The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

Connecting CEO Compensation to Hospital Quality Measures

By Jean Chenoweth/Friday, January 24, 2014
Jean Chenoweth imageHeavy media coverage about the size of the compensation packages of some major health system CEOs has led to calls for “pay for performance” and greater transparency. Behind much of this uproar are two key drivers.   The first is the growing interest of legislators like Senator Charles Grassley, Chair of the  Senate Finance Committee and Governor Cuomo of New York state to convert hospitals from not-for-profit 501©(3) status to taxable entities. The second is the national demand for higher value in healthcare. Media focus on byzantine hospitals billing practices has led to spotlights on multi-million dollar pay packages for CEOs of not-for-profit hospitals, and the general public has responded with concerns

In a recent article in ACO News, "Hospital pay now at risk for CEOs," Jean Chenoweth, noted the relatively new trend of hospital boards using performance metrics to determine CEO compensation. If this becomes a standard practice, this will align the performance metrics required of physicians with those of executive leadership. Through the 100 Top Hospitals® program, Truven Health is developing performance benchmarks that will be one of the tools available to hospital boards for determining CEO compensation packages. The Balanced Scorecard consists of 10 measures across four domains: quality, efficiency, finance and consumer assessment of care identifies top performing hospitals. The benchmarks include diverse quality and financial matrices to help manage complex health systems and hospitals.

For more information about the 100 Top Hospitals program, please visit 100tophospitals.com. 

Jean Chenoweth
Senior Vice President, Performance Improvement and 100 Top Hospitals

Elements of a Big Data Strategy

By Brian O’Sullivan/Monday, January 6, 2014
Brian O' Sullivan imageA recent article in Healthcare Informatics discussed how the University of California Irvine Medical Center (UCI Medical Center) is applying big data technologies to reduce avoidable readmissions, enable new research projects, and track patient vital statistics in real time. At Truven Health, we see these technologies as enablers to help our customers realize their goals for improving care. The technology itself is one aspect of a multi-faceted program to realize value from your data assets. These elements include data governance, data operations, infrastructure, data management and applications, and analytics to engage your community.

A well defined data governance program will allow your organization to realize value from the myriad and potentially disconnected data sets you are collecting. Master data management, defined business rules and metadata standards all enable downstream analytics. Data quality is paramount in any sophisticated data intelligence program. It is critical to establish a foundation of trust in the data.

The nuts and bolts of data operations may seem mundane, but when you’re responsible for petabytes of data, especially HIPAA-regulated healthcare data, you can’t afford to ignore the basics. Security and privacy requirements, systems management, data access, government regulations, encryption and where necessary, data obfuscation and de-identification, are all daily operational necessities that will need attention.

A variety of infrastructure options are available in the market today. When choosing one, take into consideration the level of control you need, where your strengths lie, and where your focus needs to be. Options include public cloud offerings, “build your own” environments from the ground up, and hybrid models, such as managed service environments that provide full featured platform capabilities.

Data management is at the heart of any big data strategy. Hadoop is the “big data” software technology and has become an enterprise-grade solution for data processing and enabling advanced analytics to be applied to even the largest data assets. There are a number of available distributions of this open-source software platform Truven Health has implemented the distribution from Hortonworks. Truven Health Unify™, built on Hadoop, brings clinical and administrative data together, makes it uniform, and then applies advanced analytical methodologies.

Software solutions then enable your organization to realize value from this integrated and analytically sound data asset. User-centric solutions, such as data visualization and workflow applications, engage your community of practitioners, providers, payers, and patients to change behavior and adopt new practices. By establishing a data asset as a trustworthy foundation, objective views of performance and practices can be developed and a data-driven agenda can be pursued.

Brian O’Sullivan
VP, Technology Strategy and Enterprise Architecture

No Going Back to the $20 Office Visit

By Michael L. Taylor/Thursday, January 2, 2014
Mike Taylor imageWhen I started my private medical practice, I priced an office visit at $20, because that was the prevailing rate in my town. I really had no idea of my cost structure, patient volume, or even practice viability. As we grew to a five physician practice, we updated our charges annually without any projections of the effect of the price increase. My patients had no interest in the cost of healthcare, and often requested unnecessary tests, knowing insurance would cover the cost. The hospital where I admitted patients had a sign in the emergency department listing the prices of various tests. That was price transparency in the early 1980s – very little transparency, very little understanding, and even less interest.

Fast forward to 2014 – the cost of healthcare is approaching 19% of GDP in the U.S., and we are all aware that per capita healthcare costs in the U.S. are more than twice the average of OECD countries. Payers have tried for years to control healthcare spending:

  • Employers started by including deductibles and co-pays in benefit plans. They tried HMOs, utilization review to limit services, disease and case management to control high-cost claimants, and wellness programs to decrease the need for services.
  • High-deductible health plans started several years ago, shifting more of the cost to consumers, and now payers are looking to exchanges to cap their portion of the healthcare spend.
  • Efforts by the Centers for Medicare & Medicaid Services (CMS) to control costs led to the sustainable growth rate (SGR) concept and to DRG-based payment in the inpatient environment. Now CMS is looking at bundled payments in both inpatient and outpatient settings.
  • Medicaid managed care plans are growing, and evidence suggests they may be cost effective for the Medicaid population.

Today, many plans require consumers to pay 25-30% of the cost so it’s not surprising that they are becoming very interested in healthcare costs. Consumers want to know the cost of suggested tests and treatments, and are starting to ask questions about the need for services.

Uwe Reinhardt, a well known and respected health economist, has noted the need for price transparency, and I would point out that transparency is becoming important not just for consumers, but also for hospitals and payers. Employers are not willing to continue writing “blank checks” without knowing what they are getting for the money. They view health benefits as an investment in workers, and want information about the price, but more importantly, about the value of their investment. Some employers are studying the idea of narrow networks to improve value, and hospitals are watching this move carefully as they begin to compete on value. The changes brought by the Affordable Care Act are accelerating the trend toward value.

At Truven Health, we have long recognized the need for, and support the notion of, price transparency. To serve this need, we have developed tools to help consumers. Our Informed Enrollment tool gathers a patient’s most recent year’s actual claims, inputs the elements of available benefit plans, and helps estimate the patient cost of each plan. The Truven Health Treatment Cost Calculator loads actual price data from the Truven Health MarketScan® database, and allows the user to compare prices based on actual data, not estimates. As an example, if I wanted to see the price of an MRI in my city, I could go to the Treatment Cost Calculator to learn the cost, location, and, when available, the relative quality of each option. I can even get directions. Both these tools use the patient’s real data, not estimates or models.

As the U.S. migrates from a fee-for-service environment to a value-based approach, health system and hospital costs and quality are being publicly measured and compared. As patients, we should be able to see the prices. As employers, we need to understand the cost. Price transparency is here to stay, and this is driving change for doctors, hospitals, the government, and all of us. There is no going back to the $20 office visit.

Michael L. Taylor, MD, FACP
Chief Medical Officer