Hospital system gains cost analysis

Don’t be left behind — Data-driven cost accounting for health care Hospital system gains cost analysisLearn about using the new wealth of information to contain costs and make smart choices about growth strategy. See how the
right systems can help you meet cost containment pressures.
Large national and international hospitals and health systems, children’s hospitals, cancer centers and other providers can gain better understanding of their costs, be provided models for growth and accomplish their revenue and cost strategic initiatives through the appropriate guidance and tools.

The client The client is an integrated global health enterprise headquartered in the mid-Atlantic region of the United States. It comprises a network of 20 academic, community and specialty hospitals — including an international presence — 400 outpatient sites and an insurance division. An array of rehabilitation, retirement and long-term-care facilities is offered. More than 3,200 physicians are employed, and annual revenue exceeds $10 billion. The enterprise is the number one employer in its area of the state.

The challenge The hospital system office wanted to implement a new costing methodology, with service costs based on patient consumption of services. The existing methodology did not allow for detailed performance analysis by hospital department and service, or support comparisons across facilities, services, departments or physicians. Additional goals of the project included these:
  • Creating a standardized cost methodology across all hospitals
  • Replacement of disparate costing systems across hospitals
  • Expanding drivers used for costing
  • Creation of data for other payer provider initiatives

The Grant Thornton solution The team was brought in to assist with the implementation of Hyperion Profitability and Cost Management (HPCM).
HPCM serves as an integrated system for profitability management, reporting and analytics and provides:
  • Business user-driven profitability application and modeling
  • Actionable insights into costs and profitability
  • Flexible allocations platform for any method — ABC, standard costing, etc.
  • Support of both cost and revenue management
  • Traceability maps and data flow reporting capabilities for transparency and ease of use
  • Common foundation shared and integrated with other Hyperion performance management applications as part of Oracle’s EPM system
  • Single point of maintenance for reduced cost of administration and ownership versus nonintegrated point solutions
The team worked with the finance leadership in developing a pilot to develop the HPCM models and create an initial set of reports using OBIEE. We also applied our know-how to:
  • Implement HPCM, with both standard and detailed models to enable department/service costing and patient episode costing
  • Create an HPCM data schema for patient-level data
  • Utilize Oracle OBIEE to create reports from both Essbase database management and relational table data
  • Provide guidance for rollout to remaining hospitals for continued success

The outcome As a result of the new costing methodology, the enterprise has gained improved assignment of costs based on the actual drivers of expenses; a better understanding of the profitability of departments, patients and other relevant dimensions (hospital, physicians, etc.); automated generation of customer and product profitability data collection and reports; standardized hospital costing; and a flexible model structure to allow for growth.

Hyperion Profitability and Cost Management continues to provide effective modeling for this enterprise. HPCM enables enhanced business performance through a better understanding of cost and profitability. Decisions are empowered with crucial visibility and flexibility.

Do you have similar challenges? Your organization can benefit from our extensive experience in cost management, allocations and profitability modeling. We can work with you to determine your strategic goal and help with tactical decisions to achieve it.

Cynthia Moehlman
Director, Technology Solutions
T +1 913 272 2771