The healthcare-support services sector has been facing increased competition in today’s highly complex, data driven environment. Additional regulations, pressure from shifting payer/provider liabilities, and better transparency is being demanded by healthcare consumers, providers and payers. Today, all healthcare transactions are expected to be processed quickly, as close to real-time as possible.
The organization lacked insight into their margins and needed a deeper understanding into the profitability of their products, customers, and sales channels to remain competitive and relevant in the marketplace.
With the growing number of claims to process, the organization’s need for speed and accuracy was escalating. Alta Via was enlisted to assist them in their goal of acquiring next-level data analytics and visualization reporting capabilities in the form of an advanced managerial accounting framework.
The healthcare organization had grown organically over the past three decades, resulting in offering 3,000+ active products nationally. Because of the sheer volume of these product offerings, they struggled to identify which products consumed the bulk of the organization’s resources and which revenue streams were the most and least profitable.
Alta Via examined their costing and analytical weaknesses, and identified their lack of integrated systems. The plan was to build a decision support system that combined their operational and financial information into one causal-based cost model. The plan was splint into 3 parts:
Educating key organization stakeholders in exactly how the Cost & Profitability model was going to address their challenges using managerial accounting principles.(link to MAP on AVC.com)
It entailed interviewing all the department managers and identifying the various resource pools, their outputs, activities performed, and how these resources were consumed in producing the company’s products and services. Full documentation of these cost objects were the building blocks of the cost model. This is visualized on a ‘Connected Value Map’ (CVM):
Next, collecting all the necessary master data and transaction information was needed for the cost model to generate decision support insight. Within this healthcare-support services business, there were a variety of customer-facing software applications, and adaptive back-end operational applications, (in-house and cloud-based) that serviced all the individual departments. Alta Via integrated this data using “extract transform and load” (ETL) tools as visualized in the figure below.
This ETL integration proved to be the cost model’s game-changer. Due to the silo’d growth of the company departments, each area were utilizing their own solution. Therefore, no aggregation or single source of costing ‘truth’ was available. Each manager was only able to view and control their own system’s input/outputs and isolated metrics. The cost model was now able to capture and validate the federated data holistically that had never before been accomplished in the organization.
The Cost & Profitability model allowed all users to view, track, compare and visualize revenue and costs with detailed quantitative information at the appropriate margin reporting levels. It’s important to note that unlimited reports were generated, giving users the opportunity to slice and dice data at will, with full drill-down capabilities to analyze their data as desired.
Ultimately, the Cost & Profitability project ushered the healthcare-support service organization into a new era, both operationally and financially. With the project complete the company had:
- the ability to capture and view their costs-to-serve and profit margins in one model.
- Transformative visual charts and graphs providing in-depth analytics.
- achieved cross-department unification.
- the knowledge to prioritize resources between innovation (new products/R&D) and current product support.
- calculate and refine their sales contract pricing processes.
- illustrate quantitative and graphic data not just dollar-based data
- forecasting tools for planning, controlling and analyzing costs into actionable insight.
Truly the cost and profitability model provided them with breakthrough results and a better use of information!
If you would like to see some of the dashboards and tools the company used to identify their products click the link below to download the complete case study.