Becoming An Insight-driven Organization: Analytics .
Becoming an insight-drivenorganization: Analyticsdelivers concrete businessvalue to health plansFindings from the Deloitte Center for HealthSolutions 2017 US Health Plan Analytics SurveyExecutive summaryMany health plans are facing uncertainties: the changinghealth insurance landscape, the speed at which valuebased care is approaching, and growing demands fromcustomers, to name a few. At least one investment mayhelp executives meet each of these challenges—aninvestment in analytics. Health plans are data rich, yetthose data are not always leveraged to understand whathappened and why, or predict what is likely to happen.Health plans that do not take advantage of their datamay risk being disrupted and left behind.The Deloitte Center for Health Solutions conductedan online survey of 45 analytics professionals athealth plans (with 250,000 or more members) tobetter understand the priorities and challenges ofimplementing analytics within a health insuranceorganization. Nearly 40 percent of respondentsrepresented Blue Cross Blue Shield affiliates, and ofthose that had an enterprise analytics leader (n 35),over 80 percent reported to a vice president or higher.The survey helps to provide a window into top-of-mindissues facing health plan analytics departments. TheCenter also conducted 15 interviews with executivesat health plans and technology companies to betterunderstand leading practices and lessons learned frominsight-driven organizations.Key findings from our survey and interviews include: Analytics is a critical asset for long-termstrategy: Two-out-of-three survey respondentsagreed that analytics is extremely important to theirorganization as a competitive differentiator.As many early adopters of analytics begin to seetangible results (e.g., increased efficiencies, improvedaffordability/reduced medical costs, or enhancedcustomer engagement/experience), later adopterswill likely need to catch up or be left behind. Projectedspending on analytics mirrors this view—33 percentof respondents expect spending on analytics willincrease substantially over the next three years.Despite many being in a resource limited environment,interviewees stated that their leadership understandsthe value that analytics brings to the table, andsupports investments. Analytics drivers are business drivers: Financialgoals, such as reducing medical and operating costs,are among the leading drivers of analytics investmentsamong survey respondents. Clinical and customeranalytics are priority investments in the next year,particularly in the areas of cost and utilizationmanagement and customer experience. Many health plans prefer to buy vs. build theirown solutions: Rather than build them, more thanhalf of survey respondents intend to buy, rent, or usea hybrid approach to acquire solutions to their topanalytics priorities in the coming year and over thenext three years. However, respondents preferredto keep day-to-day analytics activities in-house.Our interviews suggest that keeping analytics inhouse is more secure, and health plan analyticsrequires market and organizational-specific businessknowledge that is not easy to outsource. Deloittebelieves analytics is a critical part of health plans’business models, and retaining in-house expertise willlikely be essential to their long-term competitiveness.
Becoming an insight-driven organization: Analytics delivers concrete business value to health plans Data quality, technology, and access to skilledlabor are big barriers to analytics investmentsand implementation efforts: Data quality is themost commonly cited barrier to analytics investmentsand implementation, followed by asset-relatedbarriers: tools and technology, access to skilledresources, and funding. Without enterprise-wideagreement on data definitions and requirements,analytics outputs are not trusted and can lead toineffective insights. Thus, health plans could benefitfrom investing time and resources to ensure thedata they use are valid and meaningful. Additionally,as health plans try to improve their technology, theyare met with a plethora of technology options in themarket that can be overwhelming when determiningthe best course forward. Finally, with skilled analyticslabor in short supply, health plans will likely not onlyhave to compete with each other, but with otherindustries as well to capture talent.What is analytics“Analytics” refers to the systematic use oftechnologies, methods, and data to deriveinsights and to enable fact-based decisionmaking for planning, management, operations,measurement, and learning. Analytics functions are generally centralizedwithin an organization: While most surveyrespondents stated that analytics functions relatedto hardware/infrastructure, data storage, and datapreparation are primarily owned by informationtechnology (IT), there was a closer split of IT andbusiness ownership for the building of reports.Despite differences of primary ownership, the majorityof respondents stated that their analytics functionswere generally centralized into a shared service forthe enterprise to capitalize on economies of scale andcompetency. Regardless of which function is ownedby IT or business, a coordinated, business-drivenapproach to analytics is generally key to ensuring thatanalytics initiatives are aligned with business goals.“If our value-basedtransformation andcybersecurity are the toptwo priorities for our CEOand the board, analyticsis number three.”—Chief Analytics Officer2
