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Case Study: Leading National Healthcare Provider


Leading National Healthcare Provider: Investment Optimization

An interview with Kevin Hamilton

BRG consultants advise companies in optimizing their investments by employing a data-driven benchmark analysis, taking the guesswork out of profit and loss management.

What was the business challenge?

A three-hospital academic medical center had achieved strong operating margins for many years but, as with many strong health systems, was concerned about the impact of healthcare reform on future performance. The organization’s internal-gap analysis identified the need to improve performance through reduced costs and/or increased revenue by $100 million to $125 million per year over the next five years. While traditional methods of performance improvement (e.g., reducing labor and supply costs, improving revenue-cycle operations) were important, the client recognized that it would need to employ different methods to truly transform the organization. 

The client interviewed 15 consulting firms and selected BRG to begin a multiyear engagement. The project work included deployment of leading-edge clinical redesign, in addition to traditional performance improvement methods, all underpinned by our BRG consultant's analytical expertise, allowing the organization to reach new levels of performance.

What was your role with the client?

BRG’s data analytic capabilities focus on the identification of actionable opportunities for our clients and their customers. These identified opportunities may include process redesign, right-sizing of services, entry into new markets, or increasing the overall value of care provided to patients.

Key components of the project included:

Data Identification: Identifying the different key data components that would be required for the analysis. This discovery phase included:

    • Incorporating the identified data components into a flexible and comprehensive data warehouse
    • Blending disparate data sets to create a more holistic view of a patient visit
    • Seeking out and integrating publicly available data to enhance the analytics

Data mining: Utilizing advanced visualization tools for pattern discovery, including:

    • Cluster analysis by patient, physician, and disease classification
    • Outlier identification and quarantine

Data-Driven Benchmarking: Robust benchmarking and variation analysis, including:

    • Linear regression analysis to better understand the determinants for case cost (e.g., length of stay, physician, severity of illness)
    • Cost normalization and benchmarking of risk-adjusted cases against best practice
    • Quality of care analysis using a cutting-edge cost-of-complication statistical model to identify the impact of potentially avoidable complications
    • Deployment of optimization algorithms that seek the most appropriate price to charge for an item or procedure given the patient mix, competitive landscape, and reimbursement attributes
    • Normalization and cluster analysis of supply purchase data to discover patterns of cost-saving opportunities
    • Regression analysis to understand the relationship between volume changes and staffing flexibility
What were the results?

To date, the BRG project team has implemented more than $90 million in additional annual improvement, and the client is on track to achieve its margin goals and position itself for future health reform. Our client recently told us, “BRG’s cutting-edge tools, industry-leading experts, and analytical capabilities were key drivers to the success of the project.”