Value in healthcare today is a reality that organizations must understand to control costs while enhancing quality of services. The challenge facing healthcare organizations is finding innovative ways to quantify opportunities in quality to impact both savings and value of care.
One area of opportunity is to impact the increasing healthcare expenditures related to prescription drugs. In 2014, prescription drug spending growth was higher than the growth in total U.S. healthcare spending and by 2024, the U.S. will spend about $560 billion annually on outpatient prescription drugs (1). Efforts to control prescription drug costs are not new; however, the focus on quality and advancements in analytics present healthcare leaders with new opportunities.
Specifically, the future of cost savings in pharmacy will be tied to the intersection of: (1) existing cost saving measures, (2) integration of quality metrics and (3) the advancement of a modern analytics agenda. Together, this framework can decrease costs while improving quality of care and population health.
Current efforts in pharmacy cost savings initiatives can still help to reduce cost by focusing on waste and over utilization. The solutions are robust and include improving generic dispense ratios, tiered formulary strategies with exclusion lists, and population health management through better care management and coordination (i.e. medical adherence, disease management).
While these efforts may help control some pharmacy spend, the time to innovate using quality and modern analytics is more important than ever given the significant growth in pharmacy spend.
Quality measurement in health care is the process of using data to evaluate the performance of health plans and health care providers against recognized quality standards. There are a number of resources that provide information on quality metrics, standards and initiatives. For example, the Healthcare Effectiveness Data and Information Set (HEDIS), Consumer Assessment of Healthcare Providers and Systems (CAPHS), National Committee for Quality Assurance (NCQA) and Centers for Medicare and Medicaid Services Star Ratings (CMS) are examples of popular organizations that contribute to the development and endorsement of quality measures.
While the focus on quality and the measurable impact on savings is still being researched, the empirical research is promising. A study in the New England Journal of Medicine found that enrollees under an Alternative Quality Contract (AQC) was associated with a modest slowing of spending with improved quality of care (2). Furthermore, a study in Hospital Pharmacy indicates that pharmacists may impact a majority of quality care measures set out by CMS (3, 4).
These findings are enough to suggest that pharmacy cost reduction strategy can benefit from integrating quality standards to generate savings and benefit population health simultaneously.
Similarly, the application of advanced analytics provides opportunities for healthcare leaders to generate cost savings. It's been estimated that big data analytics can impact over $300 billion in savings per year for US healthcare (5). Advanced analytics allow data scientists to gain new insight with high-dimensional and high-frequency data to augment current business intelligence efforts. These methodologies include predictive modeling, Bayesian networks, clustering, survival analysis, and machine learning applications.
How do healthcare leaders capitalize on quality initiatives to augment current pharmacy analytics for cost reduction while promoting public health? The following is a proposed 8-step methodology to realize savings with pharmacy and quality initiatives data.
1. Gather research on pharmacy quality initiatives
Determine which quality metrics are developed, are in development, or can be quantified from a pharmacy perspective.
2. Engage clinical stakeholders to validate opportunities and generate hypotheses
Enlist the help of clinical stakeholders including pharmacists, quality experts, physicians, and other healthcare workers. This team can help frame what are validated quality opportunities as it relates to pharmacy. In addition, this team will formulate the initial hypotheses and metrics to measure the quality opportunity and/or cost savings estimate.
3. Prepare pharmacy data against the quality metric(s)
Work with data scientists to understand and package the data for analysis. This will require a detailed understanding of pharmacy codes and quality descriptions. When appropriate, derive variables, and build appropriate metrics to measure the quality initiative identified supported by pharmacy data.
4. Perform data mining and advanced analytics
Based on the hypotheses set out in step 2, perform analytics to gather insight into the quality metrics. Utilize modern techniques not traditionally utilized in pharmacy analytics to derive additional insights to augment initial findings. Descriptive statistics can provide an overview of expenditures and the performance metric associated with the quality metric identified. Additional methodologies like predictive modeling can generate risk scores on cohorts likely to adhere to the quality metric. Geospatial analysis can further segment these risk cohorts into regional or county views. Machine learning can derive additional insight on the interactions among variables related to the quality metric.
5. Gather feedback from clinical stakeholder team
Present initial findings to your stakeholder team to understand if the findings make sense. This will help validate the quality metrics proposed and make it easier to implement any business rules into your company.
6. Field test findings / monitor accuracy of findings
After validating your findings, it's important to field test the findings among small cohorts. This can be your organization's case management team, pharmacy experts, or chief medical officer. They will provide additional feedback about what is usable and scalable, and if cost savings can be realized from the opportunity.
7. Organizational Dissemination
At this point, decide from an organizational level how to disseminate the pharmacy and quality initiatives. This can be business rules to manage patient populations, conversations with PBM's to discuss formulary strategy, and engagement with providers to act on insights from the analysis.
8. Track Savings / Model monitoring
Continuously track savings opportunities and realized savings from the pharmacy and quality initiative. It's also important to monitor any models developed and re-calibrate based on new initiatives, stakeholder feedback, or changes in the market place.
With pharmacy spend increasing, focus shifting to quality and more healthcare organizations diving in to big data, the need to be innovative is urgent. One solution to curb pharmacy spend is augmenting current savings efforts to include quality with modern analytics. A systematic approach to this integration can allow healthcare leaders to realize savings while improving the public's health.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.