Aurora Health Care’s Journey Towards Better Cost Information Patrick Nolan, Vice President of Finance, Aurora Health Care Tracy Greiten, Director of Operational Informatics, Aurora Health Care

Situation Opportunity: As an organization we needed more comprehensive and meaningful cost data to support everything from quality initiatives to population health management. Problems: Cost accounting system was antiquated Cost allocation methods were not developed with a standard approach Only hospital cost data was available We were not leveraging critical cost information in the system Cost information was not being utilized where critically needed

New Program Implementation Aurora selected Strata Decision Technology software to supports it’s cost data development Implementation Goals Improve processing time and leverage improved system flexibility Standardize cost allocation methods across service lines Develop cost data for clinic based services Leverage actual supply and drug costs contained within other systems Optimize the use of cost information across the system

System Improvements Processing time went from 24 hours to 2 hours for full costing Corporate expenses allocated at a more detailed level Enhanced ability to reallocate cost outside the general ledger Easier system maintenance Better validation tools Improved reporting

Service line Standardization Developed Cost Allocation Teams focused on service lines Initially focused on labor allocations in our largest service areas Teams have representation from cost accounting, financial planning, and operations. Each function plays a specific role on the team Developed clear timelines and goals for each team Allocation teams have guiding principles Focus on the pursuit of meaningful variation Keep materiality in mind Don’t get distracted by perfection Consider on-going maintenance in your approach All changes must be tested and validated

Clinic Costing Developed a clinic cost model for the first time Learned about approaches from other Strata clients Navigated the unique challenges of professional billing and our clinic org structure Use Medicare based RVUs as a basis for allocating cost Aligns closely with physician compensation and reimbursement Other methods used where we had more detailed information or where RVUs were not assigned

Hospital Supply and Drug Costing Leverage actual supply acquisition cost in key areas For our ORs and Cath labs we are able to leverage existing utilization and purchasing data to incorporate actual acquisition cost for supplies (even those not charged) Leverage actual drug acquisition cost in hospitals Utilize Epic utilization data to apply GPO pricing to administered drugs Apply 340b savings where applicable

Cost Data Optimization Developed an approach to ensure we maximize the impact of our costing work Includes a strategic rollout and communication plan Targeted use in key areas Growth and capital planning Population health analysis Pricing Quality and utilization variation analysis Operational improvement activities

Questions?