Just about a year ago I contacted the Managing Director of Health Care in the Government Accountability Office. Being a Partner in a healthcare consulting firm and spending every day concerning myself with operational improvements, I was wanting to respond to a published report about the government’s efforts to identify “best practices” used by states, physicians, and hospitals to improve the quality of care – and reduce it’s costs. The subjects to comment on were . . . What techniques lead to better than average outcomes? How do we effectively improve quality and reign in costs simultaneously?
While the questions posed have been around for a while, there’s a new technique that has arrived on the scene that may help ferret out some accurate answers. It’s called Data Envelopment Analysis, or DEA, and can be used to compare the performance of multiple “business units” using both quantitative and qualitative indicators – simultaneously!
Data Envelopment Analysis has been widely used in other industries such as banking, education and manufacturing for several years, but more recently the technique has been applied in healthcare, which has notoriously been unable to evaluate both quality and financial performance at the same time.
Data Envelopment Analysis (DEA) is Applicable in Healthcare Organizations and Large Health Delivery Systems
The opportunities to apply DEA in healthcare are plentiful. Consider the power of incorporating this technique into an an operational assessment of your medical business. It’s a way of providing a new and more comprehensive view of performance among “business units” – whether those units are individual physicians, similar healthcare departments, or even whole medical facilities such as clinics or hospitals that are part of a larger healthcare organization. The outcome can be more meaningful and game-changing because it can establish achievable targets for optimum performance that Physicians, Administrators and Office Managers can focus on, and that are based on the best performing units in your own organization. Targets that are much more accurate than traditional performance benchmarks that are most often based on “healthcare industry averages” … even if above average is still inefficient and ineffective. All this can apply to medical billing performance, clinical operations, and physician practice management to name just a few.
So if you’ve ever run into the old dodge “our patients are sicker, that’s why is costs more”, or “our quality is higher, and that’s why it costs more”, a DEA analysis may be for you. It will allow you to compare your business units using both qualitative and quantitative measures, to find out who is leading the pack, who is just doing an average job, and who is lagging behind. And you get targets for the average performers as well as the laggards to move them all to the optimum performance frontier.
To learn more about Data Envelopment Analysis in healthcare, and how we’ve applied it, check out our discussion of Efficiency in Healthcare.