How to Drive ROI in Your Health Care Improvement Projects

1. How to Drive ROI in Your Health Care Improvement Projects December 17, 2013

2. Presenters Bobbi Brown, VicePresident of Financial Engagement, Health Catalyst. Ms. Brown started her healthcare career with software sales and service at McKesson in the Technology Solutions Group. She worked at Intermountain Healthcare before moving to Sutter Health and, later, Kaiser Permanente, where she served as Vice President of Financial Planning and Performance. At Intermountain Health Care, she partnered with clinical teams to analyze and measure financial impact of the clinical programs. She holds an MBA from the Thunderbird School of Global Management as well as a BA in Spanish and Education from Misericordia University. Leslie Hough Falk,RN, MBA, PMP, Health Catalyst. Prior to joining Health Catalyst, Leslie held positions as a Nurse Informaticist, Director of Biomedical Engineering, Clinical Engineer for Kaiser Permanente-Northern Region and Pediatric ICU RN. Ms. Falk also worked with Hewlett-Packard in several clinical, marketing, sales and support leadership roles. She holds a Master of Science degree in Community Counseling from Seattle Pacific University as well as an MBA and Bachelor of Science in Engineering from the University of Nevada, Las Vegas. She is also a certified Project Management Professional (PMP), Lean Green Belt and Information Privacy Professional (CIPP/CIPP IT).

3. Agenda • Why IT ROI is increasingly important in Health Care improvement projects • ROI in Health Care versus other industries • Health Catalyst 4- step approach for driving ROI

4. Poll Question #1 • What is your primary area of focus? • Physician/Provider • Nursing • Finance • Information System • Other

5. The Increasing Importance of ROI in Health Care Improvement Projects

6. Stagnating Margins Source: Medpac report March 2013

7. Competing Trends Value Based Purchasing Links payment more directly to the quality of care. Population Health Balancing the need for individuals and populations while caring for a larger number of patients. • Accountable Care Organizations • Shared savings for groups of doctors and hospitals, and • other providers who deliver quality care and spend wisely. Reduced Readmissions Becoming more efficient at preventing services that once contributed to the bottom line. Increase Value Improve Quality Reduce Costs Health Care Organizations Bundled Payments Payment arrangements that include financial andperformance accountability for episodes of care. Eliminate Waste Improving quality and reducing costs while meetingexpanded regulatory data collection and surveillance requirements.

8. IT ROI in Health Care versus Other Industries

9. ROI Measurements and Complexity of Environment Phase 3 Investments to improve Quality of Product or Service (e.g. clinical systems) Hard Measurement of Return on Investment Phase 2 Investments to improve Productivity and Reporting (e.g. department systems) Phase 1 Investments with Direct Cost Savings or Revenue Increases (e.g. financial systems) Easy Complexity of the Environment into which IT Investment is Made More Less Source: Journal of Healthcare Information Management — Vol. 17, No. 4

10. Unique Health Care Governance and Payment Model Other Caregivers Provides care to Facility Patient Physicians Pays Enrolls Pays Payer Source: Journal of Healthcare Information Management — Vol. 17, No. 4

11. HIMSS Health Value STEPS Model Source: HIMSS Resource Center. http://www.himss.org/valuesuite

12. Use Case Example • Scenario: Clinical Improvement project • Project Goals: Shift clinical resources from surveillance to interventions, and reduce Catheter-Associated Urinary Tract Infections by XX % • Team: Providers, nursing, patient safety and quality, information systems • Missing results: Financial impact of reduced CAUTIs such as length of stay and improved productivity related to decreased surveillance activities • Team feedback: “Yes, we should consider LOS and productivity gains. However, we don’t track that. I’m sure someone else in the hospital does but we are clinicians.”

