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Building a Data Analytics Program

Laying the foundation for continuous results-driven improvements in revenue cycle management.

If you know you could improve the financial health of your organization by leveraging analytics, you're not alone: More than two-thirds of healthcare leaders cite data analytics as one of their top three priorities.1

Getting started, however, isn't always easy. In addition to the many tasks competing for your priorities, you're also faced with numerous decisions: What key performance indicators (KPIs) should you monitor to move the needle and get results? Should you implement a data and analytics business solution or just rely on manual efforts? And if you do select technology, what are your criteria?

As you design the ideal data and analytics program for your organization, three steps can help you lay the foundation necessary to achieve the best results:

Determine Scope and Program Parameters

A business intelligence (BI) program for the healthcare revenue cycle can encompass a broad range of goals and related KPIs; therefore, it's easy to create an overly ambitious project plan and become derailed before achieving results.

Determining your scope at the program's onset can help you set expectations, allocate resources and identify measurable milestones as you consider data analytics' potential impact on your organization. For instance, how do you envision various departments and roles within your organization using data and analytics? What reports will they leverage the most and why? What are your goals for business intelligence six months, one year or even five years out?

As you're determining scope, another point to consider is whether you want to evaluate peer-based data in addition to your own organizational data. By leveraging your own data, you can glean a great deal of insight.

Many times, however, peer-based benchmarking data can give you a valuable frame of reference for your organization's performance. As a result of comparing organizations that are similar across size, specialty and geography, for example, you can compare the performance of your organization in critical areas like denial rate and charge lag against your peers. Deciding whether you want to add comparative data to your project plan is critical, as it can help guide your decisions regarding technology and overall project scope.

Develop a Best Practice Implementation Plan

Data and analytics programs can be inherently complex. Applying best practices in project management can help you adhere to your timeframe and budget-and most of all, ensure you achieve your goals:

Identify an executive sponsor. The sponsor should be an organizational leader who can truly drive the BI vision. Ideally, this person will be passionate about the value of metrics and have the mantra, "You can't manage what you can't measure."

Designate a BI champion. Your tactical lead, the BI champion, is dedicated to understanding the tool and being the go-to resource for questions and concerns. Good BI champions are often managers or staff supervisors with the same "can't measure, can't manage" mantra.

Understand needs and concerns at each level of your organization. Department leaders may never have been asked to articulate their goals before. It's beneficial, though, to know what their goals are and which KPIs are most valuable to them. By reviewing typical revenue cycle KPIs and seeking executive-level input, you can align program goals with overall organizational goals while also reinforcing leadership's support.

Review and Prioritize Revenue Cycle KPIs

With the sponsor and champion on board, you're ready to analyze typical revenue cycle KPIs and prioritize them according to organizational goals. Specific to claims management, which is typically a high-impact area for correcting problems and improving cash flow, some important KPIs are:

First Pass Rate, or clean claims rate, is crucial in understanding your staff's proficiency in getting claims successfully to the payer on the first attempt without rejection. As you can imagine, the higher this rate, the less time will be wasted correcting and resubmitting claims. As a result, the length of your revenue cycle will decrease.

Denial Rate is especially important because denials usually represent one of the largest bottlenecks of the revenue cycle. A high denial rate, or the percent of claims that are denied by the payer, can dramatically increase the length of your revenue cycle and therefore delay reimbursement from the payer. Denial trends show historic performance over a set period of time, which can tell you if any current problem areas are anomaly or reflective of a more severe problem.  As such, most organizations should keep a watchful eye on this KPI, so issues can be corrected the first time to prevent them from reoccurring in the future.

Charge Lag represents the amount of time between the date of service and the date the claim was submitted electronically. While some organizations may have a goal of a couple of days, others may be substantially longer. Regardless, being able to monitor charge lag allows your organization to ensure you are submitting claims within an optimal timeframe. If not, it provides the necessary impetus to understand why and adjust your processes accordingly.

These three KPIs are important; however, you should carefully evaluate what functions within your revenue cycle need the most improvement, so you can begin improving those first. This will also help you stay within the scope of the initial program as defined by your organization.   

Build on early success by setting manageable milestones

A data and analytics program is rewarding because it provides more tangible wins than many programs; you can see your lower denial rate translate into increased revenue and better cash flow. As a result, it's tempting to launch a large-scale program encompassing many areas of the revenue cycle. Instead, starting small is a good idea. By selecting the one or two KPIs deemed most critical to your organization's success, you can achieve early wins and build on your success. The practice of leveraging data to drive change will likely be a new habit. The reward is a financially healthy organization that continues to improve its revenue cycle as the healthcare environment changes and evolves.

Jim Denny is co-founder and CEO of Navicure, a provider of cloud-based healthcare claims management and payment solutions.

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