Texas Children’s Hospital Contains Cost with Big Data

Hospitals have been using data warehouse software for decades, but such systems are difficult to tune for healthcare data, which is constantly changing. They fail to integrate and assimilate information in a timely manner, which can lead to unnecessary treatments or diagnostics. This can be troublesome as Medicare and Medicaid shifts from reimbursing hospitals based on the volume of patients they treat to the value of the care they deliver.

Texas Children’s Hospital in Houston, Texas is ranked nationally in 10 pediatric specialties. Texas Children’s Hospital is a 469 bed facility with 21,744 admissions in the most recent year. It performed 8,655 annual inpatient and 14,349 outpatient surgeries.

Myra Davis, CIO of Texas Children’s Hospital, is focused on managing healthcare’s shift from volume to value care for the roughly one million patient encounters the hospital experiences each year. In 2011, she turned to Health Catalyst to manage information for patients with chronic problems because the hospital’s extant system for handling patient data included a clunky coordination of paper forms, disparate computer systems, and spreadsheets. Today, Health Catalyst aggregates electronic medical records, financial systems, and other relevant information in a single, common view for clinicians. The software parses patient vital signs, compares them against health history, and makes recommendations to clinicians to adjust their care.

For example, the hospital’s asthma team can analyze reasons for the delay between the time a child arrives at the emergency center and the time they receive the appropriate asthma medications. Also, Ms. Davis said the software identified that more chest X-rays had been ordered than was needed for asthma patients. The hospital took steps to reduce the procedures, cutting costs by decreasing length of stay and unnecessary diagnostics.

This software project, which cost $1.6 million to install on corporate servers, is important work for the hospital, which will have to get its cost structure in order. By September 2013, Texas specialty care hospitals must adhere to the state’s “proscriptive payment” program, in which Medicare reimburses hospitals based on a standard fee for every diagnosis group, such as heart failure or asthma. Hospitals that can contain costs for the average patient will make money, while those that can’t will be penalized. Ms. Davis said she has not yet run the numbers on how
much the software is helping the company save. To date, she has limited the use of Health Catalyst to asthma and appendectomies, disease groups the hospital classifies as high volume. But she said she and her team are currently working with the startup to use the software for other disease groups, including cardiology and pneumonia.

Other hospital CIOs are using similar data management software to meet their healthcare reform goals. Brad Savage, CIO of post-acute care outfit Golden Living, has been using
software from startup Caradigm to get complete patient histories, including medications, allergies, observations, and hospital visits, to avoid costly re-hospitalizations. This software also eliminated 3,000 plus hours per day on paperwork at many of Golden Living’s 302 facilities across the U.S., allowing nurses more time to give care for patients. “We wanted to bring all data that matters into common data repository to respond to changing needs of business, and deliver analytics into the organization,” Mr. Savage said.

Judy Hanover, an analysts for IDC Health Insights, said startups such as Health Catalyst and
Caradigm provide alternatives to traditional data warehouse systems that can take years to implement and prove sluggish and labor-intensive when CIOs need to make changes. “It’s a fresh approach to analytics tools and it will have a quicker impact on operating expenses,” Ms. Hanover said.

Faced with rising pressure from the government to hold down prices and improve the quality of care, hospitals across the U.S. are betting on new data management tools as the quickest path to greater efficiency. And as hospitals deploy new IT, venture-backed startups are rushing into the market. VC funding for health startups rose 45% to $1.4 billion in 2012, up from $968 million in 2011, according to Rock Health, a business accelerator for digital health startups.

Health Catalyst, a startup which designs data warehouse software and processes to help hospitals manage operational, financial, clinical, and research data, is one such beneficiary. Formerly known as Healthcare Quality Catalyst, the Salt Lake City company raised $33 million from Norwest Venture Partners, Sequoia Capital and Sorenson Capital Partners.

“[Health Catalyst’s software] is advantageous for the patient as well as the hospital because more and more of them are going to be paid based on process versus the number of  procedures,” said Promod Haque, managing partner at Norwest Venture Partners and member of Health Catalyst’s board.

That’s where a company like Health Catalyst can help, Mr. Haque said, noting how he liked the pedigree
of Health Catalyst co-founders Steve Barlow and Tom Burton, who worked for non-profit Intermountain Healthcare before forming their venture. He said they understand how healthcare IT must evolve to bolster patient outcomes and meet regulatory compliance rules. And he expects every hospital and hospital system will need a data warehouse of some kind to meet these goals. Mr. Haque said he invested in the company because of its customer footprint — 81 hospitals caring for 20 million patients.

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