IBM Software

Business Analytics

The AQ Journey:
Business Analytics
at MedeAnalytics
Hospitals and healthcare providers today face a range of daunting
challenges, with financial challenges among the most pressing and the
most complicated. Hospitals have to serve the sick and injured – often
without regard to a patient’s ability to pay. At the same time, these
institutions need to remain financially solvent, even if they are non-profit.
These competing realities can land them in situations that are ethically
sound, but financially ruinous. Successfully navigating these turbulent
waters is far easier for healthcare organizations with a high Analytics
Quotient or “AQ.”

California-based MedeAnalytics is a company that helps hospitals and

other healthcare organizations boost their AQ with analytic solutions
for financial, operational and clinical performance. With its Self-Pay
Analytics solution, which is powered by IBM® SPSS® Modeler,
MedeAnalytics develops statistical models that enable hospitals to
improve their accounts receivable performance and make better use
of their finance staff.

Business outcomes
Through an organization-wide culture of analytics, MedeAnalytics
developed a predictive model to segment self-pay accounts based upon
probability of payment. Once implemented, the results were dramatic.
Using the Self-Pay Analytics solution, one of the hospitals that uses
the solution:

• Increased self-pay collection rates by 12 percent

• Reduced collection agency fees by $25,000 per month
• Reduced bad debt write-offs by 30 percent
• Reduced self-pay collections staff by more than 50 percent
IBM Software
Business Analytics

In addition, for the people on the patient financial services team doing
the difficult collection work of sending letters and making phone calls,
the result was less frustration, higher morale and more time to spend
on other important duties.

Over the years MedeAnalytics has helped its customers build a vision
and advance its AQ journey. The following is a typical progression a
customer would follow.

Phase 1: Novice
For hospitals, the most financially problematic segment of the patient
population is composed of self-pay patients who are uninsured or
underinsured. Hospitals often spend an inordinate amount of time and
effort making repeated attempts to collect payment from people who
are either unable or unwilling to pay their bills. The collection rate for
this group of patients typically runs in the 15 percent range. Hospitals
facing this frustrating, unsustainable situation often think that “there
must be a better way.” And when they work with MedeAnalytics, they
find out that there is.

Phase 2: Builder
The MedeAnalytics Self-Pay Analytics solution enables hospitals
to segment patients into high, medium and low-risk categories.
Hospitals with large self-pay populations can measure and predict
patient payment behavior and reduce risk from bad debt by
dramatically boosting collection rates.

The Self-Pay Analytics solution weighs a number of variables, including

the patient’s age, payment history and credit score, the type of treatment
or procedure, the type of admission to the facility (for example,
emergency room or doctor referral) and other factors that affect
the probability of payment. Then, using decision-tree segmentation,
the hospital identifies those patients who should be contacted by
the provider’s own staff, those whose unpaid bills may be re-categorized
as charitable or pro bono services, and those whose accounts should be
sent to a collection agency.

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IBM Software
Business Analytics

One hospital in Florida, for example, faced a growing percentage of

self-pay patients and had 16 members of its business office staff assigned
to these collections. Yet their best efforts resulted in collection rates of
less than 10 percent, clearly not a good investment of scarce resources.

Phase 3: Leader
When hospitals achieve the type of dramatic results described in
the previous section, it’s a powerful incentive to identify other areas
that can benefit from analytics. MedeAnalytics is leading the way
by expanding its analytic product offerings in the financial area with
a solution that will help hospitals analyze and verify the charges on
hospital bills.

The company is also developing solutions for the clinical side to help
doctors and insurers work with patients – especially those with chronic
conditions like diabetes or heart conditions – to predict the likelihood
they will remain on or go off their medications and take proactive steps
to motivate those people to re-start their treatment programs. This
approach is likely to save those patients a trip to the hospital – often
the emergency room – and save the hospital significant costs that would
otherwise be incurred.

Phase 4: Master
MedeAnalytics has shown its mastery of the field of healthcare analytics.
In every organization with a high AQ, there are people driving change
through innovative solutions. At MedeAnalytics, one such person is
Predictive Analytics Scientist David E. Mould, Ph.D. With guidance
from people like Dr. Mould, hospitals can be more financially secure
while meeting their moral and legal obligation to provide care for all
regardless of their ability to pay.

Raising the personal AQ

“For us, analytics is all about empowerment,” says Dr. Mould. “We
empower our customers to ask sophisticated, important questions and
receive answers that help drive their business. Within our own walls,
we see people using the platform to make real change. They can
abandon the task of inputting data manually and spend their time more
productively, really digging into the data for insights that will help us
and our customers.”

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About IBM Business Analytics
IBM Business Analytics software delivers actionable insights decision-
makers need to achieve better business performance. IBM offers a
comprehensive, unified portfolio of business intelligence, predictive
and advanced analytics, financial performance and strategy management,
governance, risk and compliance and analytic applications.

With IBM software, companies can spot trends, patterns and anomalies,
compare “what if” scenarios, predict potential threats and opportunities,
identify and manage key business risks and plan, budget and forecast
resources. With these deep analytic capabilities our customers around
the world can better understand, anticipate and shape business outcomes.

For more information

For further information or to reach a representative please visit
ibm.com/analytics.

Request a call
To request a call or to ask a question, go to ibm.com/business-
analytics/contactus. An IBM representative will respond to your
inquiry within two business days.

© Copyright IBM Corporation 2011

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Produced in Canada
May 2011
All Rights Reserved

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