding services lines, understand where patients come from, where patients are being treated, and if service locations and populations are misaligned.

Understanding cost and margin on the patient level allows hospitals to make informed decisions with high confidence such as:

  • Scaling new service lines
  • Expanding programs
  • Adding new procedures
  • Cease existing procedures or programs
  • Physician contracting

Implementation Made Easy

Craneware professionals provide an implementation service for Trisus Healthcare Intelligence ensuring a quick return on investment with ongoing benefits through expert consultation. Our experienced business architects create the data extracts and query scripting specifically for your organization. The data needed for actionable insights is easily retrieved and integrated into the intelligence software so your team easily creates the data visualizations needed to meet your business goals.

The Trisus Healthcare Intelligence team also manages monthly data processing, data modeling, and provision of reports providing an easy-to-use tool accessible on any device, anytime, anywhere.