Smart SNFs: The ROI of Data Analytics

How SNFs approach and calculate their return on investment for advanced analytics technology

Health care providers know they need to invest in technology for the many benefits it provides — from predictive patient analytics to operations analysis and optimization. But particularly in skilled nursing settings where margins are already compressed and staffing challenges are persistent, justifying the investment in new technology can be challenging. Leaders often want to know specifically what return on investment they will see when implementing a new technology solution, so that they can quickly and easily prove the value of that technology to their organizations and investors.

Those data-enabled SNFs successfully utilizing analytics technology today recognize there are a few ways to approach the question of ROI, beginning with identifying two kinds of metrics: hard ROI and soft ROI. Consideration of both will effectively prove the value of the technology, and an understanding from the outset of what is feasible in terms of calculating ROI can be critical.

Shortly after implementation of data analytics, for example, users will likely be able to see some soft return on investment in the form of improved clinical outcomes. Residents may have fewer hospitalizations, longer length of stay, or more appropriate care planning for their specific conditions. Yet the organization may not have the full scope of historical data for a hard ROI calculation to be validated.

A combined approach can help organizations truly show the value of their investment by seeing ROI from both perspectives and understanding the benefits that both offer.

“A soft to hard ROI transition doesn’t mean you stop focusing on clinical quality improvement,” says Kevin Keenahan, SVP business development for PointRight Analytics’ parent company Net Health. “It’s an additive process where analytics continues to collect high-quality data and the product demonstrates clinical outcome improvement in real-time. It’s important to set milestones where you can calculate reimbursement, lost revenue, and/or cost savings.”

Soft ROI calculations for SNFs

On a basic level, soft ROI describes outcomes that clearly have value to an organization, but may not be directly tied to a dollar amount.

“Softer ROI is the value of having more accurate data that gets reported to the Centers for Medicare and Medicaid Services, and having accurate publicly reported quality measures,” says Janine Savage, VP, product management, analytics and business intelligence for PointRight Analytics. “And many of the quality measures impact star ratings, which is far reaching  for public perception of the care provided as well as to meet Accountable Care Organization and payer requirements for skilled patient referrals.”

In the case of PointRight, the solution offers several different analysis tools. Its MDS assessment tool allows SNFs to evaluate their data and gain a real-time perspective on their performance and outcomes, rather than a look-back based on past data submitted to CMS. The value of this accuracy may not be specifically measurable, but the soft return on investment can come in the form of new partnerships, additional referrals and greater public perception of the SNF and organization.

PointRight users also see better regulatory performance, including an average of 12% fewer total deficiencies, 37% fewer substandard quality of care deficiencies, and 36% fewer widespread deficiencies.

For some organizations, these outcomes and a soft ROI approach suffices in that a SNF’s leadership knows the analysis ultimately improves quality.

“Analytics unquestionably improves the quality of what we do in a variety of ways,” says Mitch Marsh, senior vice president, residential services, for ArchCare — a multi-site provider of a health care services including five skilled nursing facilities in New York state that utilizes PointRight. “We know that and we’re not looking for a demonstrable dollar amount.”

Hard ROI calculations for SNFs

Yet for other organizations, a hard calculation will be necessary in justifying the investment upfront and following implementation. This more traditional approach to ROI can be applied for SNFs once they have gathered a sufficient amount of data.

“We look over time on average for those who use our solutions, and they see an increase of $4.21 in per diem reimbursement rate on average,” Savage says. “Multiplied by an average stay, it could be a difference of $100,000 or more. We are able to show ROI very objectively.”

Other areas where SNFs can determine a measurable ROI include:

Fall prediction: PointRight analysis has determined the cost savings to a medium-sized hospital with average hip fractures as $69,300. This is based on the number of hip fractures per year and reduction of hip fractures due to fall prediction. A SNF can demonstrate its value to referring hospitals and payers by decreasing fall rates, thereby reducing healthcare costs while significantly improving the patient experience.

Hospital readmissions: Knowing the likelihood that a SNF resident will be rehospitalized and adapting care planning to prevent readmissions is directly translatable into a reimbursement dollar figure. Empty beds equal lost revenue.

Reimbursement mix: By analyzing reimbursement-related data and correcting for errors, PointRight users achieve reimbursement levels to which they’re entitled for the care they’re providing. On average, facilities see an increase in their PDPM per diem rate of $4.21 as a result of more accurate MDS coding.

Ultimately, the use of data analytics over time can improve reimbursement significantly.

“It could be the difference between having beds empty and getting a very high reimbursement rate,” Savage says.

Setting ROI expectations and finding added value

In addition to balancing the measurable value of technology with those outcomes than are less easily tied to dollar amounts, organizations are best served to set ROI expectations from the onset of implementing analytics technology.

Organizations tend to focus on areas where performance could be better, for example, when instead they can realize significant value in areas where they are succeeding.

“Don’t obsess about the failures,” Marsh says. “Instead, investigate and clone the successes.”

Having unrealistic expectations can also be a major hurdle.

“Don’t be too ambitious in the early days,” Keenahan says. “…As we think about building ROIs, ideally you will have a product that has a very compelling soft ROI or hard ROI and may not have both.”

Utilizing a data analytics partner that understands ROI and what SNFs specifically can achieve in terms of both types of ROI is another consideration for SNF organizations pursuing analytics technology for the first time, or those who are seeking a new vendor. SNF leaders should ask questions around the partner’s expertise in data science, their capabilities beyond transactional and episodic reporting, and their deep understanding of analytics, statistics and data science in order to explain the data as it relates to key organizational decisions.

“If you are really going to engage with analytics and operationalize them, you have you have the underlying belief there are going to be benefits,” Savage says. “In the end, what makes something valuable to an organization is what their end users feel about it.”

To learn more about how PointRight Analytics, a Net Health Company, can help optimize clinical outcomes in your SNF environment, visit PointRight’s solutions for SNFs.

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