Corus™ Suite: Next-Generation Cost Management Technology

Next-Generation Cost
Management Technologies
CORUS™ Suite
June 2017

© 2016 Health Catalyst
Proprietary and Confidential
Agenda Topic Topic Details
Introduction • Agenda review
The Need for Activity-Based
Costing
• Surviving in both fee-for-service (FFS) and value-based worlds
• Cost accounting basics
• Healthcare cost-accounting pain points
• Why costing matters: Peds example
How CORUS works
• CORUS Suite overview
• Costing the Health Catalyst way
• Is my organization prepared?
Conclusion
• Feedback
• Actions and next steps
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“The only way to be successful in the new world
of value-based healthcare and population health
is to understand your true costs and manage
them. To get there, we need access to massive
amounts of data from across the care
continuum to identify all of the resources used in
delivering patient care.”
Robert A. DeMichiei, EVP and CFO, UPMC

Why Would Health Catalyst Do This?
4
Predicted
Utilization of
Population
Contracted
Utilization
Cash
Received
Cost to
Deliver Care
Actual
Utilization
Margin
Millionsof$
1 Source: Moody's Investors Service, "U.S. Not-for-Profit
Hospital 2014 Medians" report, September 2015.
Median is 2.6%1

Poll Question
Does your organization consider cost accounting a
critical component to succeeding in value-based care?
- Strongly Agree
- Agree
- Disagree
- Strongly Disagree
- I don’t know / Not applicable
5

Cost Accounting Basics
6
GENERAL LEDGER
(COST)
SERVICES
Linking expenses from the GL to
services delivered is the key to
accurate and useful cost data
EVERYONE’s cost is
accurate at a high level –
the GL don’t lie!
LINKING

Healthcare Cost-Accounting Pain Points
7
Current cost accounting systems are outdated
• Process is time and resource intensive to maintain and
update
• Current cost accounting systems struggle to handle
the amount and type of data needed
• Validation of data and reconciliation of cost is tedious
Historically under-invested in
• Just a person or two checking boxes, which are mostly
used for internal financial reporting
• Lack of transparency into calculations limits buy-in
from key stakeholders

8
Problems with Existing Solutions/Methods
Cost data that comes from: Cost data from actual utilization:
Existing Solutions Our Approach
Procedures Charges Averages
& Guesses
EMR
Activity
Supplies Dept. IT
Systems
Procedures Dept. IT
Systems
Staff &
Payroll

9
Why Costing Matters
Costing of two patients in a clinic under the different costing
methodologies
Total quarterly cost for the “HC Peds Clinic” department from the General Ledger
was $225,000
- Patient A: Toddler with an ear infection
 Scheduled for “possible ear infection”; physician removed earwax in the
patient’s ear, identified infection and called in antibiotics
 Total visit time was 10 minutes and physician billed a 99214 visit and 69210
for ear wax removal
- Patient B: Teenager with ongoing “headaches”
 Scheduled for “headaches”; physician performed an extensive evaluation and
spoke with parents for 20 minutes
 Total visit time was 30 minutes and physician billed a 99215 visit

RCC Example Charges RCC Patient Cost
Ear Infection $220 45.0% $99
Teen with Headaches $200 45.0% $90
Patient Average $95
10
Costing Example – RCC Method
Costing of two patients in a clinic under the different costing methodologies
- Total cost for the “HC Peds Clinic” department from the General Ledger was $225,000
- Patient A came in for “possible ear infection” and Patient B came in for “headaches”
Total Charges Total Cost RCC
$500,000 $225,000 45.0%
The total cost for the department is divided
by the total charges for the clinic to come
up with a ratio ($225k/$500k) = 45%
The ratio of cost to charges is then applied
to each patients charges in the clinic to
come up with a cost for their encounter

RVU Example RVU's Cost per RVU Patient Cost
Ear Infection 4.42 $22.50 $99
Teen with Headaches 4.07 $22.50 $92
Patient Average $96
11
Costing Example – RVU Method
Then total cost for the department
is divided by the total RVUs to
come up with a cost per RVU
($225k / 10k) = $22.50 per RVU
RVUs are assigned to
each charge code
based on fee schedule
and/or department
manager input; total
RVU’s are then
calculated for the dept.
The cost per RVU is then applied
to each patients RVUs in the
clinic based on their
procedures/charges to come up
with a cost for their encounter.
Total RVU's Total Cost Cost per RVU
10,000 $225,000 $22.50

