Tag Archives: healthcare analytics

Improving Margins Using Service Line Profitability Analysis

Joe Morrison, Intalere

By Joe Morrison, Director, Product Management, Intalere

Service lines are arguably the most utilized measure within healthcare organizations to quantify the financial health of any health system. While many organizations define their service lines slightly differently, their goal is the same – to improve the health and outcomes of patients while improving efficiencies and reducing the total costs within patient populations, all while remaining profitable.

With the shift from fee-for-service to fee-for-value based care over the past several years, healthcare providers have endured significant margin compression on the services and service lines they offer to their communities. Outcome and episodic reimbursement momentum has impacted revenue streams and placed traditional ‘bread and butter’ service profitability in decline.

There are typically two main areas organizations focus on when looking at service line profitability to make up the gap in margin compression:

  • Increasing revenue streams – Examples may include investments into new services and focusing on outpatient markets.
  • Cost reduction initiatives – Which may include increased efficiencies around supply chain and reduction in physician preference items.

But, one cannot only think of service line optimization as simply the two areas of revenue and cost. Alignment of clinical outcomes and physician engagement are compulsory to effective and efficient service line management and improving margins.

Organizations that are positioning themselves for service line margin growth should be considering these four items:

  • Focus on population health management initiatives by expanding ambulatory services and physician alignment based upon patient population needs.
  • Understand, collect and analyze key metrics for service line margin improvement priorities and gather key stakeholders to understand and agree upon the metrics that will be monitored and benchmarked.
  • Analyze and map patient discharge data which can help an organization examine its primary service area and better understand the ever-changing market dynamics
  • Assess whether an investment in a service line, such as additional providers or marketing, will yield adequate revenue for a return on the investment.

Service line margin growth requires thoughtful use of related financial and clinical data paired with tools to help organizations understand where opportunities are hidden as well as teaming with physicians to reduce clinical variation and cost around unnecessary procedures and utilization of supplies.

Intalere’s OptiAnalytics Navigate delivers both organizational and physician performance to continually uncover opportunities for service line growth, identify areas for improvement, and evaluate market share and population trends.