13. Poll Question #2 • Do you currently measure ROI in your Health Care IT improvement projects? • Always • Sometimes • Not usually • No • Unsure

14. The Health Catalyst 4-step ROI Approach

15. Four Step Approach • State proposal • Justify business need Step 1: Define the Projectand Business Need Step 2: Begin to Quantify ROI Step 3: Recruit, Train,Plan and Implement Step 4: Evaluate Costs,Revenue & Direct Benefits

16. Sample Proposal Project Proposal: Heart Failure Readmission Analytics Proposal Expand capabilities of the enterprise data warehouse and purchase an advanced heart failure application with a total cost of $400,000. Focus will be readmission rate. Business Need Cardiovascular clinical program is our largest program. Heart failure readmit rate has been climbing over the past three years and is now above the national average at 26%. Due to the readmit rate in 2014, Sample Medical Center received a penalty of 0.4% from CMS. • State the proposal succinctly in one to two sentences • The business need is a justification for the proposal that ties into the overall organization strategy

17. Four Step Approach • Identify all costs • Estimate benefits • Identify direct benefits • Identify indirect or intangible benefits and set improvement targets • Identify all revenue opportunities • Document assumptions • Perform a sensitivity analysis • Identify risks and alternatives Step 1: Define the Projectand Business Need Step 2: Begin to Quantify ROI Step 3: Recruit, Train,Plan and Implement Step 4: Evaluate Costs,Revenue & Direct Benefits

18. Step Two: Direct Benefit Categories • General categories – • I. Enhanced efficiency and productivity • Examples: reductions in FTEs or less overtime; business process improvement; supply chain standardization allowing lower supply costs; increased departmental capacity; and reductions in capital expense

19. Customer Example Enhanced Efficiency and Productivity “Our clinicians thought that the EHR would be a silver bullet to get the data they needed for quality improvement and operational reporting and they blamed IT when the information wasn’t forthcoming. …Implementing an EDW should really be an appendix to the implementation of an EHR because the surge of data is just unbelievable and the appetite for it is huge.” – Myra Davis, M.E., VP of Information Services. Health Catalyst Solution Results to date Objective • Late-Binding™ Data Warehouse • Foundational Applications • Discovery Applications • Advanced Applications • Installation Services • Improvement Services • 67% average savings on labor costs • Average time to build reports declined from 97 hours to under 30 hours • 1 EDW report = 10 EHR reports • 25% faster turnaround on remaining EHR reports • Meet the increasing demands by clinicians and operations for EHR data and reports • Reduce reporting costs and free IT resources to focus on analysis versus report writing • Reduce turnaround time on remaining EHR report requests

20. Step Two: Direct Benefit Categories • General categories – • I. Enhanced efficiency and productivity • Examples: reductions in FTEs or less overtime; business process improvement; supply chain standardization allowing lower supply costs; increased departmental capacity; and reductions in capital expense • II. Clinical improvement and waste reduction • Examples: lowering LOS; reductions in uncompensated hospital readmissions; lower medication cost per case or per capita; fewer ICU days; and patient safety improvements leading to fewer complications or medical errors

21. Types of Waste Variation in OR room turnover (cycle time) or Emergency Care wait times ADEs, transfusion reactions, pressure ulcers, HAIs, VTE, falls, wrong surgery

22. Customer Example Clinical Improvement Objective Health Catalyst Solution Results to date • Define Heart Failure (HF) baseline measures for 30 and 90-day readmissions rates • Implement evidence-based practice interventions to drive HF readmission rate reductions • Establish balance metrics including ED visits, observation days and patient satisfaction • Develop sustaining processes for evaluating readmission rates to ensure continuous process improvement • Late-Binding TM data warehouse that enables faster time-to-value • Integration of clinical, patient satisfaction and financial data to establish baseline, ongoing and balance measures • Discovery, Foundational and Advanced HF applications including cohort finder, registry and evidence- based clinical content • Healthcare analytic visualization including gauges and trend lines for at-a-glance view • Seasonally adjusted rate reduction of 21% in 30-day and 14% in 90-day HF readmissions • 2X increase in the number of phone calls made to patients within 48 hours of discharge • Average of 63 % increase in physician medication reconciliation within 48 hours of discharge • Follow-up appointment intervention baseline and balance measures established 22

