Transformers and Value Based Purchasing

Last Friday I went to my nephew Aidan’s fifth birthday celebration bearing my most favorite gift — a book (socks and underwear are my second favorite, but I save those for national holidays).

But of course, his parents had to outdo me with their gift of a Transformer. Not just any Transformer mind you, rather this really cool one that transformed from a hulking robot into a very slick, bright red fire truck.


Game, match, win…the Transformer was a hit.

I admit this toy is really great and the engineering is amazing. The parts are interconnected and dependent upon each other to work — twist the pieces one way and you get a robot, another way a fire truck — and unless you take a hammer to it (which I admit is a possibility with a five year old boy) that toy is not coming apart, the parts are designed to stay together and work together.

Of course all of this got me to thinking about how healthcare providers need to transform their financial and clinical reports to reflect the new environment of “Value Based Purchasing,” and how the failure to do so is, quite simply, a foolhardy path.

Providers can no longer manage the delivery of healthcare with reports that do “only one thing” — and I know that many of them are still trying to — I see it every day.

Even though providers understand that they are in a new environment of “Value Based Purchasing” or — “prove, with data, that patients are receiving appropriate, high quality care, which delivers the outcomes you claim it does, and that patients are satisfied with that care, in order to receive payment” — they are failing to integrate their financial and clinical data into one set of reports — they are failing to effectively manage in this new environment.

Time and again I see financial reports and clinical reports, which never (as in ever) intersect. Heck, they don’t even wave at each other in passing.

Why is this?

I have a theory…and it’s pretty simple. Over the past 30 years we have built an entire data infrastructure based on billing (administrative) data that has been completely siloed from clinical data.

In large part this is because clinical data, unlike billing data, could not be easily or reliably captured — it was buried in paper records, without any reporting standards or universally accepted taxonomy.

This was coupled with the fact that the people who were responsible for developing financial reports never dared venture into clinical data because, not only was there was a “no trespassing sign” on medical record’s door, but failure to heed it was nothing short of career suicide (I’ve seen the bodies, I’ve sent the flowers).

But all that has changed…for the better.

Just like in 1984 when Universal Billing (UB82) became required for the submission and payment of hospital claims by third party payers — and ICD, CPT, and DRG became ubiquitous industry TLAs (three letter acronyms), we are now in an environment where clinical data is undergoing a radical transformation.

We have entered a parallel universe of rapidly expanding data standards for clinical and patient experience data. There’s CMS and the Joint Commission’s Core Performance Measures, HCAHPS patient satisfaction data, Meaningful Use Measures, and the transition (at last) to ICD10’s (just to name a few).

Just like financial data, there is now an emerging taxonomy and standardized format for reporting clinical data.

And just as the adoption of the UB82 was required for providers to receive payment, the reporting of clinical data and the achievement of specific targets on performance measures is now required to receive payment updates and incentives.

We have crossed the threshold into “Value Based Purchasing.”

And so, instead of creating reports that are completely disconnected from this new environment such as:

  • A monthly report for financial managers about the at-risk dollars if HCAHPS targets are missed.


  • A separate monthly report for clinical managers of HCAHPS patient satisfaction results versus national benchmarks.

Providers must create reports that, for example:

  • Integrate their institution’s HCAHPS results, and third-party payer’s required results with the dollars earned or forfeited if specific targets are or aren’t met into one report.

Because, whereas the first report shows the financial implications of poor performance by the clinical team, but not the details of what the performance targets are, and the second report is completely divorced from the “purchasing” part of “Value Based Purchasing,” the combined report provides managers with all of the information they need to be successful in this new environment.

Given the 30-year head start that financial data has had on clinical data it is understandable that the reporting may be more mature. But that doesn’t make it acceptable or wise to continue to report it in a parallel universe from clinical data. And although structured clinical data is new and still developing that doesn’t mean it isn’t ready to be seen in public with financial data. It is.

Now providers need to integrate the two into their reports. They need to transform them into reports that reflect the current “Value Based Purchasing” environment and into reports, which will empower their institutions to achieve high quality patient care and to reap all of the financial rewards associated with it.

And remember, if you commit to creating really great reports, even a five year old with a hammer will be no match for them…they will hang together.

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