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansFindingsAnalytics is a critical asset for long-term strategyAbout two-thirds (67 percent) of survey respondentsconsider analytics extremely important to theirorganization’s long-term competitive strategy. Manyanalytics leaders we spoke with have utilized highvalue use cases to demonstrate the proof of valueand/or return on investment as they present thebusiness case for analytics to their leadership. All ofthe health plan representatives we interviewed see awell-developed analytics capability as a basic businessnecessity.Not surprisingly, survey results point to increasedspending on analytics in the coming years. As shown inFigure 1, more than 75 percent of respondents expecttheir analytics spending to increase in the next year,with similar increases in the years that follow.Figure 1. Four out of five respondents expect spending on analytics to increase in the near-term futureSpending on analytics is expected to .In the next 3 yearsNext yearIncrease a lot24%Increase a little53%Remain the same22%Decrease a little0%Decrease a lot0%Increase a lot33%Increase a little42%Remain the same18%Decrease a littleDecrease a lot7%0%0%10%20%30%40%50%60%Source: Deloitte Center for Health Solutions 2017 US Health Plan Analytics SurveyBusiness case for analytics can sell itself When working with employer clients, some health plans use claims analyses to illustrate the conditionsthat drive costs for their employees. This can trigger conversations about care management programsthat the health plan can offer around these conditions, and how such programs can help reduce costsand improve care and employee health. A health plan with a large Medicare Advantage book of business attributes its consistently highperformance on STAR ratings to its analytics. Dedicated analysts keep a constant watch on “leadingindicators”—pieces of data that drive specific STAR measures. If they see a downward trend, or if thetolerance threshold for that measure is crossed, the analysts raise the issue with the internal operationsteam (such as medical management) that has the ability to intervene and correct the trend.3
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansAnalytics drivers are business driversAll analytics leaders we interviewed tie analytics to strategic business priorities. As a result, they see strong supportfrom their leadership for their analytics enterprise objectives.Based on our survey results, four major business goals drive analytics investments. The leading driver is improvingmember/customer experience. The other three of these top-tier goals are financial (Figure 2, green bars).Figure 2. Financial goals are important drivers of analytics investmentsWhich of the following business goals currently drive your health plan's analytics investments?Improve member/customer experience56%2nd tier1st tierImprove medical costs/affordability49%Reduce operating costs/inefficiencies44%Pursue financial profitability andrevenue growth opportunies44%Meet customer needs and requirements31%Drive innovation31%3rd tierReduce regulatory and compliance riskCollaborate with providersSource: Deloitte Center for Health Solutions 2017 US Health Plan Analytics Survey429%16%
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansBlue Cross Blue Shield plans tended to prioritize customerexperience, whereas non-Blue carriers’ top priorities werefocused on improving medical costs and affordability. Improvement of member/customer experience wasthe top priority for 71 percent of Blue Cross BlueShield plan respondents versus 46 percent ofnon-Blue plan respondents. Among non-Blue plan respondents, 64 percentsaid top priorities include improving medical costs/affordability. By contrast, 24 percent of Blues planrespondents identified this as the top priority.Immediate analytic investment priorities often balanceoverall organizational goals and today’s businesspressures. Cost utilization and customer experienceare top investment priorities for the coming year perour respondents (Figure 3).Figure 3. Short-term analytics efforts focus on improving costs and customer experienceIn which of the following areas are you prioritizing an increased investment? (Rank top three)42%Customer andemployer analyticsClinical analyticsCost and utilizationCare management29%Network and value-based care20%Population health20%Customer experience40%Sales and client management18%Marketing and branding13%Market andfinancial analyticsRegulatory and compliance29%Strategic positioning24%Accounting and financial16%Product and pricing7%OperationalanalyticsTechnology and facilities27%Back office operationsHuman resources13%2%Source: Deloitte Center for Health Solutions 2017 US Health Plan Analytics Survey5
