1. CORUS™ Suite
Next-Generation Cost Management Technologies
June 2017

2. The Need for Activity-Based Costing
Agenda Topic
Topic Details
Introduction
Agenda review
The Need for Activity-Based Costing
Surviving in both fee-for-service (FFS) and value-based contracting (VBC)
The basics of activity-based costing (ABC)
Healthcare cost-accounting pain points
Why costing matters: operating room (OR) use case
How CORUS works
CORUS Suite overview
Costing the Health Catalyst way
UPMC example
Conclusion
Feedback
Actions and next steps $

3. “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, executive vice president and chief financial officer, UPMC

4. Surviving in Both FFS & VBC
Get the highest rate you can! (And, later, use data to inform negotiations)
Levers for ensuring success once you have already taken risk.
Millions of $
Median is 2.6%1
Predicted Utilization of Population
Contracted Utilization
Actual Utilization
Cash
Received
Cost to
Deliver Care
Margin
1 Source: Moody's Investors Service, "U.S. Not-for-Profit Hospital 2014 Medians" report, September 2015.

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

6. Healthcare Cost-Accounting Pain Points
Current cost accounting systems are outdated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 only used for internal financial reporting
Lack of transparency into calculations limits buy-in from key stakeholders

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

8. Why Costing Matters: OR Use Case

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

10. The Need for Activity Based Costing
Agenda Topic
Topic Details
Introduction
Agenda review
The Need for Activity Based Costing
Surviving in both fee-for-service (FFS) and value-based contracting (VBC)
The basics of activity-based costing (ABC)
Healthcare cost-accounting pain points
Why costing matters: operating room (OR) use case
How CORUS works
CORUS Suite overview
Costing the Health Catalyst Way
UPMC example
Conclusion
Feedback
Actions and next Steps $

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

12. Activity-Based Costing: Dashboard

13. Activity-Based Costing: Data Quality

14. Costing the Health Catalyst Way
Recognized in 2017 as “Best in KLAS for healthcare business intelligence and analytics.”
Integration of EMR 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.
Embedded costing knowledge from world-renowned academic medical institutions, accelerating cost management transformation.
Integration of EHR data, including patient-level clinical and operational data, as well as departmental and equipment resource-utilization data, delivering the first truly comprehensive view of the cost of patient care
Manufacturing-style activity-based costing—with automated and robust data quality and cost validation algorithms—that is scalable and maintainable, freeing analysts to focus on identifying variation and cost-saving opportunities
Embedded costing knowledge including best practices, rules, and algorithms from world-renowned academic healthcare institutions, accelerating cost management transformation
Dramatically more timely and actionable cost data based on healthcare’s most advanced analytics platform, which supports over 160 source systems including EHR, claims, General Ledger, payroll, supply chain, and patient satisfaction systems
Deep experience in costing and analytics
More than a new market entrant, the CORUS Suite incorporates costing best practices developed over many years by two recognized leaders in healthcare cost management—UPMC, a $14 billion integrated healthcare delivery and insurance system that includes more than 25 hospitals and 600 doctors’ offices and outpatient sites; and IU Health, Indiana’s most comprehensive health system with 18 hospitals and over 3,700 physicians and allied professionals.
The CORUS Suite also benefits from Health Catalyst’s market-leading technology and services, recognized in 2017 as “Best in KLAS for healthcare business intelligence and analytics,” and proven to advance clinical and financial outcomes for more than 400 hospitals and 4,000 clinics nationwide
Dramatically more timely and actionable cost data based on healthcare’s most advanced analytics platform, which supports over 160 source systems.

15. A Service Line Approach to Improving Women’s Health
Used Service Line, Procedural and Physician Variability reporting functionality.
Developed cross functional team and engaged physicians by sharing data, as well as making them part of developing the change.
Opportunity identified with outpatient hysterectomies – Same Day vs Overnight.
90% of patients could go home same day despite standard practice of staying over night
Developed clinical protocols that determine a patient’s eligibility to go home same day based upon defined medical status criteria
Pilot project resulted in savings up to ~$700 per case, and satisfied patients with same day procedure
20 percent reduction in inpatient LOS for hysterectomies (over a 3 year time period)
34 percent reduction in open hysterectomies
28.3 percent reduction in 30 day readmissions for hysterectomies
Costing Tool Goals
Understand service line and procedural level P&L
Identify potential savings opportunities
Share cost data with physicians and identify best practices
Utilize cost and quality metrics to align incentives and payment methods

16. Integration of Clinical and Operational Data Use Case
A large academic health system had been using charges as the basis of costing for the operating room.
Knowing the organization now had the CORUS Suite, the operating room (OR) director wanted to find out what her true costs were.
Finance was able to use the CORUS Suite to quickly identify precise patient times, resources, and true labor costs—plus, they leveraged updated costs for supplies with the link to their supply chain data sources.
When they compared the cost for each surgeon, they discovered that the physician with the shortest time was using additional staff.
The physician-finance dyad lead worked with the surgeons to determine best practices and reduce clinical variation based on a review of time, resource costs, and clinical outcomes.
Integration of clinical and operational EHR patient resource-utilization data, delivering the most complete picture of any procedure’s true cost. A large academic health system had been using charges as the basis of costing for the operating room. Knowing the organization now had the CORUS Suite, the operating room (OR) director wanted to find out what her true costs were. She asked finance to look at the EHR clinical and operational source data to find the specific times and all personnel resources used in the OR during surgeries. Finance was able to use the CORUS Suite to quickly identify precise patient times, resources, and true labor costs. They were also able to leverage updated costs for supplies with the link to their supply chain data sources in the CORUS Suite. Upon comparing the cost for each surgeon with data on labor and supplies, they discovered that the physician with the shortest time was using additional staff. The physician-finance dyad lead worked with the surgeons to determine best practices and reduce clinical variation based on a review of time, resource costs, and clinical outcomes.

17. Manufacturing-Style Activity-Based Costing Use Case
Large, integrated healthcare system decided five years ago to build its own activity-based costing system.
The platform wasn’t scalable and could not be cost-effectively maintained. Every month, it took six FTE business days to close out the books, eating into time that the analysts could have devoted to identifying and participating in driving outcomes improvements.
After implementing the CORUS Suite, the activity-based cost processes have been automated and now run overnight—and clinicians and physician- financial/operational dyad service line leaders have greater transparency into the cost drivers.
The health system has saved millions of dollars through improvements.
Manufacturing-style activity-based costing that is scalable and maintainable, freeing analysts to focus on identifying variation and cost-saving opportunities. A large, integrated healthcare system decided five years ago to build its own activity-based costing system. Unfortunately, the platform wasn’t scalable and could not be cost-effectively maintained. End users could not easily add or maintain new cost drivers, add newly acquired hospitals, or add upgraded data sources such as their new inventory system, or ambulatory EHR. Every month, it took six FTE business days to close out the books, eating into time that the analysts could have devoted to identifying and participating in driving outcomes improvements. After implementing the CORUS Suite, the majority of the health system’s activity-based cost processes have been automated and now run overnight. Clinicians and physician-financial/operational dyad service line leaders have greater transparency into the cost driver definitions and algorithms, making data validation and modifications easy to perform. The health system has saved millions of dollars through improvements identified by the CORUS Suite, and has freed their analysts to focus on identifying variation and cost-saving opportunities.

18. What do you think?
Feedback / Questions