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Big data in healthcare: The secret to calculating total cost of care

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Technical Writer

Your hospital's finance department likely knows how much a knee replacement surgery costs. With the recent adoption of value-based care, however, providers will soon need to know more than the price of a single surgery. They need to know the total cost of care for each patient and each condition. This means hospitals and medical providers must figure out the amount spent on knee replacement appointments, treatment and therapy, in addition to the cost of the surgery, rehabilitation services and any complications. It's no easy task, but the use of big data in healthcare can help.

Total cost calculations

If your hospital cannot currently determine the total cost of care for patients, you're not alone. According to the HealthLeaders Media Strategic Cost Control survey, only 5 percent of respondents can calculate the total cost for all services they provide, despite the fact that 68 percent are actively involved in value-based care or plan to be in the near future. In order to meet federal mandates, providers will need to know the total cost of care for every patient, but this calculation isn't as simple as adding up numbers.

According to Healthcare IT News, one of the biggest issues with data integration is that various data systems define data objects, like a person, member and patient, differently. As a result, the concepts don't map neatly between systems. The fact that the information is often stored in different locations, including hospitals, clinics, long-term care facilities and primary care offices, adds to the complexity. In many cases, hospitals also lack the tools to automate the calculation process.

Using data tools to integrate data from multiple formats

Advanced analytics tools can simplify the data-collection process and increase the accuracy of reporting. For instance, when the Seton Health Alliance accountable care organization is crunching its numbers, it must aggregate data from more than 2,000 providers and 40 different electronic health record systems, according to the Healthcare Financial Management Association. To streamline this task, the group invested in analytics tools that could collect and standardize data. Seton Health Alliance is now able to easily calculate total medical spend per member per month, and the alliance reduced this number by 9 percent between 2013 and 2014, saving $10.4 million.

Seattle Children's Hospital has also seen significant results from using data tools to analyze care and costs for each patient. By using an advanced analytics solution to mine data from 10 different data sources, such as electronic medical records and billing and general ledger systems, the hospital can determine exactly what care was provided to each patient as well as the cost of the services. In addition to calculating the cost of care, the hospital can also spot treatment and health trends thanks to historical data. This allowed the organization to improve treatment protocols and add additional resources where needed. Because of the volume of data created by the hospital's 375,000 annual outpatient visits, this level of analytics would not be possible without advanced data tools.

Big data in healthcare can provide the information you need to determine total cost of care for your patients. You need this information to meet federal mandates, but more importantly, this calculation will help you provide the highest quality care at the lowest cost, thereby improving your services and the lives of the people who depend on you.