Measuring Population Health Management Return on Investment

Transcription

1 Measuring Population Health Management Return on Investment September 2017 Careful planning and collaboration with stakeholders sets the foundation for Measuring ROI (Return-on-Investment) of a PHM (Population Health Management) program. There is a great deal of interest among health centers, primary care associations and health center controlled networks of the advantages associated with investing in a Population Health Management electronic platform. Measuring specific and quantifiable returns clarifies the benefits and supports a consistent understanding among stakeholders of the value of PHM. Measuring benefit and ROI of a PHM program carries the potential to influence decisions, accelerate care, and enhance quality at lower cost. It is the confluence of people, processes, and technology that will enable us to realize value, and build a business case for investing in these activities. This document outlines a process for measurement of ROI of a population health management system offered at the network level. What is presented here could also be used a starting point for developing an ROI analysis at the organizational level. Each stage is an opportunity to quantifiably measure progress in both formative and summative terms. In the proposed process for measurement of ROI outlined in this document, each generation or iteration of measurement will yield increasingly sophisticated and complete results. Measures to include Complete measurement of ROI should include not only shared savings from effective management of chronic disease, but also, the differences realized in moving from higher-cost utilization of services to lower-cost utilization. Total, direct and indirect costs are factored into the equation. Ultimately, there are several primary sources to draw data from in the data collection process. It should also be recognized that this is an evolutionary plan for a process that may look differently at the end, from when it began. Timeframe for measurement Organizations just starting to implement a PHM system should consider the appropriate timeframe for measurement. In developing the measurement process, it is important to recognize that this is an iterative process that will span a 3 to 4 year timeframe. During that time, stakeholders engage in a multistage process of infrastructure building, training, population definition, care model development, data collection and analysis. Service Line & Support Program Costs Impact Analysis ROI Calculation CHC Engagement Alignment & Priorities Control & Refine 3 years 2 years Cohort 1 Start 6 months 1 year Cohort 2 Start Page 1 of 5

2 Review and understanding of data The process is not only iterative, but it is developmental in nature. Therefore, even though a cohort of health centers may begin participation in a PHM initiative simultaneously, they may each be at a different level of understanding and sophistication in their ability to engage in the ROI process. As such, in building toward full ROI calculation, there are many ways of measuring benefit along the way. In order to facilitate the process described in this document, we have provided the companion resource, PHM ROI Matrix Tool. This provides data identification, tracking, and accountability characteristics, and allows for adaptability to the PHM program. As analytical findings are applied, it measures ROI from the perspective of the health center. The PHM ROI Matrix Tool is intended to walk a health center through a process of developing the ability to measure benefit in basic, intermediate, or advanced terms. The Tool provides recommendations for measurement in Years 1, 2, and 3, to support analysis of ROI at different stages of PHM system implementation. On this continuum, various metrics are applied and the depth of data required for each level of measurement varies. In some cases, measurement of benefit will be isolated to the use of the Bureau of Primary Health Care Uniform Data Set (BPHC UDS). Ideally however, at the end of Year 2, the health center is moving toward calculating full ROI. Plan Components All stakeholders, including providers and patients, will gain from the PHM effort. Therefore, procuring relevant baseline and formative data from each stakeholder is crucial. The PHM ROI Matrix Tool helps establish accountability, required data, methodology, and timing for procuring meaningful data. It is the aim of the PHM ROI Matrix Tool to enable each stakeholder to participate in an aggregate (network level) and/or single (health center-specific) ROI calculation. Such stratification allows success to be measured in multiple ways. For each stage of ROI measurement (Basic, Intermediate, and Advanced) there are the following sections of the plan: Goals Objectives Measures Responsible Party/Parties Begin / End (Data Collection) Identifying primary sources for these data elements is an important first task in developing the ROI calculation. In addition, there may be intermediate calculations needed before aggregate figures are used for the final calculation of ROI. An example includes securing claims payment data from partner health plans related to emergency, or inpatient care. Another includes careful tracking of internal expenses related to personnel, equipment, etc. The numbers yielded through this process will enable intermediate calculations leading to calculating ROI. Worksheets accommodating these intermediate calculations are either provided or referenced in the PHM ROI Matrix Tool. A centralized data validation function can help ensure that data are complete, relevant, and accurate. As health centers progress in sophistication with their PHM initiative, incorporating advanced or predictive analytics will enable them to implement solutions before issues occur, hence improving ROI. Ensuring data systems are in place to accommodate these calculations will be critical. Since the overarching goal is to measure benefit, it is important to recognize that there are many examples of how benefit may be measured. This tool provides a starting place for thinking through the various categories of benefit, and identifying measures that may be useful for each category. However, users should feel free to adapt components and metrics to meet their needs. Clearly defined decisions and/or KPIs (Key Performance Indicators) will dictate the data collected. Understanding the data and their appropriateness to decision support, will also guide the data preparation phase before initial modeling begins. The primary categories to assess benefit within the PHM ROI Matrix Tool, are as follows: Financial and Clinical Measures There are many financial and clinical measure standards available in the healthcare industry today. Measures of interest will be state and local specific based on the priorities for measurement by state Medicaid, Accountable Care Organizations, and other federal and local grant initiatives. HRSA financial performance measures focus on quality of care, and health outcomes. As such, the PHM ROI Matrix Tool takes the user through a process that includes Basic (Year 1 and 2) infrastructure building and cost data gathering related to specific care models. The exercise provides the health center and the PCA the opportunity to meet HRSA expectations in calculating Total Cost per Total Patient, and Medical Cost per Medical Visit. But the PHM ROI Matrix Tool also begins the process of gathering critical cost data in a methodical way in support of the ROI calculation. Using the UDS as a starting point, the PHM System performance can be assessed on several levels. Other sample measures have been provided in the PHM ROI Matrix Tool. Developing consensus on the measures that are most relevant to health centers is a first hurdle in laying out the analysis. Page 2 of 5