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansThrough our interviews, we heard about some earlysuccesses in leveraging analytics for managing costand utilization trends, and these activities tend to crossdepartments and disciplines, touching on customerexperience, provider networks, utilization management,and fraud and abuse: Focusing on the customer experience can improvecost and utilization and deliver a better experiencemore efficiently. One plan was able to close between350,000 and 400,000 gaps in care in one year throughpersonalized member communications. The plan usedanalytics to build consumer personas, with differentpersonas reflecting consumers’ values and how theymake decisions directly or indirectly related to healthcare. Based on these personas, the organizationdetermined the most appropriate approaches forreaching consumers, thereby creating an interventionpoint to change behavior. One organization has worked for several years withthe state hospital association, provider groups, andaccountable care organizations on data, and ondeveloping programs with a focus on preventableadmissions and preventable ER visits. It is beginningto see cost savings from those programs. Without asolid foundation in data and analytics, it would nothave been able to locate the patterns in the data andachieve these outcomes.and government data, it can help identify instancesof improper coding. A practice with a physicianand an advanced practice registered nurse mightbill a disproportionate number of hours under thephysician. The plan can intervene before claims arepaid and share the data with providers to help themimprove documentation.Many health plans prefer to buy vs. build theirown solutionsFor top analytics investment priorities (e.g., costutilization analytics and customer experience analytics),more than half of respondents said they intend to buy,rent, or use a hybrid approach, and approximately onethird expect to build those solutions in-house (Figure 4).Figure 4. More than half of survey respondentsintend to buy, rent, or use a hybrid approach fortheir top analytics priorities in the coming yearInvestment strategies for analyticssolution priorities in the next year15%33% Another health plan uses analytics to identify patientswith multiple hospital admissions. This health planmines call-center data from hospitals and emergencydepartments to identify member eligibility inquiries andcompares the data from these calls against its historicalclaims data. When a readmission is found, the case isimmediately referred to a focused care managementprogram. Nurse care managers then work with thesepatients and their providers to help avoid a futurereadmission. The plan estimates this initiative produces 2 million in annual savings from cost avoidance. Through the application of analytics, health plans canidentify uncommon trends, such as unusually largevolumes of certain diagnoses or procedures. Forinstance, when a health plan is able to combine claims53%BuildBuy/rent/hybridUnsureSource: Deloitte Center for Health Solutions 2017 US Health PlanAnalytics Survey6
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansOur respondents often rely on vendors to help stand up these solutions and customize them to their organizationalneeds, but many look to keep day-to-day analytics capabilities in-house rather than outsource them (Figure 5). Ourinterviews suggest that two main considerations drive this: (1) data security, and (2) market- and organizationalspecific knowledge requirements to interpret the data. Many health plan respondents believe that keeping datainside their four walls reduces security risks. Additionally, they believe the data analysis requires an understandingof their business, which can be best served by their in-house analytics team. We believe analytics is a criticalpart of health plans’ business models, and retaining in-house expertise will likely be essential to their long-termcompetitiveness and future value proposition.Figure 5. Survey respondents prefer to keep analytics activities in-houseWhich of the following analytics activities do you intend to keep/bring in-house or outsource in the next 3 years?Report and businessintelligence creationAnalytics/algorithm development(including data science)14%14%21%79%Data transformationand preparation86%86%Keep/bring in-houseOutsourceSource: Deloitte Center for Health Solutions 2017 US Health Plan Analytics Survey“Our resources are focused on thedelivery side this year. We will add fulltime employees to take advantage ofthe other two pillars—market side andfinancial—but we will not shift focusaway from the delivery side becausethat’s where the most cost levers are.”—Chief Information Officer (CIO) andVice President of Health Network Services7
