BENEFITS ANALYSIS FOR HEALTH CARE: PART I
by Sid Adelman

The data warehouse has a remarkable potential for benefits in the health care industry. The benefits will be both tangible and intangible. For the tangible benefits, an organization should be able to estimate specific cost savings and increases in revenue. This template indicates potential benefits and suggests the formulas for calculating those benefits.This analysis of benefits is aimed at organizations that provide health care and organizations that insure health care.

Tangible Benefits:

Increase Membership

The organization will be better able to market to employer groups by having more information on:
coverage,
costs,
outcomes,
member utilization

The organization will be better able to recruit and retain members by knowing more about:
membership,
satisfaction,
outcomes

The organization will be better able to enroll more groups and more members and retain groups and members by being able to provide more and better information to employer groups.

The organization will be able to identify marketing opportunities by analyzing demographics and integrating this analysis with existing members.

The organization will be better able to enroll and retain more groups and more members by giving employer groups access to information about their members through the internet.

Benefit = Profit/member X Additional members

Increase Revenue:

The organization will be better able to negotiate with employer groups by having more information on:

coverage,
costs for each category of care,
outcomes

The organization will be better able to bid on managed care contracts by having more information on:

coverage,
costs for each category of care,
outcomes

The organization will be better able to increase revenue income from providers by knowing more about:

providers,
revenue generated,
referrals,
fees paid to providers
outcomes

The organization will be better able to recruit and retain providers, groups and members by being able to measure:

results,
outcomes,
provider productivity

The organization will be better able to collect a higher percentage of claims by having better information on claims.

Marketing will be able to present more acceptable packages and will be able to recruit and retain groups and members by being able to target the right set of alternatives.

Benefit = Increased revenue X (Number of Employer Groups X Average Number of Employees/Group)

Benefit = Increased Revenue/Provider X Number of Providers

Benefit = Revenue/Provider X Additional Number of Providers

Benefit = Revenue/Member X Additional number of members

Benefit = Increased revenue/Claim X Number of Claims

Cost Control:

The organization will be better able to understand and control costs by knowing costs per member per month and knowing these costs by:

demographics,
pre-existing conditions
diagnosis

The organization will be better able to negotiate with providers and control costs by knowing more about:

providers,
revenue generated,
hospital referrals,
provider compensation,
outcomes

The organization will be better able to control inventory, charge for supplies, and negotiate with suppliers by knowing more about:

supplies,
suppliers,
costs,
inventory

By knowing more about costs, the organization can better determine which procedures, practices and services to outsource (lab, pharmacy, surgical procedures, dialysis, help desk, administrative functions, etc).

By providing better information to physicians and encouraging them to follow protocols the total cost of treatment can be reduced.

By having better HR information, the organization will be better able to negotiate with unions and employees for:

wages,
working conditions,
hours,
benefits.

Incorrect payments - Searching for patterns of claims, incorrectly paid, incorrectly denied or administered that can suggest changes in claims processing procedures.

Abuse detection - Searching for patterns indicating that certain providers are performing unnecessary procedures, prescribing expensive medication where a less expensive drug would be effective, performing unnecessary tests and keeping a patient in the hospital longer than necessary.

Fraud detection - Searching for claims were service has not actually been provided; looking for patterns that would suggest further inquiry into the claim.

Benefit(Material Management) = Cost savings for supplies

Benefit(Outsourcing) = Cost savings/procedure X Number of procedures outsourced

Benefit(Protocols) = Average cost savings by following protocols X Number of protocols followed

Benefit = Average HR cost savings X number of employees

Benefit = Administrative costs resulting from errors in payments

Benefit(Abuse) = Average cost of procedures X Number of unnecessary procedures

Benefit(Fraud) = Average cost of claim X Number of fraudulent claims

---

The concluding part of this article will appear in the next edition of D S * .