Why hospitals need to adopt a 'retail mindset' when it comes to analytics

Accountable care demands that data crunching these days be agile to enable quick pivots in strategy, says the director of pharmacy at Rapid City Regional Hospital.
By Mike Miliard
09:03 AM
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The in-house analytics projects at Rapid City Regional Hospital have also shown some interesting findings about costs and opportunities for revenue in their retail approach to their pharmacy operations.

With rising drug costs, value-based care, changes in reimbursement rules and more demanding consumers, there's no shortage of things that can change in a year. That means hospital IT departments need to employ quicker, more agile analytics that enable them to pivot in response to fast-changing conditions. 

And that’s why Dana Darger, who has been director of pharmacy at Rapid City (South Dakota) Regional Hospital for more than 15 years, said healthcare organizations need to think more like stores when it comes to issues of dollars and cents.

"Hospitals have never behaved with what I'll call a retail mindset,” Darger said. “Retail stores can tell you what they make on everything."

About two years ago, Rapid City Regional "emancipated a big chunk of the pharmacy department and a couple other pieces of the organization to create a retail-based organization inside the hospital," Darger explained. "We completely unencumbered them from the hospital machine and said, 'Go behave like a retail organization and let's see what you can do.'

So far? "They're not worried about their expenses anymore, they're worried about their margins. If somebody is looking to see if the drug budget is overspent, they're looking to see if the margin is there to show that was valid and a good buy." 

As healthcare moves inexorably toward value-based reimbursement, entities are going to need to analyze data more quickly and make those retail-type business decisions.

The three watchwords: validate, analyze, utilize.

"You have to validate the data and you have to get smart about what you're going to do with it once you have it. What do you want to do with it?” Darger explained. “What story do you want that data to tell?”

Having more control over data, being able to drill down where and when the pharmacy department decides it needs new insights, has been key to driving value in a timely manner, said Darger, who at the HIMSS Big Data and Healthcare Analytics Forum in San Francisco June 11-12, will discuss common analytics challenges and opportunities such as data validation, staff engagement, workflow, automation and more.

Rapid City’s work with analytics has enabled an array of new discoveries that are pointing the way toward smarter decision-making: "How much money I made on drug X this year, versus how much I made last year," Darger explained. "In the world of pharmacy, we've historically looked only at the expense line – if we can control expenses we can control the bottom line.”

But as more and more of Rapid City’s business moves into the outpatient setting, it's no longer just an expense line, so Darger said they have to look at the revenue and the margin as well.

"As a pharmacist, getting reimbursement data can be very difficult if I have to go through the traditional channels," he added. "You get mired down. Whereas, if we take a different approach, I can get real-time data on reimbursement in that outpatient setting so I can take a true swipe on what the margin is for the business and should I make changes."

The in-house analytics projects have also shown some interesting findings about costs and opportunities for revenue.

"If you look traditionally at the way pharmacy works, pharmacists tend to look at the world as expense-driven," said Darger. "They base things on what drugs cost, rather than what the margin is. We have an outpatient infusion center where we do a lot of IVIG. Our chairs are pretty well booked, we're backed up with patient time.

"The question now is if we're using – pick a drug like zoledronic acid, it's about an hour-long infusion, we don't pay much, it's pretty cheap, the reimbursement is about $60, we'll net about $50 on the drug," he added. "But what I can't tell you right now, if I don't do a data dive, is what is an hour of chair time worth? How much do I make or lose on an hour of chair time?"

There's another drug, called Xgeva, he explained, "which will cost me 20 times what zoledronic acid will cost me – I'm going to make more money on the pharmacy side, but I'm going to give up the revenue for the chair time. Is that a plus or a minus? With our data analytics we can tell you what that hour costs us for the other services for that chair, and what we got paid, and so we can actually calculate a margin for a subcutaneous injection, when the patient will be there for 15 minutes versus that hour-long infusion – what did we net on that across all of the costs?" 

Those are just some of the questions providers like Darger are grappling with, and tapping into analytics to answer. And he offered a note of caution: 

"You also have to be okay with the hypothesis being proven negative," Darger added. "A lot of times, people are trying to get the data to say what they want it to say.  You have to figure out how to let the data tell the story so you can make changes based on it."

Big Data & Healthcare Analytics Forum

The San Francisco forum to focus on utilizing data to make a real impact on costs and care June 13-14.

Twitter: @MikeMiliardHITN
Email the writer: mike.miliard@himssmedia.com