Earlier this week, Chicago-based Huron Consulting Group, a provider of business consulting services, and Strata Decision Technology, a provider of cloud-based financial analytics and performance tools for healthcare, unveiled a unique software and service solution to drive ongoing value and performance in healthcare.
The solution is designed to assist healthcare providers with the transition from fee-for-service to value-based care and address the underlying challenges of accurately managing revenue, cost and margin, both parties said.
Dan Michelson, CEO of Strata Decision Technology, and Gordon Mountford, executive vice president of Huron Healthcare, recently spoke with Becker's Hospital Review about their new solution.
Question: How did this solution come about?
Dan Michelson/Gordon Mountford: The incredibly uncomfortable conversation taking place in the board room of most healthcare delivery systems is about how exposed they are from a business perspective relative to moving to a value-based reimbursement model. And they should be uncomfortable. Anytime the business model for a multi-billion [dollar] organization is being turned upside down…there is a lot of risk.
The core issue is most health systems don't have either the toolsets, skillsets or change enablement capabilities required to compete in this new world. One example is the need for a very clear and accurate understanding of true cost (not charges) and margins as they enter into risk-based and capitated contracts.
But it's not only information on cost that is missing, it's the lack of experience, expertise and resources required to drive out waste and reduce variation on an ongoing, every day basis. For all of the sophistication they have had in place for managing the top-line via revenue cycle management, they have Excel and Powerpoint for managing value and performance. Clearly as we move towards risk-based and capitated models that has to change.
We saw that gap in the market and recognized that while most providers have the mindsetto transition to value-based care, Strata and Huron help our clients execute on their strategies with a technology-enabled solution aimed at achieving measurable results. Up to this point, there hasn't been a single offering to help healthcare providers drive out and manage costs and margins now while preparing for value-based care in the future. In the same way that RCM has been a core competency for health systems in the past, a new competency around delivering performance and driving value was needed — what we refer to as value performance management.
Q: What makes this solution unique?
DM/GM: We are not aware of any such solution on the market right now. We have observed that many healthcare organizations either struggle with how to use the tools they have and/or lack the change management or performance improvement skills necessary to drive true transformation in their business. Our approach will help ensure healthcare providers have both the technology, methodology and resources to put their vision on value into motion. The scale of this is significant as we are combining Strata's cloud-based technology platform, which is rated No. 1 in KLAS and used by over 1,000 hospitals and 185 healthcare delivery systems, with the proven expertise and experience of Huron's 1,000 plus consultants in driving performance inside healthcare organizations every day, to develop data-driven solutions across the continuum of care.
Collectively we will providethe toolset to understand cost and margins via cost accounting and automate cost management as well as the capabilities, in resources, methods and expertise, to help healthcare providers identify and implement opportunities to reduce cost, drive margin and improve clinical performance on an ongoing, multi-year basis. This combined software and service solution from two of healthcare's most experienced and trusted companies was created to help define a market which has been created around driving ongoing value and performance in healthcare.
Q: What does this solution mean for healthcare providers?
DM/GM: We have some customers with 500 people on their revenue cycle team and five people on their performance improvement team. One way to think about what we are doing is bringing that same level of focus, effort and sophistication of managing revenue the top-line (RCM) to managing value and the bottom line (VPM).
In a very practical sense, the clients we work with will have a very clear and accurate understanding of true cost and margins as they enter into risk-based and capitated contracts. They will be able to continuously identify opportunities to drive margins by reducing waste and unnecessary variations in care and we will help them drive out that cost and reduce that variation. They will understand the financial impact of harm and poor quality and we will help improve clinical performance by reducing hospital-acquired conditions, patient safety indicators and readmissions.
Once again, to clarify, it is not just the software, it is also the service to ensure clinical and financial performance improves. Each of these elements is a building block that needs to be put in place in order for a health system to deliver ongoing value.
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