3 The ROI calculation includes a comparison of the cost of care at a higher-cost utilization, to lower-cost utilization services as one objective of the PHM. The data elements necessary to complete this component of the ROI analysis are addressed below, under Financial Calculation of ROI. Patient Satisfaction Consumer Assessment of Healthcare Providers (CAHPS) is the healthcare industry standard that focuses on how a patient perceives their encounter experience with providers. Regardless of the metrics used to measure patient satisfaction, providers must recognize that engaging people in care solutions is critical. For this reason incorporating patient satisfaction data into the ROI analysis will ensure a holistic view of the impact of the PHM. Provider/User Satisfaction Measuring provider and stakeholder user satisfaction with the PHM is an important intermediary and long-term measure of value. Gathering this information through an internal survey or auto-evaluation of the applicability, and ease of use of the PHM system will provide access to insights that are integral to process improvement, as well as communicating the value of the system. Informatics PHM initiatives offer an opportunity to apply another dimension of analysis to both clinical and business data. ROI analysts should consider this particular utility to improve information for decision making in coordination and delivery of care, and in measuring ROI. tremendous potential for accelerating care to the patient, and impacting clinical outcomes in a positive way at less cost. Measuring such benefits by applying the ROI calculation will help support the expansion of such technologies to population health management. Financial Calculation of ROI Quantifying the impact of a PHM program is ultimately done in economic terms. To this end, there are distinct components that are required to effectively complete this calculation. Measuring changes in expenses to run the program as well as revenues received will be at the foundation of the ROI calculation. The PHM ROI Matrix Tool enables users to collect these data to facilitate this calculation. Therefore, in order to achieve a ROI calculation organizations will need to include the following in the data collection process: Start-up Costs of the PHM operation Ongoing costs of the PHM operation Savings, and benefits of the PHM intervention in managing disease Drilling down on data using micro-analytic approaches have been effectively used to reveal scales of importance to patients. Application of Likert Scales and Thematic Analysis may convert qualitative data to quantitative data for analysis. One approach to using advanced technology includes the application of text analytics. Such application takes structured and unstructured data and transforms these data to quantitative formats. In so doing, there are many independent variables not routinely found in electronic medical records that may be mined and modeled using statistical algorithms. Such advanced applications, carry Page 3 of 5

