This is the second post in a series where I’ll be documenting an achievement from my time at Munson Healthcare. Our team created a system-wide patient-level profitability model that leveled up our understanding of the business in a big way. By the end of the series, I’ll show how we used patient-level profitability modeling to find $23 million of cost savings opportunity. First post: How we built a foundation of data models for patient-level profitability to sit on.

How we laid the political groundwork so senior leadership was excited to invest several months and hundreds of thousands of dollars into patient-level profitability reporting

“Not something we want to pursue at this time.”

“We can’t green light this without buy-in from [disagreeable executive] and [committee that doesn’t understand].”

“Why don’t we try this on a smaller scale before we go all-in?”

These are the responses most healthcare business intelligence teams are accustomed to when they pitch a game-changing project.

Our experience pitching patient-level profitability reporting was different. The COO of the healthcare system said “I like where you’re going with this. You keep pushing. I’ll give you air cover.”

Why was our experience so different?

  • Did our senior leadership team misunderstand the size of the commitment? No.
  • Did our senior leadership team routinely commit to wildly ambitious business intelligence projects? No.
  • Did we have the backing of the key voices in our organization before we ever pitched this? YES.

Here are the three most important reasons we were able to get executive support to build system-wide patient-level profitability reporting. Without executive support, this project would have withered and died.

Reason #1 — We had done it before, at a smaller scale

Let’s rewind a few years. Our flagship hospital scaled up its cardiac cath lab. Why?

Because percutaneous cardiac intervention (PCI) and electrophysiology (EP) services had great patient outcomes. But just as important, because a patient-level profitability analysis said cardiac cath services have excellent margins.

Even before we had system-wide, regularly-updated patient-level profitability reporting, we would still do a profitability analysis of inpatients at the end of the fiscal year (only for our biggest hospital).

Our year-end analysis would surface some obvious insights. Patients with commercial payers have higher margins than patients with Medicare. Cardiology has higher margins than Behavioral Health.

Don’t underestimate the value of those obvious insights. Because ‘advanced analysis’ told our senior leadership team things they already assumed were true, that built credibility. That meant when the analysis surfaced a less-obvious conclusion, they wouldn’t dismiss it out of hand.

After a few years, we had a track record of producing patient-level profitability once per year, only for one hospital, and only for inpatients. And our patient-level profitability reporting would confirm our executives’ assumptions about most things in the business, and usually add a couple of less-obvious ‘bonus’ findings per year.

Even with an unambiguously positive track record, it would be hard to convince our senior leadership to scale this up to system-wide reporting done monthly or quarterly. Five times as many hospitals? Inpatients, outpatients, and physician network? That would be a big ask, unless we had a leader who had done exactly that before…

Reason #2 — We had a new executive who had done this exact thing at his last organization

The ‘new guy’ card is powerful, and you only get to play it once. A few months before we got the green light to build patient-level profitability reporting, our business intelligence team started reporting to a new VP.

A big project for a new VP? That’s no coincidence.

Our new VP played the ‘new guy’ card expertly by combining it with the ‘this ain’t my first rodeo’ card. He told our system COO and CFO that he had built system-wide patient-level profitability reporting before, and he had the spreadsheets to prove it.

Having the data from his last organization was a powerful impetus for the system COO and CFO. ‘If we build system-wide patient-level profitability,’ they thought, ‘we’ll be able to compare ourselves directly to a highly-comparable system’. That comparison alone could generate massively high-value insight!

But our new VP didn’t stop at his bosses. He worked his way through all the system-level VPs and the three Directors who would have to support the project directly. He made sure everyone from Corporate Finance to IT understood (a) how much value we could get out of patient-level profitability reporting and (b) why we couldn’t afford to wait…

Reason #3 — We had our burning platform

We had produced patient-level profitability reporting (and created value) at a smaller scale. We had an executive who had built monthly system-wide patient-level profitability reporting before. Still, it would have been easy for our senior leaders to say “it’s a nice idea, but we have bigger problems right now. And most of our problems are a lot less complicated than advanced financial analysis.”

Luckily for us, we had a looming deadline that spurred our executives to act decisively.

Trendstar was state-of-the-art healthcare business intelligence software in the late 1980’s. In fact, Trendstar was so good, we had used it for nearly 20 years. It helped us with Case Mix Index (CMI), Clinical Documentation Integrity (CDI), and Risk of Mortality. It helped us estimate reimbursement and cost per case.

Trendstar had been so reliable, our business intelligence and corporate finance teams had built a vast ecosystem of processes and custom software applications around it. We would feed Trendstar data and Trendstar would return valuable information.

Imagine our disappointment when Trendstar started throwing bugs. Sometimes we couldn’t get numbers at all. Sometimes we got numbers, but they didn’t feel right. Trendstar had to go.

We saw a hefty license renewal fee coming up for Trendstar several months out. “Greenlight the project,” we said, “and we might just be able to avoid paying that renewal fee.”

It wasn’t just a matter of saving the license fee. Trendstar was state of the art in the late ’80s. We knew we could use Dimensional Insight to replace all of Trendstar’s functions AND make every former Trendstar user’s life much easier.

‘Not only can you stop using this ancient software package that’s giving you bugs and untrustworthy numbers,’ we said. ‘We’ll replace it with something faster and more flexible.’

We were speaking everybody’s language. Not just Corporate Finance’s language. Not just IT’s lanuage. Not just senior leadership’s language.

By stacking the deck with a track record of success, a hungry new executive who had done this before, and an ancient software package that needed to be retired, we got the green light for our most ambitious business intelligence project to-date.

While you’re here…