Introduction
An independent, physician-owned medical practice, with a growing number of patients and excellent name recognition in its community, ACME Physicians has seen its financial performance deteriorate in recent years. Profit margins were shrinking under the double negative forces of rising operating costs and tighter payer fee schedules. Cash levels had been consistently trending down, and something had to be done.
Practice leadership decided to fight and stay independent. “If we’re seeing more patients, why are we making less money?” They put their business minds together and set out to find a way to stop the cash hemorrhage.
What are cash problems a symptom of?
Not being sure whether the root of the problem was on the revenue side, the cost side or both, the physician-owner team went looking for evidence in the most obvious place, the finance office. A review of both receivables and expenses was requested, but in return tens of spreadsheet files were sent back. It quickly became clear that developing an accurate picture of the situation was going to be time-consuming. The finance team was committed to helping but had neither the time nor the advanced skills required to put together the complex reports required to integrate data from multiple sources.
Where could the team go for help? This was going to be an effort demanding a broad set of skills. A Business Analyst to understand the basic economics of the practice, someone with enough data engineering knowledge to either prepare the data in the spreadsheets or replace them with data out of the systems of record. Finally, once the data was in place, the management team would need a variety of reports and visualizations to make sense of it all. And that’s not including the critical time that would need to be spent coordinating the efforts of all those resources. The team also needed a project manager. That felt like creating a new department in the business office, a 5% headcount increase in an 80-people organization.
A fractional data team
A quick search on job websites showed that these were expensive positions to fill on a full-time basis. It was too challenging to find and retain a jack-of-all-trades data nerd. And almost $500K per year to staff a full-time team of 4. The best-known alternative, consulting firms, were charging several hundred dollars an hour to bring a team with the required breadth of skills to help.
ACME Physicians found Managed Analytics Services, a fractional data team offering from LeapFrogBI and wanted to learn more. With Managed Analytics Services, clients can utilize the expertise of multiple specialized data professionals for as much or as little as needed with skills in all sub-disciplines of data work.
The data team in action
A cost-benefit analysis proved this solution to be warranted for ACME Physicians and soon the two teams were kicking off the effort. LeapFrogBI’s Business Analysts showed to ACME that the project should look beyond the current situation and into the future. LeapFrogBI would build an analytical database (a data warehouse) and ACME could use it not only to understand what had happened in the last few years, but also monitor financial and operational performance in the future.
After 2 weeks, the effort to understand the business requirements was complete. The Business Analysts could now reduce their number of hours worked and let the data engineering team build the infrastructure required to process existing CSV files as well as setting up connectors to EHR and PMS systems.
Then, after working full-time for 4 weeks, a Data Engineer released the initial version of the data warehouse. The finance team could already connect to it from Excel, but the executive team expected advanced visualizations to be able to understand more complex data correlations.
At this time LeapFrogBI reduced the presence of the Data Engineer and mobilized two Report Developers to work directly with management in creating the requested data visualizations.
LeapFrogBI completed the initial implementation in 8 weeks.
Accurate data = business value
First, the management team wanted to know what was happening with the revenue. Reports quickly showed that coding productivity had been consistently decreasing. In the healthcare business that’s called charge lag. It took the team longer to submit their claims to payers, directly impacting cash flow. In addition to that, coding quality had also deteriorated. That meant more time spent with payers fixing claim issues and trying to collect payments.
On the expense side, as expected, medical support staff headcount was keeping up with patient growth but at a higher cost per encounter due to higher salary costs.
The most striking finding however, came when the team saw that their efforts to hire more doctors resulted in a lower average of patients seen by doctor. Newer doctors were not as productive as they needed to be to justify the resource expense. ACME decided to slow down its recruiting efforts and work to make existing staff more productive.
Surviving unstable conditions
With the Managed Analytics Services partnership, ACME can now maintain the quality of its data assets by allocating different data skills as needed, when needed. Every change request is approached with the same cycle of business review, development, delivery, validation, and release to production. The team at ACME became familiar with the responsible process which requires minimal project setup time for future data work requests. Going forward, it is important to continuously monitor and maintain ACME’s data solution.
Conclusion
Healthcare providers remain under great economic pressure. In its effort to stay independent, ACME had to make a commitment to financial and operational discipline. The ability to continuously monitor business vital signs became an absolute prerequisite for their success. ACME’s data solution will provide powerful support to their future business decisions.