23. Customer Example Ordering Waste “We knew we couldn’t completely create predictor models, as science isn’t that refined. But we have reduced the number of chest X-rays to a very respectable level. We have been able to minimize quite a bit of waste in other areas too, so overall, this approach in using the analytics has really helped us to manage our disease processes”. Dr. Charles Macias, TCH Attending Physician and DirectorEvidence Based Outcome Center. Objective Health Catalyst Solution Results to date • Improve clinical outcome for asthma patients across the care continue • Better manage populations in a new Valued Based Purchasing environment • Measure and ensure sustained clinical quality improvements • Late-Binding™ Data Warehouse • Key Process Analysis (KPA) Application • Population Analytics Advanced Application- Asthma Module • Installation Services • Clinical Improvement Services • Decreased average LOS by 11 hours • Achieved and sustaineda 49% decrease in unnecessary ChestX-rays over 16 months • 80% order set utilization …67% sustained increase over 8 months • 90% usage of asthma action plan by providers

24. Step Two: Indirect Benefits and Revenue Opportunities • Can be more difficult to measure • Longer-term benefits • Example: an improved medical outcome such as a reduction in future hospitalizations associated with neonatal respiratory distress syndrome (RDS), which will require long-term analysis to reveal an impact on costs

25. Customer Example Indirect Benefits: Opportunity Cost Objective Health Catalyst Solution Results to date • Define CLABSI and CA-UTI baseline and on-going CLABSI and CA-UTI rate measures • Implement evidence-based practice interventions to drive CLABSI and CA-UTI rate reductions • Leverage National Healthcare Safety Network (NHSN) definitions and calculation algorithms • Shift clinical resources from surveillance and chart abstraction to interventions • Late-Binding TMdata warehouse that enables faster time-to-value • Discovery, Foundational and Advanced ID applications including cohort finder, registry and evidence- based clinical content • IDEA platform that tracked intervention compliance within days versus months • Visualization and Gantt charts for clinicians that provide data behind NHSN algorithm results in one consolidated view • Surveillance requirements reduced by 90% • Increased clinical resources on the floor to drive interventions • Opportunity costs savings exceeding an estimated $1M in year 1 and $100K annually as a result of not purchasing, maintaining and supporting a one-off measurement and tracking system • 164% increase in CLABSI maintenance bundle compliance

26. Customer Example Shared Savings • 75 percent reduction in rate of elective deliveries occurring prior to 39 weeks of gestation in the first six months • 6-figure bonus payment from payer for exceeding target reduction rate

27. Sensitivity and Risk Analysis Examples • Sensitivity Analysis- modeling various assumptions • What if we can lower the readmit rate by 20%? • What if we make two follow-up calls? • What if we use a nurse for all follow-up calls? • Risk Analysis- describing concerns and tactics • Physician lead is new in position • Finance will provide education • Nurse manager respected in position and can assist in orientation • .

28. Health Catalyst Clinical Improvement Financial Tool • Financial framework to help clinicians work with their finance team member(s) to estimate quantitative and qualitative costs and benefits • Download the ROI Executive Brief and Tool at:www.healthcatalyst.com/driveroi

29. Four Step Approach • Establish multi-disciplinary outcomes-improvement teams • Agree on business objectives and an Aim statement • Agree on ROI measures • Provide timely executive updates Step 1: Define the Projectand Business Need Step 2: Begin to Quantify ROI Step 3: Recruit, Train,Plan and Implement Step 4: Evaluate Costs,Revenue & Direct Benefits

30. Cardiovascular: Heart Failure Date: [complete] Overall Status Project Progress Launch/Rollout date : XX Key Strong concerns Some concerns Done well In process Not started

31. Four Step Approach • Identify all project costs • Ensure nothing else has changed • Perform Financial ROI calculations • Review ROI calculations with the team • Make adjustments • Monitor and ensure sustained results Step 1: Define the Projectand Business Need Step 2: Begin to Quantify ROI Step 3: Recruit, Train,Plan and Implement Step 4: Evaluate Costs,Revenue & Direct Benefits

33. The Opportunity for Change Taking the next step… • Download the Health Catalyst ROI Executive Brief www.healthcatalyst.com/driveroi • Contact us to learn more about our solutions, ROI modeling and communication tools www.healthcatalyst.com/company/contact-us

34. Questions