Value
Cost per
Activity
Total Activity
Cost Total Cost
Ear Infection
# of Visits 1 $36.00 $36.00
Scheduled Minutes 10 $2.70 $27.00 $63
Teen with Headaches
# of Visits 1 $36.00 $36.00
Scheduled Minutes 30 $2.70 $81.00 $117
Patient Average $90
12
Costing Example – ABC Method
Activities Value Allocation % Total Cost
Allocated
Costs
Cost per
Activity
# of Visits 2,500 40% $225,000 $90,000 $36.00
Scheduled Minutes 50,000 60% $135,000 $2.70
100% $225,000
Clinic costs are allocated
to each driver (e.g. front
desk staff salaries are
driven by the # of visits
and nurses/MA’s are
best captured by minutes
with patients)
Allocated costs are
divided by actual
utilization for each activity
($90,000 / 2,500 visits) =
$36 per visit & ($135,000 /
50,000 minutes) = $2.70
per minute
The cost per activity is then
applied to each patients
actual activity calculate a
cost per activity and a cost
per encounter.
The best available
activities that drive
costs are selected

Comparison RCC RVU ABC
Average Cost $95 $96 $90
Ear Infection $99 $99 $63.00
Teen with Headaches $90 $92 $117.00
Variance $9 $8 ($54)
% Variance 10% 9% -46%
13
Why Costing Matters
Average cost for these patients is
similar for all methodologies
However, ABC accurately highlights
the variation between the
resources used by each patient
Potential impact on 1 million visits each year = $54 million variance.
You cannot make the right strategic decisions to improve care while
lowering costs without this kind of data.

14
Step 1: Assign true costs to each patient
based on their actual utilization
 Drug, supply and labor costs (when available)
What methodologies does CORUS support?
Step 2: Remove all true patient costs
from GL
Step 3: Allocate remaining expenses to
patients using the best available driver(s)
 Minutes in OR, number of images, scheduled
minutes, etc. (currently have 20+)
$
$
$
Patient’s Activity for Allocations
 Minutes in OR
 Number of imaging procedures
 Scheduled minutes in clinic
 Number of registrations

Poll Question
What costing methodology does your organization
use? (check all that apply)
- Ratio of Cost-to-Charges (RCC)
- Relative Value Units (RVU)
- Activity Based Costing (ABC)
- Other
- I don’t know
15

Agenda Topic Topic Details
Introduction • Agenda review
The Need for Activity Based
Costing
• Surviving in both fee-for-service (FFS) and value-based worlds
• Cost accounting basics
• Healthcare cost-accounting pain points
• Why costing matters: Peds example
How CORUS works
• CORUS Suite overview
• Costing the Health Catalyst Way
• Is my organization prepared?
Conclusion
• Feedback
• Actions and next Steps
$
$
$

17
 EMR
 Patient Accounting
 General Ledger
 HR/Payroll
HealthCatalystData
OperatingSystem
Activity-Based Costing
 System set-up and administration
 Build and assign cost models
 Enter activity-based costing
allocations
 Create cost driver queries
 Link costs to patients/activities
 Supply Chain
 Pharmacy
 Affiliate Data
 RTLS
CORUS
CostEngine
Cost Insights and Analytics
 Leverage detailed and actionable cost
data across your analytics
environment
 Cost Insights, Qlik/Tableau apps,
Excel, SQL, etc.
WebApplicationCORUS Suite Overview

Activity-Based Costing: Dashboard

Activity-Based Costing: Allocations

Cost Insights: Provider Comparison

Costing the Health Catalyst Way
Recognized in 2017 as “Best in KLAS for healthcare business intelligence and analytics.”
• Embedded costing knowledge from world-renowned academic
medical institutions, accelerating cost management transformation.
• Integration of EMR and financial data, including patient-level clinical and
operational data, delivering the first truly comprehensive view of the cost of patient care.
• Manufacturing-style activity-based costing that is scalable and maintainable,
freeing analysts to focus on identifying variation and cost saving opportunities.
• Dramatically more timely and actionable cost data based on
healthcare’s most advanced analytics platform, which supports
over 160 source systems.

Poll Question
How ready is your organization to implement
more accurate costing methodologies?
- Very ready
- Moderately ready
- Somewhat ready
- Not at all ready
- N/A – our costing is good enough
22

People and Process
Traits of accountants
• Organized
• Attention to detail
• Professional expertise
• Creativity

So Many Processes, Products to Cost….