4 PHM ROI Matrix Tool The tool consists of a series of checklists and worksheets that enable the user to reach a point of calculating ROI. The Tool also allows the user to apply other clinical and financial measures (i.e., BPHC - UDS) before reaching the point of calculating ROI as another means of measuring progress. As such, formative evaluation occurs before a health center reaches the point of calculating ROI. Following is a description of each Tab on the tool: Tab 1: Instructions This sheet provides the user with an overview of the PHM ROI Matrix Tool. It also provides an orientation to the various components of the Tool with descriptions for each. This sheet provides a reference to the Annual Milestones (Year 1, 2, and 3) in the developmental process for a health center seeking to measure benefit and calculate ROI for PHM. Each milestone has also been categorized as Basic, Intermediate and an Advanced level of complexity associated with measuring progress and benefit on the road to measuring ROI. Tab 2: Health Center Engagement This sheet is intended as a start-up PHM initiative (Year 1) milestone. The health center has declared its commitment to participate in the PHM initiative and is making early investments toward participation. They are working with the Primary Care Association (PCA) to achieve the goals identified in the matrix. This includes the identification of: Electronic Health Records (EHRs), Tracking Tools, Workflows, and Accounting System Capabilities Target Population(s) of Focus Care Models Consistent with Disparities by Area Chronic Disease Management and Care Transition Programs Such crosspollination of ideas and tools will enable the network to not only inventory, but also secure best practices. There is also the technical integration of systems that begins at this stage of development. Of particular importance is to ensure there is flexibility in the chart of accounts in the cost accounting system. Inflexible chart of accounts will make the calculation of ROI difficult for health centers. Tab 3: Alignment and Priorities In Years 1 to 2 there begins the process of identifying priorities that are integral to measuring benefit. To this end, users will begin to align the methodologies and the measures. These goals are emphasized: Enhance Patient/Family Satisfaction/Collaboration Enhance User Satisfaction with Data Systems Targeted Cost Reduction of Care Tab 4: Control and Refine In Year 2, there is emphasis on formalizing greater control in quality of data, and the systems that are integral to measuring benefit accurately. There is also an establishment of technical support for users in the initiative. Such support systems are integral to ensuring consistency and an acceleration of movement toward improvement overall. Hence the areas of emphasis include: Establish Data/ Information Governance Structure/Function Establish Internal Processes to Implement Data Systems Integral to Measurement Establish Technical Assistance and Training Support Establish Data Quality Assurance Systems Tab 5: Network Level Service Line and Support Year 3 moves toward greater consistency and sophistication in network provider reimbursements. In some cases, providers at health centers may have entered into some level of performance incentives, and in others, perhaps not. In addition, an alignment of provider incentives to upstream third party payer contracts begins to take place. This stage of development also represents an opportunity for health centers to ensure the readiness of data to calculate ROI in financial terms. As such, health centers and PCAs must engage in meaningful and productive communication. This is particularly critical as the parties seek to implement advanced analytics, where clear definition of KPIs and key business decision definition is of utmost importance. In some cases, data may require special handling and preparation in order to apply against particular algorithms. As in the case of machine learning algorithms for example, normalization, and balancing data may be required. Areas of emphasis include: Inventory Provider Reimbursements Align Provider Reimbursements Calculate ROI (High Cost and Low Cost Utilization) Advanced Analytics Common Metrics for Comparative Analysis Improve Quality and Service Metrics Page 4 of 5

5 Tab 6: Program Costs This is the first of three calculation worksheets. As can be noted, the methodology that follows will result in a financial calculation of ROI. This sheet enables the user to aggregate costs association with start-up and operation of the program. It is important that start-up costs are isolated to the period before implementation of the PHM initiative. After implementation, operating costs are applied to the first year of operation of the initiative. Total costs will be carried to Tab 8, ROI Calculator. Tab 7: Impact Analysis The Impact Analysis worksheet provides summary data on program costs and utilization. First, organizations begin to aggregate costs for services provided by outside provider contractors. It is important to recognize that this section of the tool does not include costs to a health center employed providers as these have already been captured under Program Costs. Second, this worksheet enables users to run two key comparisons. These are Pre-PHM Initiative Costs vs. Post Initiative Costs, and Lower-Cost Types of Utilization versus Higher-Cost Types of Utilization. As can be noted in the worksheet, once these costs have been aggregated, they are carried over to the ROI Calculator in Tab 8. Tab 8: ROI Calculator This worksheet factors in Total Estimated Revenue, and draws together Program Costs, with Claims Paid as represented in the Impact Analysis worksheet. As the following formula is applied, the user will arrive on the ROI. The example provided does not include hypothetical data beyond Year 1 of operation, however it is recommended that such annual trending be applied once implemented. In fact, at minimum, a quarterly, preferably monthly calculation of ROI will enable stakeholders the opportunity to closely monitor progress once implemented. Definitions Total Estimated Revenue: An estimate of the revenue received for services provided by the health center. It is recommended that revenue be consistently represented (accrual vs. cash basis) as this model is implemented. Before Initiative Costs: Costs associated with direct provision of the initiative. This includes Payroll, equipment, materials, software, hardware, etc. Personnel expense includes direct employees and contractors. After Initiative Costs: Costs associated with direct provision of the initiative. This includes Payroll, equipment, materials, software, hardware, etc. Personnel costs include direct employees and contractors. Paid Claims: Claims paid to external providers for services. This may be as a result of obligations to contractors in risk-bearing contracts with third-party payers. These costs may be incurred both before and after initiative. Lower-Cost Utilization: This includes primary care services; pharmacy, skilled nursing services, lab, and radiology, wellness visits. Higher-Cost Utilization: This includes inpatient and emergency room (ER), diagnostic radiology, specialty care, etc. Program Costs: Costs associated with development and operation of the program. These are costs incurred before and after the initiative. Such costs are provider incentives, payroll, equipment, materials, software, hardware, etc. ROI Formula Before Initiative Costs - After Initiative Costs = Net Total Savings Net Total Savings + Total Estimated Revenue Program Costs = ROI This resource was developed through the efforts of Mark S. Rivera of Managed Care Consulting, Inc./MCC Analytics and the Michigan Primary Care Association. This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number U30CS29366 titled Training and Technical Assistance National Cooperative Agreements (NCAs) for grant amount $500,000. This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. Government. Page 5 of 5