Never mind the political push-back against the Affordable Care Act (ACA), aka Obamacare, it is steadily proving to be a blessing in disguise for healthcare analytics. Traditionally laggards in implementing information technology (IT) solutions, healthcare companies are now scrambling to incorporate analytics as Obamacare induces a complete rethink of the way the industry operates.
Healthcare expenditures per capita in the U.S., presently 2.4 times higher than that of other developed countries, are estimated to increase 67.9% over the next decade. U.S. healthcare spending is billed at over $2.6 trillion annually. More than half of that is reportedly being wasted, primarily due to unnecessary hospitalizations, redundant tests, operational inefficiency and excessive end-of-life care.
Healthcare organizations today are forced by competitive pressures to provide more cost-efficient, patient-centric outcomes. Increasing regulatory oversight places further focus on accountability in the industry. The cost dynamics of the healthcare industry are gradually shifting, driven by rising incidents of chronic illnesses, infectious diseases and increasing life expectancy. These cumulative factors indicate an urgent need for improved perception of underlying trends, thus forging a path to differentiation.
With healthcare dynamics undergoing a massive transformation, the industry seems to be on the brink of a strategic shift in operations. The survival strategy is likely to be a seamless transition to an efficient, data-based system increasingly driven by value rather than volume. Analytics seems to be the silver lining for the daunting challenges facing the healthcare industry.
Healthcare Analytics to the Rescue
In a world of entrenched inefficiencies and suboptimal clinical outcomes, analytics has the power to pivot and transform the healthcare industry. The sheer abundance of data that overwhelms healthcare companies makes a compelling case for integrating advanced analytics to unlock and apply new insights from available information.
At present, descriptive analytics are extensively used as reporting tools. Descriptive analytics encompasses data visualization, standardized reporting and historic trend analysis. Healthcare companies also need to exploit the dimensions of simulation and scenario analysis to capitalize on information insights, cost efficiencies and thereby achieve targeted revenue growth.
Companies like Xerox Corporation (XRX - Free Report) and Siemens AG early-on realized that data, predictive analytics and modeling could be a significant part of the answer to spiraling costs and eroding quality of healthcare. Siemens’ wide portfolio of performance-driven diagnostics IT solutions provides effective support in diagnosing, monitoring and managing diseases, while its healthcare analytics integrates patient data across the care continuum from prevention and early detection to diagnosis, treatment and aftercare. Xerox, a veteran in text-mining and technology, has been applying healthcare analytics tools for over a decade, winning more that $200 million worth of IT contracts since the ACA was passed.
Even diversified conglomerates like General Electric Co. (GE - Free Report) and 3M Co. (MMM - Free Report) are striving to find pockets of strength amid industry upheaval as evidenced by their recent acquisitions.
GE Healthcare recently bought healthcare workforce analytics firm API Healthcare in order to expand its current Hospital Operations Management (HOM) portfolio, which gives hospitals real-time access to operational data. In order to reduce costs and improve productivity, GE Healthcare intends to optimize asset utilization and workforce alignment, as well as eliminate patient flow bottlenecks. With this acquisition, GE Healthcare is likely to trim hospital operations costs with a mix of real-time data, software, powerful analytics and professional services.
In Feb 2014, 3M acquired leading healthcare data analytics and business intelligence provider, Treo Solutions, to facilitate customers’ access to better, more comprehensive data across the spectrum of patient care. The acquisition is purported to extend real-time data analytics and payment redesign globally. 3M Healthcare delivers intelligent software and consulting services that are used to compile, classify, and analyze health information. The acquisition is expected to expand its horizons and unlock additional value.
Analytics can thus be used to build multidimensional predictive models, reduce costs, improve outcomes and empower patients. With access to better healthcare facilities, aligning pay with performance and trimming costs, analytics holds the power to put healthcare companies back on a strong growth trajectory.
However, the wealth of information that bombards healthcare companies both facilitates and complicates the ability to achieve and influence desirable outcomes. The sheer magnitude of data makes it progressively difficult to differentiate between critical data and clutter. The data paradox – a dilemma presented by too much data and too little insight – is an overwhelming obstacle to creating effective analytics strategies.
Other roadblocks for adoption of analytics include qualms about the quality and integrity of data, ownership of the data and a culture that does not encourage information sharing.
From a traditional base of transaction monitoring using basic reporting tools and spreadsheets, healthcare analytics is steadily progressing toward predictive analytics, which predicts future activities and model scenarios using simulation and forecasting techniques. Predictive analytics has the power to “see the future,” and predict patient behavior, thus generating more personalized healthcare.
In healthcare industry, the blend of advanced analytics and the vast ocean of data is an absolute gold mine. Companies like General Electric and 3M have probably just scratched the surface and are likely to reap huge benefits in future.
However, there is more than just a financial incentive as it involves a matter of life and death.