In this fast-changing healthcare environment, better outcomes and improving financial
performance hinge on the ability to gain insight from data. Any organization, regardless of current capabilities can benefit from becoming more analytical over time. Healthcare analytics is rapidly evolving by making extensive use of data (statistical & qualitative) and predictive modeling. There is an overwhelming amount of digital data available through point-of-care encounters, medical claims, pharmacy claims, lab values, biometrics, financial reporting, and others. The insight from this data combined with medical guidelines reveal (i) gaps-in-care & care-alerts, (ii) opportunities for cost savings, (iii) best practices, and (iv) ability to mitigate operational risk.
Many financial/business-oriented systems are now concentrating on solutions dealing with clinical data. The emerging integrated clinical/financial analytical systems combine traditional sources (e.g., general ledger, HR, cost accounting, and claims/revenue data) with rich clinical data from providers. The appeal to integrate detailed data sets into an analytics system is triggered by healthcare reform requiring public report cards and pay-for-performance initiatives, which includes health platforms’ focus on performance metrics and management. Data is also the catalyst for payment reform. The fee-for-service payment model is shifting to outcome-based payment that is linked to provider and member performance and satisfaction ratings.
Gartner predicts that many care delivery organizations, particularly larger ones, will self-develop their own data warehouse systems, with some external support from solution architects, professional services firms, and/or application vendors. This large and eclectic vendor landscape includes consulting, product, and platform vendors. The growing demand for healthcare analytics is attracting many vendors in the following categories:
Compliance Decision Management: InfoStrength, MediRegs/Wolters Kluwer, Quantros, TractManager, Verge Solutions, etc. Consulting Services: Accenture, ACS, CSC, Dell Services, Deloitte, IBM, InfoSys, SAP Business Objects, Teradata, etc.
Healthcare analytics improve the competitive market position, profitability, resource use, cost-effectiveness, quality and customer stickiness. Given that this industry landscape provides leading key performance indicators, they trade, relatively speaking, at healthy multiples. Public companies trade at median revenue and EBITDA multiples of 3.9x and 14x, respectively; while precedent M&A transactions have been sold at median revenue and EBITDA multiples of 3.7x and 15x, respectively (sources: Capital IQ and 451 Group). The application of analytical tools is expanding within the healthcare marketplace, as more data is available digitally, resulting in solutions that benefit the clinical and financial aspect of healthcare constituents. As a final note, it’s difficult to triage the problem if you can’t see the problem.
Zeke Navar is a Principal at Covington Associates. He can be reached at 617-314-3950 or znavar@covllc.com.
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