The Truven Health Blog

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


Faced with a health system or hospital budget shortfall?

Peer benchmarking could lead to the answer.

By Truven Staff

Tell us if this health system’s challenge sounds familiar: CHRISTUS Trinity Mother Frances Health System, located in Northeast Texas, was facing a staggering potential setback when a number of payer contracts changed. The difference amounted to a $25 million shortfall in their budget’s revenue.

The system’s first reaction might have been to issue an across-the-board expense reduction mandate to make up the budget difference. We all know that can happen a lot in the industry, but it doesn’t always produce the results healthcare organizations need, and quality of care can be impacted.

Instead, this system chose a data-driven, strategic savings approach as the path forward, with an eye on long-term financial independence from these types of shortfalls.

A look at the targeted expenses

Using a comprehensive comparative database, the system was able to benchmark costs, productivity and resource utilization against best-in-class facilities of similar size and demographics.

Leaders identified cost improvement opportunities in areas such as supply, labor costs, length of stay and purchased services — areas where the system was not at the same level as high-performing peers in terms of expenditures.

The benchmarking information from the database was also used as a call to action for staff to find methods of improving processes and cost management. CHRISTUS Trinity Mother Frances leaders formed teams and assigned financial targets. Teams then used the database to answer the question, “If another health system is able to keep supply costs at this level, what can we do to bring our costs to that level with no bearing on our patient care or satisfaction?” The health system also created a dedicated project management office to help guide the process. The results of these efforts (in box below) speak for themselves.

If you’d like more information on how the health system achieved this result, please reach out to us. You can also read the full case study here.



Price Variation with No Discernible Relationship to Quality or Outcomes

By Truven Staff
Mike Taylor imageTina Rosenberg, a highly respected healthcare journalist for the New York Times, recently published a two-part “Opinionator” series on healthcare costs. The second article in the series discussed the Truven Health white paper from 2012 that describes the $36 billion savings opportunity due to price variation among providers. I was pleased to speak with Ms. Rosenberg about the topic, and provide background information for the article.

Our research (and others) has shown price variation based on geographic location, with some areas of the country charging much higher rates than others for similar services—and not demonstrating any significant improvement in quality or outcomes. Our white paper extends the research to show prices also vary within any given market, again without discernible differences in quality. As an example, a hospital charge for a similar procedure may vary by a two-fold difference, based on the discounts negotiated between the payer and the hospital.

Further, the Institute of Medicine (IOM) recently reported even more information on price variation and pointed out the value of price transparency. That paper argues that it would be a mistake for CMS to make significant pricing changes based on geographic principles alone. One of the major data sources? The Truven Health MarketScan® Research Databases, and one of the consultants working with IOM on this paper was our own Teresa Gibson, PhD.

This topic of price transparency helps understand how to improve the quality and decrease the price of healthcare—the stated vision of Truven Health Analytics. This is a tangible example of how we are fulfilling that vision.

Michael L. Taylor, MD FACP
Chief Medical Officer

How will we measure the endpoints for Meaningful Use goals?

By Truven Staff
Michael R. Udwin imageThe goals embodied by Meaningful Use, directed at population and patient health as well as reduced costs, are to be commended.  Of course the challenge lies in the details as providers successfully navigate each of the envisioned Stages, including data acquisition, process management and improved outcomes. 

As the breadth and depth of such information expands how will we determine and more importantly measure best practice?

To date, rating organizations have relied on the combination of administrative billing data, core measures and patient satisfaction scores.  As our goals and data tracking capabilities have evolved, extended measures have been incorporated, including readmissions and 30-day mortality.  Yet, Meaningful Use encompasses both patient and population health.  How shall we assess an organization’s ability to manage care for a community?   

The answer to this question may be close at hand.  The Healthcare Effectiveness Data and Information Set (HEDIS) provides an analytic roadmap to quantifying our nationwide objectives, with broad categories including “Effectiveness of Care”, “Access/Availability of Care”, “Experience of Care”, and “Utilization and Relative Resource Use”.  Such content cuts across multiple aspects of our delivery system, including inpatient and outpatient encounters, preventive care and population health.

So as we embrace the spirit of Meaningful Use and specifically the goals of reducing cost and promoting a healthy patient and population, identifying “wellness” leaders may hinge on the successful integration of traditional and evolving healthcare data sets. By doing so, we may shine a light on those attributes critical to the creation of a vibrant healthy community of tomorrow.

Michael R Udwin, MD, FACOG
Medical Director

Transparency + Accountability

By Truven Staff
Ray Fabius imageI celebrate the efforts of the state of Massachusetts to advance price transparency within health care. With the wide variety of health plan alternatives and benefit designs it has never been easy for consumers to estimate what their out of pocket costs will be before accessing elective care. In many, maybe most cases, the information is not available.

Truven Health data analysis has shown wide and unexplained variation in the cost of the same service within metropolitan service areas - sometimes this variation can be three fold or more, and patients are generally unaware of this. Providing online tools to disclose a price is a good start. Enhancing these tools to allow for price comparisons is the next step. Studies show that tools like our Treatment Cost Calculator have the potential to significantly reduce total health care costs for employers by providing their workers the ability to compare prices.

The ultimate goal should be to offer the patient quality assessments as well as cost comparisons so consumers can select their providers based on value. Then the burden for better outcomes of care shifts at least in part to the consumer who needs to be accountable for evaluating the information available and making the best choice. If they exercise this ability, health care delivery will need to respond with a more healthy marketplace competition previously not seen in the medical industry. Providers will need to pursue the most efficient and effective pathways to attract patients and keep them.

Price transparency is an important step in this necessary direction.
Ray Fabius MD
Chief Medical Officer