Insights for Providers
Sep 13, 2024
Insights for Providers | June 7, 2023
It’s harder than ever for hospital networks to thrive — today’s healthcare landscape is characterized by shrinking operating margins, rising costs, and labor shortages. In order to maintain a healthy financial position, hospitals and health systems must understand the importance of using data to evaluate the expected performance of their networks. Big data is now an integral part of modern healthcare administration. Data analytics play a key role in most hospital executives’ decisions — from helping them determine areas where they can cut costs to singling out patient populations that need tailored outreach to identify potential supply chain shortages. As hospitals battle severe financial pressures, it’s become clear that they can’t operate successfully without precise, data-driven performance evaluation. The landscape of hospital network performance benchmarking can be challenging to navigate. There isn’t just one metric that can adequately evaluate an entire healthcare business. There are dozens of measures of financial and clinical performance that need to be considered, and exploring these metrics can prompt administrators to ask the right questions. Some measures on the long list of metrics that hospital networks need to examine include length of stay, readmission rates, bad debt, average cost per discharge and mortality rates. Hospital networks must have a strong understanding of these metrics for their own facilities, any new ones they plan to operate, and the networks with which they compete. Having this deep knowledge is the first step in designing a successful plan for a healthcare organization’s future. When evaluating financial performance, it’s important to remember that hospital networks have complex revenue streams. Health systems typically have different ways of generating revenue — including reimbursements from various payers, diagnostic service lines and pharmacy fills. These different revenue streams can be challenging to track amid changing reimbursement models and an ever-evolving regulatory landscape. Hospital networks also face challenges when it comes to data availability and quality. Health systems generate vast amounts of data, but ensuring data accuracy, completeness and consistency can be hard. Data from different sources may need to be integrated for financial evaluation, and good data quality can lead to accurate financial performance assessment and decision-making. Additionally, hospital networks have to brace for factors that are outside their control. Various external factors, such as changes in population demographics, healthcare utilization patterns and broader economic conditions can influence hospitals’ financial performance. These factors can impact patient volumes, payer mix and reimbursement rates — making it difficult to predict and evaluate financial performance accurately. To get the best picture of future financial performance, hospital networks must realize the crucial role of robust healthcare data. This means gathering historic and real-time data. This process can lead to improved budgeting and financial planning. Hospital networks usually develop an annual budget that outlines their projected revenue and expenses for the upcoming year. By carefully analyzing historical data and considering factors such as anticipated patient volumes, reimbursement rates and cost trends, health systems can forecast their financial performance for the next fiscal year and plan accordingly. Hospital networks can also use financial modeling techniques to simulate different scenarios and predict future financial outcomes. By adjusting key variables and assumptions, health systems can assess the potential impact on their financial performance and identify areas for improvement or risk mitigation. Hospitals can make informed forecasts by examining revenue and expense trends over time, including seasonality and cyclical patterns. Analyzing existing networks’ performance data can help identify areas for optimization before going to market. Analyzing performance data helps identify inefficiencies in various processes, such as patient flow, resource utilization and operational workflows. By understanding where bottlenecks exist, hospital networks can implement targeted improvements to streamline operations, reduce costs and enhance overall efficiency. This optimization can lead to better resource allocation, reduced waste and overall improved financial performance. Performance data analysis can also provide insights into the quality of care delivered within the hospital network. It allows for identifying areas where patient outcomes may be suboptimal or where there are variations in care delivery. By understanding these patterns, hospitals can implement quality improvement initiatives, evidence-based protocols and best practices to enhance patient care, improve clinical outcomes and ensure patient safety. These types of data analyses enable hospital networks to make data-driven strategic decisions. By evaluating key performance indicators such as financial metrics, patient volumes, market share and payer mix, hospitals can identify growth opportunities, service line expansion or potential partnerships. This analysis helps inform strategic planning and resource allocation, ensuring that decisions align with the hospital network’s goals and market demands. These analyses also help identify potential risks and vulnerabilities within a hospital network. They help hospitals proactively identify areas of concern, such as revenue leakage and compliance gaps. This knowledge allows hospitals to implement risk mitigation strategies and safeguards to ensure compliance. Going over the performance data of competitor networks is another crucial part of maintaining a firm financial footing. This can give hospitals a better understanding of their performance gaps. For example, if a competitor has higher patient satisfaction scores or shorter wait times, this insight can guide the hospital network in setting improvement goals and designing initiatives to bridge those gaps. Comparing performance data to competitors also allows hospital networks to identify successful strategies that competitors have implemented. For instance, if a competitor has achieved better outcomes in a particular clinical area or has implemented innovative patient engagement programs, the hospital network can study and learn from these practices. This helps hospital networks understand their market position as well. By examining how they compare to competitors regarding patient outcomes, quality metrics, cost-efficiency and other relevant indicators, hospital networks can identify unique selling points or areas where they can differentiate themselves. This insight can inform design decisions related to service offerings, marketing strategies and targeted investments to strengthen their competitive advantage. Comparing performance data to competitors and using it to inform design decisions can directly impact the bottom line of a hospital network. One of the impacts is cost optimization. Analyzing performance data in comparison to competitors can help identify areas of inefficiency or excessive costs — these cost optimization efforts directly contribute to improving the bottom line by increasing profitability. This analysis can also lead to the discovery of market expansion opportunities and strategic resource allocation insights, as well as improve patient retention and loyalty. By comparing performance data, hospital networks can identify areas where competitors excel in patient experience. Satisfied patients are more likely to return for future services, recommend the hospital to others and contribute to positive word-of-mouth referrals. Increased patient loyalty and retention can lead to higher patient volumes, improved reputation, and, ultimately, increased revenue. A data-driven approach is crucial for hospital network optimization, yielding improvements in operational efficiency, patient outcomes, and competitiveness. By leveraging data insights, networks can tackle bottlenecks and allocate resources effectively. This leads to enhanced operational performance and improved patient experiences. Additionally, data analysis helps identify best practices, benchmark against competitors, and make informed strategic decisions — enabling networks to stay competitive and deliver higher-quality care.Landscape of provider performance benchmarking
Challenges of healthcare network performance evaluation
Making better healthcare network design decisions
Network optimization for higher-value, more efficient care