Data yields healthier operating margins

The healthcare market in the United States is in a period of seismic change, and the leaders of this major provider wanted reassurance that the rates it negotiates with insurance companies are competitive and that it realizes as much revenue as possible.

Saint Luke’s Health System—which was started in the late 19th century to serve a frontier town—has long been committed to caring for the communities it serves. Today, it is at the forefront of an industry transformation that is based on delivering value-based care driven by quality outcomes.

The information we provided helped Saint Luke’s understand how the rates it negotiates with insurance companies compare to the rates paid to other healthcare systems in the region.

We also developed a powerful tool that can be used in future negotiations. The tool—a customized spreadsheet—includes the healthcare system’s own data as well as market information from KPMG LLP’s (KPMG) commercial claims database that can be used to evaluate payment scenarios.

Ultimately, Saint Luke’s expects that incremental revenue increases that result from this initiative will enable it to deliver enhanced services through its network of hospitals, clinics, and other facilities.

Saint Luke’s wanted two critical pieces of information from this engagement.

First, it wanted to know how the rates it had negotiated with insurance carriers compared with rates negotiated by other healthcare systems in its Midwest market. Second, it wanted to ensure that it was maximizing the revenue to which it was contractually entitled in order to deliver the highest quality of care for the communities it serves.

Our Data and Analytics team played a crucial role in evaluating and compiling information and developing a customized tool for our client. Our involvement included:

• comparing Saint Luke’s current commercial rates for its largest payors against commercial rates for two markets in neighboring states
• determining the volume and revenue trends for the system
• assisting in the development of a number of pricing scenarios
• identifying strategic pricing opportunities based on the current structure of their contracts
• developing a robust tool for use in future contract negotiations
• transferring the tool and the knowledge necessary for interpreting pricing scenarios
• identifying significant opportunities to increase revenue and improve its managed care contracting operational processes.

Use the right tool at the right time

A robust tool—in this case, a spreadsheet loaded with relevant data—can provide an important perspective during contract negotiations or market evaluations.

Data tells stories

The healthcare market changes every day, and having real-time access to in-depth data provides the critical perspective required to evaluate issues and negotiate competitive rates.

One size doesn’t fit all

Each healthcare system is unique, and the information and tools developed should be customized to meet the individual requirements of individual markets.