Read time: 4 minutes
By: Brad Myers
Benchmarking vs. indexing has long been a hot topic in the financial world and, like any popular debate, not without some controversy – or, at the very least, strong and varied opinions. Overall, a case can be made for merit in both, though indexing often prevails as the superior strategy, in part due to its personalization and specificity. The healthcare industry is no stranger to benchmarking either and, like in finance, comparative benchmarking between health systems comes with certain flaws. While there is certainly value in measuring a health system’s performance, outcomes, and even individual service lines against competitors, the trouble often lies in the integrity of the benchmark itself – which starts with data. Institutions performing “in the top 1%” may be challenged to show the same result using a different data set, while those who find themselves underperforming may be surprised to learn that, when data is reconciled and normalized, they’re actually on par with their peers. Rather than benchmarking, then, it may be worth thinking in terms of indexing after all. This more tailored approach used by our Professional & Advisory Services (P&AS) team in leveraging purchasing data allows for tracking against specific targets, closer alignment with a health system’s uniquely individual goals, and – most importantly – insights into where opportunities to boost revenue, reduce spend, and prevent leakage may lie.
How healthy is your data?
There’s no question that data is one of the most valuable resources any health system has. From proving outcomes for expanded access to limited distribution drugs (LDD), to quantifying the growth potential for new streams of revenue – and many others – the insights that can be gleaned from data are virtually limitless. However, as the old adage goes, “Your output is only as good as your input.” When it comes to using data as an externally comparative measure, consider the inadvertent influence that variable factors between health systems – such as size disparity, patient demographic, payer mix, and countless others – may have on benchmarking. Normalizing data to achieve a more “apples-to-apples” comparison is an extraordinarily complex and lofty goal for most, albeit one that may be more within reach than ever thanks to emerging technologies in artificial intelligence (AI), machine learning (ML), and others.
For now, using an indexing approach to understand how your health system is tracking against specific performance targets – combined with insights into peer or competitor strategies that may be applicable based on your own challenges – can be a valuable strategy that helps to ensure:
- Customization aligning with your unique strategic objectives
- Standardized metrics for data integrity and relevance
- Actionable insights for revenue growth, cost reduction, and leakage prevention
The power of perspective
More than simply ranking your health system’s spend and other metrics by percentile, indexing with a custom-tailored strategy and guidance by our P&AS experts based on analyzing strategies used in other health systems can help to uncover otherwise lost opportunities across several critical areas of drug spend improvement – including 340B spend, returns volume, WAC spend, contractual obligations and generics rebates, and others. Brad Myers, PharmD, MBA, Vice President, Health Systems Pharmacy Operations, Retail & Specialty Advisory Services, provides a hypothetical scenario to illustrate how the P&AS team combines indexing with data insights to help you achieve more:
“Consider GLP-1s. In health system A, 20% of GLP-1 patients are 340B eligible. The other 80% may see a doctor outside of the health system and, even though the prescription is filled by the health system’s retail pharmacy, it’s not 340B eligible. Health system B, on the other hand, set up a pharmacist clinic – or a medication therapy management (MTM) clinic – that keeps that visit within the health system, making all of those patients 340B eligible. As a result, 80% of health system B’s GLP-1s are 340B eligible, while health system A is theoretically losing money on 80% of their GLP-1s.”
While he qualifies this as a simplified example, Myers goes on to explain that a critical issue across the board is that health systems are typically not aware of these differences or, from another perspective, missed opportunities and their respective solutions. By partnering with P&AS, our health system customers can gain insights not only into their own data but also into the performance-enhancing strategies health systems across the country are implementing to achieve more.
To learn more about partnering with McKesson’s Professional & Advisory Services team to achieve more for the business of pharmacy using data and expert-driven insights, contact us at pas@mckesson.com.
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