Several major forces in recent years have been changing the way health care has been and will continue to be delivered. The emergence of more unique ways of providing care, such as in-house and factory-based clinics, the increased use of mid-level providers (nurse practitioners and physician assistants), the increased integration of technologies such as telemedicine and robotics, and change interventionist reimbursement. reimbursement of results are just a few examples.
Add to that the escalating costs of health care, the pressure to fund Medicare on the US economy, and the complications of insurance and health care payments under the ACA.
This has led to changes in the way companies try to interact with the healthcare system in the future. CVS ‘acquisition of Aetna will seek to leverage healthcare delivery through its pharmacy structure. United Healthcare’s acquisition of DaVita hopes to take advantage of cost containment and resource control through direct physician control. And the recently announced collaboration between Berkshire Hathaway, Amazon and JP Morgan Chase presents an as yet unknown structure whose stated goals are improved quality and lower cost. How they will implement their strategy is yet to emerge.
The decline in hospital admissions over the past few decades has also led to restructuring by hospital corporations like Tenet. Premise Health has emerged as a company that places physicians and other healthcare providers directly in corporate / business offices.
So the big question with these startups is how do organizations know what works financially and how do they track performance …
How can the analyst measure which methods can generate better or better results?
A simple return on investment (ROI) calculation will not provide necessary or valid information. However, the use of profitability analysis (CEA) would provide quite useful, valid and actionable information. CEA uses decision tree models to compare not only the cost results but also the effectiveness results of various treatments on the patient’s health and even on the future use of health care based on various current actions. It can also be used to determine the effectiveness of a certain amount of money spent on a particular treatment or method that will affect the results (i.e., calculation of willingness to pay). CEA models are flexible and can accommodate a wide variety of scenarios. Unlike Big Data, CEA makes use of Broad Data so that treatment modality comparisons can be evaluated using real-life results. You can compare the effects on a specific problem, such as a cancerous tumor, or on ongoing chronic diseases, such as COPD or CHF.
As the provision of effective but cost-effective, or at least cost-effective, health services becomes more challenging, methods for evaluating treatments and programs become more necessary, if not essential. Methods to evaluate these new treatments and programs should be implemented once they are in place so that adjustments can be made. CEA enables organizations to initially evaluate and subsequently monitor new methods and programs in a meaningful way.
If your goal is to provide the best decision making for your organization and take a global view of your business, expanding your sights beyond ROI and educating other decision makers, Profitability Analysis can make your organization more competitive and more profitable.