Start With the End in Mind
Project planning
Timeframe
Data needs
Risk planning
Pre Work
Analyze data in EMR
Determine starting point
Stakeholder Analysis
Who can help our project?
Who can hinder us?
KeepSatisfied
Meet Their Needs
Key Player
Manage Closely
Monitor
Minimum Effort
KeepInformed
Show Consideration
Low High
High
Interest of Stakeholders
Power/Influence
ofStakeholders

Data Governance
What existing structures exist in your organization?
 CFO group
 Service line leaders
 Specific working group
Triple Aim of Data Governance *
 Ensure data quality
 Build data literacy
 Maximize data exploitation
* Dale Sanders, Executive VP, Product Development, Health Catalyst

All of the Data in the EMR, Departmental and
Financial Sources
What data do we have available?
Get to know the clinical data stewards.

Data Searching
Event # of Cases % of Cases
Patient Arrived 920 1.49%
Patient Arrived in Dept 2301 3.73%
Patient Departs PeriOp 55320 89.70%
Patient in Pre-OP 56129 91.01%
Patient in Room 60420 97.97%
Patient Out of Room 58272 94.48%
Patient Out PreOp 51104 82.86%
Staff Type CountOfCases % of time LOS calculated
Circulator 42328 68.63%
First Assist TCV 1417 2.30%
Monitoring Nurse 3808 6.17%
Orientee - Circ 64 0.10%
Special Procedure Tech 2103 3.41%
5 0.01%
Vendor Representative 763 1.24%
Physicians Assistant 49 0.08%
Relief Scrub 6510 10.56%
Finding drivers
Studying the data available

Data Linking
EMR General Ledger
EMR Supply Chain
EMR Payroll
Contract
Physicians
Patients EMR

People Linking
Finance Clinicians
Finance Domain Specific EMR Experts
Finance Supply Chain

Two Final Important Pieces
Communication
 Go back to stakeholder analysis
 Advertise your product
Education
 Get reports needed by clinical experts
 Constantly champion your product

Investment
 Focus on differentiating
capabilities
 Align cost structure
 Reorganize for growth
 Enable change and cultural
evolution
Authors: Vinay Couto, John
Plansky, Deniz Caglar

“The only way to be successful in this new
world is to understand costs and manage
them — if you can't manage your costs you
won't survive.”
Robert A. DeMichiei, EVP and CFO, UPMC

Thank You
Interested in chatting about CORUS or cost management in
general?
Dan Unger dan.unger@healthcatalyst.com
Bobbi Brown bobbi.brown@healthcatalyst.com

Healthcare Analytics Summit 17
ERIC J. TOPOL
Author, The Patient Will
See You Now and The
Creative Destruction of
Medicine. Director,
Scripps Translational
Science Institute
DAVID B. NASH,
MD. MBA
Dean, Jefferson
School of
Population
Health
JOHN MOORE
Founder and Managing
Partner, Chilmark Research
ROBERT A. DEMICHIEI
Executive Vice President and
Chief Financial Officer, University
of Pittsburgh Medical Center
THOMAS D.
BURTON
Co-Founder, Chief
Improvement Officer,
and Chief Fun Officer,
Health Catalyst
DALE SANDERS
Executive Vice
President, Product
Development,
Health Catalyst
THOMAS DAVENPORT
Author , Consultant
Competing on Analytics*, ,
Analyitcs at Work, Big Data at
Work, Only Humans Need
Apply:Winners and Losers in the
Age of Smart Machines.
*Recognized by Harvard
Business Review editors as one
the most important management
ideas of the past decade, one of
HBR’s ten must-read articles in
that magazine’s 90-year history.
Summit highlights
Industry Leading Keynote Speakers
We’ll hear from well-known healthcare visionaries. We’ll also
hear from two C-level executives leading large healthcare
organizations.
CME Accreditation For Clinicians
HAS 17 will again qualify as a continuing medical education
(CME) activity.
30 Educational, Case Study, and Technical
Sessions
We have the most comprehensive set of breakout sessions of
any analytics summit. Our primary breakout session focus is
giving you detailed, practical “how to” learning examples
combined with question and opportunities.
The Analytics Walkabout
Back by popular demand, the Analytics Walkabout will feature
24 new projects highlighting a variety of additional clinical,
financial, operational, and workflow analytics and outcomes
improvement successes.
Analytics-driven, Hands-on Engagement for
Teams and Individuals
Analytics will continue to flow through the three-day summit
touching every aspect of the agenda.
Networking and Fun
We’ll provide some new innovative analytics-driven
opportunities to network while keeping our popular fun run and
walk opportunities and dinner on the down.
Sept. 12-14, 2017
Grand America Hotel
Salt Lake City, UT

What do you think?
Feedback / Questions
36

Appendix
37

Why Costing Matters: OR Use Case

Why Costing Matters: OR Use Case (cont’d)

Corus™ Suite: Next-Generation Cost Management Technology

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