Creating a Healthier Future asked Tina Foster, vice president of business advisor services in McKesson’s Connected Care & Analytics division, about the connection between advanced data analytics and administrative and clinical variation.

Tina Foster
Tina Foster, VP, Business Advisor Services, McKesson Connected Care & Analytics

CAHF:What’s the connection between cost and administrative and clinical variation?
FOSTER: Unexplained variations in patient care represent at least $179 billion in additional healthcare spending annually without a corresponding difference in clinical outcomes, according to a 2013 study by the New England Healthcare Institute.

A separate study from the Health Care Advisory Board said most hospitals could identify physician practice variations that could add as much as 3 percent to their annual operating costs.

On the administrative side, a lot of what we’re seeing in variation stems from the brisk pace of healthcare merger and acquisition activity that results in pieces of the same healthcare system not using the same policies and procedures or following the best practices of one of their own component parts.

Add to that the variation we’re seeing from physician alignment strategies, including practice acquisitions and affiliations. All of that unnecessarily increases operating costs. These are not insignificant numbers, especially at a time when many hospital executives are seeking ways to shave as much as 30 percent off their cost of doing business in order to effectively adapt to new model of payment based on value or performance.

CAHF: Where along the delivering and financing of a patient care episode is administrative and clinical variation most pronounced?
FOSTER: The Advisory Board study said that as much as 80 percent of the additional clinical costs from variations in practices could be traced to an average of 16 percent of a hospital’s medical staff. It’s reasonable to assume that this small pool of doctors isn’t purposefully driving up expenses and, in fact, is most likely unaware of the situation.

The same is likely true of executives and administrators who like physicians fully believe that they are following best practices and doing the most cost-effective job they can without jeopardizing patient care. The numbers, though, say otherwise. You can find a lot of unnecessary costs from clinical variation simply in the area of diagnostic testing where repeat tests are performed because of a lack of knowledge of the same test being done on the same patient earlier in an episode of care.

On the administrative side, you can find a lot of unnecessary costs from duplicate systems that exist in many parts of the same healthcare system because of mergers, acquisitions or simply not eliminating the old way of doing something when a new way comes about.

CAHF: How do advanced data analytics identify those variations and enable providers to act on them?
FOSTER: A critical success factor in identifying, addressing and achieving cost savings from reducing clinical and administrative variation is transforming our analysts into true analysts who provide credible and actionable business intelligence to committed stakeholders. With that intelligence, the stakeholders can act on that information while the patient is receiving care or, better yet, before a costly episode of care even starts, avoiding those expenses altogether.

Being able to unify data into a single source of truth that delivers business intelligence to providers is key to enabling them to minimize clinical and administrative variations and, therefore, reduce costs. Advanced analytics can support this through the amalgamation of disparate data sources; transformative business logic to identify patterns, variations and opportunities; and, more importantly, support the hardwiring of results with workflow enablers.

Have your own question for Tina?Attend an expert chat with Tina at HIMSS14 in Orlando.