Article

4 Data Considerations for Managing Complex Healthcare Product Pricing

“With the speed of electronic transactions, even the most skilled staff becomes overwhelmed by the task of unraveling the spaghetti data chain of pricing.”

As pressure mounts for non-acute sites to improve their operating efficiencies and profitability, they confront the problem of how to maintain high-level patient services and improve care while reducing costs. Oftentimes, the leadership at non-acute sites views managing the price of incoming products and services as a primary vehicle to help offset the increasing pressure from reduced reimbursements and an ever-changing insurance landscape.

What makes this exercise difficult and sometimes impossible is the reality of the axiom “We don’t even know what we don’t know” when it comes to managing pricing. With the speed of electronic transactions, even the most skilled staff becomes overwhelmed by the task of unraveling the spaghetti data chain of pricing. 

With this in mind, here are four steps to build a sustainable foundation while ensuring pricing alignment and accuracy across healthcare channels:

Step 1. Ensure Current Member Status With Your GPO/IDN/ACO 

Membership in consolidated purchasing groups of every kind—group purchasing organizations (GPOs), integrated delivery networks (IDNs) and accountable care organizations (ACOs)—can deliver many benefits. They include enabling:

  • Similar care.
  • Complimentary care.
  • Volume discounts.
  • Incentives.

Non-acute sites should evaluate the various options in their region to decide what serves the profitability of their organization and provides the best outcomes for their patient populations. Sometimes sites join groups without truly understanding the obligations and also the breath of sustainable advantages for participation. Similar to when a traveler searches online to find the best fare for hotel rooms and flights, site leadership needs to use data that can help them evaluate their options and the multiple tradeoffs.

Leadership and operating teams need to fully understand the different levels of pricing accessible to them along with the mechanics and timing of moving to a more favorable pricing tier. Balancing volume discounts and timing is critical.

No one can know the longer-term implications for membership in any particular group. Staying close to real-time data can help site leaders better service and prepare for their own future optimization. The biggest mistake site leaders make is letting affiliation membership drift, which ultimately minimizes their participation and reduces benefits. Don’t assume that all parties involved are on the same page.

Ideas for consideration:

  • Know what your membership levels are, and how timing and volume can improve your pricing.
  • Conduct an analysis to determine which memberships offer the best value on an ongoing basis versus just one year.

Challenge the level of pricing and incentive tiers when the analysis reflects possible volume realignment.

5 Steps to Lead with Data

Read global healthcare industry expert Bruce Stanley’s advice for non-acute facilities to bridge the healthcare data chain one link at a time.

Step 2. Routinely Align and Synchronize Data Through Distribution and Manufacturing Partners

A misconception exists that distributors and manufacturers profit when industry data is confused and not synchronized. Truth is, these organizations only thrive when data is aligned and accurate. Their entire supply chain is dependent on gaining, securing and maintaining accurate customer usage profiles and pricing levels.

History shows us that these organizations spend significant amounts of energy and resources correcting data errors that are critical in the seamless supply with their trading partners downstream. It’s always in their best interest to make sure, with certainty, that all transactional partners have synchronized pricing.

This said, a site can find encouraging partners in distributors and manufactures that are tirelessly working to make their own data sets pristine. Technology now allows all healthcare partners to swap files to ensure data is aligned and synchronized—daily if necessary. History tells us that the better aligned and accurate their data is, the more profitable and efficient all trading partners are. The belief that “our data is private” is fine only to a point. It’s important to note that not all data can be shared because some, like patient data, is protected by privacy laws.

The challenge for non-acute sites is to realize that when more engagement and synchronization occur, the better clinically, financially and operationally they can become. As data gets more complicated, distributors and manufacturers are leading the industry in the journey toward a pristine data environment. Aim for as much data integration as your enterprise can manage and regulations allow. The longer the stream of good data, the better.

Ideas for consideration:

  • Exchange and share transaction files with trading partners to uncover nuances and outliers.
  • Compare master files with distributors and manufacturers quarterly.
  • Utilize industry exchanges that house the most current reflection of the industry.

Step 3. Establish Variance Reporting That Uncovers and Highlights Outlying Data

Reports don’t need to be lengthy documents. Having leading technical capabilities today requires that an organization finds and then understands when an outlier occurs, whether it’s pricing, membership, customer or delivery status. In return, this can significantly mitigate future pricing and financial issues. 

Additionally, staying close to the daily errors provides incredible insights into any market movements of affiliations, pricing levels, membership, volume or timing changes. Errors occur because business terms with different parties may not be clear and concise, timing may be misunderstood, or a previous backlog somewhere in the transactional process hasn’t been resolved.  

Many organizations that run on pristine data offer expertise to track and fix incorrect data elements. While getting to the starting block of good data can be difficult, the payoff is well worth the work. In today’s environment, new technical systems capabilities are being developed and marketed to non-acute sites.

Ideas for consideration:

  • Build strong analytic capabilities and look to other industries for that skill.
  • Create or purchase what/if scenario software to maintain business process alignment.
  • Utilize state-of-the-art customer relationship management (CRM) tools.

Central Hub for Essential Supply Chain Data

Envi is a procurement platform that serves as a repository for a facility’s supply chain data. It simplifies inventory management and procurement to maximize efficiencies and drive cost savings. Provista helps facilities implement the system.

Step 4. Build Rigid Data Cleansing Processes Using GPOs, IDNs, Exchanges and Other Groups

As with many initiatives, pricing data management starts with strong analytical skills. Too often, organizations pair new technology with old skills, and the combination is disastrous. In many cases, non-acute sites can’t even begin to understand what’s occurring in their environment given their own lagging organizational skills sets.

They struggle by themselves, debating what skills are even required. This is where outside intervention is critical and helpful. GPOs and IDNs with state of the art tools employ some of the brightest minds in our industry. They constantly evaluate new tools, new theories and new procedures. As a result, they find, hire and train some of the most skilled individuals. Enterprises embarking on new system implementations should first look to their own network for advice and counsel.

Ideas for consideration:

  • Hire and maintain skilled data analysts, even from non-aligned industries.
  • Evaluate innovative technology tools coming from industry experts.
  • Eliminate non-essential process and data steps, and refrain from using bad data to make decisions.
  • Challenge existing relationships across organizational affiliations.

Better Manage Pricing Data

As the increasingly creative pricing and incentive methodologies take hold in our industry, it’s clear an easy mechanism doesn’t exist to manage them. But it’s not like climbing Mount Everest either. Many valuable resources can help an organization catapult from being stuck in the 1990s to becoming a leader in the 2020s. The four simple process steps outlined here can help build and enhance a solid platform of pristine pricing data. Not to mention, it’s timely and accurate with a flexible methodology that adjusts the moment the market moves.

Author Bio:

Bruce Stanley is the President-Principal of The Stanley East Consulting Group. He has more than 30 years of global healthcare industry experience.