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansData quality, technology, and access to skilled labor are big barriers to analytics investments andimplementation effortsData quality is the most commonly cited barrier to analytics investments and implementation by ourrespondents, followed by asset-related barriers: tools and technology, access to skilled resources, and funding(Figure 6). Culture and politics rounds out the top five barriers.Figure 6. Barriers to analytics investments and implementationTop 3 barriers to analytics investments and implementation efforts*Data qualityTools and technology22%11%18%Funding18%Culture and politics13%Data access13%Fragmented ownership 2%24%18%Access to skilled resourcesC-suite sponsorship/leadership 2%16%22%9%11%18%11%4%13%4%11%9%7%16%4%Ranked #1Ranked #2Ranked #3*Responses ranked by composite score, where a higher weight is assigned to a higher rankSource: Deloitte Center for Health Solutions 2017 US Health Plan Analytics SurveyBarriers to analytics investments and implementation may be relatedWhen analysts spend 60 to 70 percent of their time on data preparation and cleaning, they can have littlecapacity left to perform actual analytics, exacerbating staff challenges. Furthermore, many businesssystems and processes do not support analytics needs. Many of these systems were designed solely withadministrative goals in mind—pay claims, take phone calls, or answer member inquiries. Little thought wasgiven to the potentially useful information generated by those activities. As a result, these systems do notusually capture valuable data. Changing or overhauling these systems, however, often requires major capitalinvestments, complex implementations, and operating in a dual environment until transition from a legacy toa new system is complete.8
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansIn regard to data quality, most survey respondentsstated that they have data governance in place, butsome organizations have significant work to do in thisarea. Almost half of survey respondents have limitedto no data governance (Figure 7). Our intervieweessuggest that even leading organizations are not asadvanced as they would like to be in this area. Oftena majority of the data are governed, but pockets stillremain outside the governance organization. Datagovernance is important because poor data canresult in incorrect analysis or erroneous conclusions.Stakeholders will often question the validity of analyticsresults, and proving to them that the data are cleanand valid helps alleviate some of their concerns.Better data can improve organizationalefficiencyOne plan we spoke with invested in a membermaster-data solution. The goal was to measuretrue disenrollment. Within the plan’s legacy datasystem, when a member moved from one productto another, it would lose track of that memberbecause there were different member ID numbersacross various product databases. Linking thoserecords and determining true retention rates wasdifficult and time consuming.Figure 7. Some organizations have significantdata governance needsWhich best describes yourhealth plan’s data governance?4%20%22%18%36%A high functioning data governance organization existsAll enterprise data is governed by a data governanceorganizationOnly critical enterprise data assets are governedSome control of data exists within each business areaData is not controlled by firm policiesSource: Deloitte Center for Health Solutions 2017 Survey of US Health Plan AnalyticsWith master data, the organization is now able togenerate target lists of disenrolled members andconduct outreach much more efficiently. Salespeople no longer chase individuals who simplyswitched products, and instead focus their effortson people who actually disenrolled. Many of thisplan’s Medicaid members leave not by choice, butbecause they lose eligibility. The plan’s sales teamcan identify and work with these individuals—andwith government agencies—to help them qualifyfor Medicaid and re-enroll.9
Becoming an insight-driven organization: Analytics delivers concrete business value to health plansAs survey respondents looked toward more advancedtechnologies, big data platforms were of most interestto them (Table 1). Cloud-based data platforms (e.g.,Amazon Web Services) and cognitive computingtools (e.g., IBM Watson and Cognitive Scale) werealso of great interest to respondents over the nextthree years. In our interviews, we heard excitementand skepticism about cognitive computing, and alsodifferences in understanding of the terms “cognitive,”“machine learning,” and “artificial i
Becoming an insight-driven organization: Analytics delivers concrete business value to health plans 4. Analytics drivers are business drivers. All analytics leaders we interviewed tie analytics to strategic business priorities. As a result, they see strong support from their leadership for their analytics enterprise objectives.
Becoming an analytics-driven organization to create value Challenge 1 Building the right organizational structure and governance framework to support value-driven decision-making While centralized governance is needed to collect data from across the business and convert it into valuable business insight, companies can also benefit from a
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