Healthcare Matters

I’ve got a soft spot in my heart for sophisticated data analytics. It’s a tough and frustrating “sell” for the vendors who’ve got the goods, because the folks they’re trying to convince rarely have the educational backgrounds to “fully get” the message. They may not believe it. Although we all learn at a different pace, fortunately, what most of us share in common is our willingness to step on the gas once the evidence is “in.” When that “a ha moment” hits us and all of the sudden the stars line up, we’re renewed with a clarity of purpose. And it feels good.

Wouldn’t it be nice if those experiences were a little less random?

Spend analysis tools in healthcare were a much tougher “sell” a few years back than they are now. Why? Because healthcare SCM professionals figured it out. Rumors of provider successes gave way to mainstream referenceability, which gave way to much broader market adoption –although vendors of sophisticated spend analysis tools would say that it’s still a tough sell and that far too many providers still don’t know what they’re missing.

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Before it was Verisk, it was a private company called the Insurance Services Organization (ISO). ISO was established by the property-casualty insurance industry to maintain a database of rates and losses to help the industry set prices, anticipate claims, and set aside enough reserves to achieve its financial goals. While it used to be all about risk assessment, predictive analytics and decision support, now, Verisk is providing solutions to the healthcare industry specifically designed to help providers implement cost containment strategies. Verisk is public and has rolled up about a dozen data analysis companies to establish a platform it says helps providers “analyze utilization patterns, identify and target wasteful and fraudulent schemes, implement utilization management controls and assess variation in the use of generic versus brand name drugs to promote less expensive, though equally effective, therapies.” There are other “pure data analysis” companies that offer similarly sophisticated applications for optimizing cost and utilization –ParAccel comes to mind and they, too, have a healthcare focused practice area.

Not quite ready to run with a pure analytics provider, then look no further than your data base vendor/services provider. Mostly through acquisition, all of them have shorn up their analytics capabilities over the last few years. The “big data” boon compelled them. Acquisitions such as Teradata’s purchase of Aster (last year) are being driven by the growing demand for technologies that can help enterprises mine massive volumes of unstructured data. Other examples include Hewlett-Packard’s purchase of Vertica, IBM’s acquisition of Neteeza and EMC’s purchase of GreenPlum. Not surprisingly, a growing number of companies are taking advantage how these systems deal with unstructured content such as click-stream data, weblogs, social media and even Twitter streams.

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SCM is a data driven profession. As the “big data era” is now upon us, how we leverage our knowledge of spend in other dimensions (or in a broader organizational context) is going to be key to our professional growth. Get yourself familiar with what’s possible –and you’ll not only end up exercising your existing capabilities, but you’ll acquire a taste for more.

—Tom Finn