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Healthcare Analytics are Growing Sharper Teeth

Originally published June 13, 2011

Healthcare quality metrics come in three flavors. First, there are the compliance measures, which are designed to prevent bad or ineffective behaviors. HIPAA is an example of this type of measure, as are ISO and Joint Commission compliance measures. A wide number of organizations, both governmental and private, set these standards and enforce them.

The second type includes incentive-oriented measures that reward positive organizational behavior, such as the Baldridge Award or Magnet Status. Quality recognition programs such as NCQA HEDIS and various pay-for-performance (P4P) measures also fall into this category.

The third type of quality measure can best be classified as failure metrics. These are the highest growth metrics; and from a business perspective, they will cause healthcare providers much pain and agony. They are the metrics with the sharpest teeth. Most of the failure metrics are now being developed by healthcare purchasers (private and public), and are intended to expose to the world your organization’s shortcomings and compare them to those of your competition.

I once read that every executive should keep two lists. The first list should be the things that get you out of bed in the morning (e.g., are you making a difference?). The second is a list of the things that keep you up at night. Failure metrics should be at the top of everybody’s second list. The depth of your worry over these metrics is a barometer for the analytical inclination of your organization. The reason is simple: if you are analytically oriented, then there is a better-than-average chance that you already saw these metrics coming, and prepared for them by embedding them into your organization’s processes.

Here is a list of five healthcare quality metrics with the sharpest teeth. More are coming. Your list may differ slightly in either priority or specific wording.

Five Healthcare Quality Metrics with Teeth

  1. Surgical Survival Predictors

    One metric now being developed and reported by the Leapfrog Group that has to send chills down the spine of any chief medical officer are surgical survival predictors. The healthcare purchasing organization has developed analytics on six of the riskiest surgical procedures, which are pancreatic resection, esophageal resection, heart angioplasty, heart bypass surgery, aortic valve replacement and abdominal aortic aneurysm repair. These metrics not only report on what has actually happened, but also are intended to show what type of survival rate you can expect if you are admitted to a particular hospital. In other words, at your hospital, a patient has a 9% chance of dying, while your competitor offers surgery performance with a 12% chance of death. Nine percent is better, of course, but no cause for celebration.

  2. Readmission Rates

    Readmission rates are primarily a measure of clinical failure on your part. In other words, you did not do an effective job the first time, so the patient has to be treated again. Think rework, but on a more critical scale (i.e., lives are at stake). But even though readmission rates are a clinical failure, they have financial and operational ramifications as well. If a particular case is determined to be a readmission as opposed to a new admission, then the CMS (Center for Medicare and Medicaid Services) does not pay you for the original admission, nor do they pay you for the services you provide during the subsequent admission. Costs tally up, but revenue does not. Private insurance plans are following suit by denying claims for readmissions.

  3. Never Events (SREs)

    How many patients have had a medical instrument left in them during surgery? How many came in to get their left arm operated on and had the right arm operated on instead? How many patients received a procedure, treatment or surgery that was meant for someone else? The CMS has enumerated a list of 28 serious reportable events (SREs) to date, as reported by the Agency for Healthcare Research and Quality. Many payers and purchasers have jumped on these quality metrics and have even published policies regarding what the provider should do and what the payer/purchaser should do. For instance, the Leapfrog Group recommends apologizing to the patient, reporting the event, performing a root cause analysis and waiving costs directly related to the event. Waiving costs is an immediate, financial penalty, but what is the cost of the bad publicity to your organization? And what is the impact of numbers and/or severity levels that are higher than the competition?

  4. Service Price

    Why does bypass surgery cost $100,000 at your hospital and $87,000 at a hospital down the street? Why do insured patients get a discount up to 80%? Why does the same surgery cost $12,000 in India, including travel and lodging? The healthcare industry has enjoyed relative opacity in terms of pricing for much of the 20th century, but price transparency is now the rule of the day. And this is not the end. Payers, patients, regulators and consumer watchdog groups will continue to drill down into every component of the cost going into your services until virtually every action is scrutinized in fine detail. Furthermore, these prices and component costs will be published for comparative shopping purposes.

  5. Service Failure

    How long does a patient wait in the emergency room? How many different providers does a patient need to see along the continuum of care, and how long did each take to perform its services? Furthermore, why do patients at your competition only have to wait half as long for the next step in that continuum as do your patients? Efficiency, like cost and clinical quality, will be measured, drilled into, and posted for comparison.

Getting Ahead of the Curve

The first step in dealing with these types of failure metrics is to determine the causes and to root out the process failures. This requires analytics to drill into the time, place, performer, environment and circumstances surrounding the problem.

But you can use these sharp-teeth metrics to your advantage as well. What if you are already beating the competition on one or more of these (or similar metrics)? Marketing would like to know this. Your people would like to know this. Your lenders and bond rating agency should also hear about this.

And if you are behind on a metric, then you know your priority.

Next Steps

Leaders of your organization need to know the externally reported numbers off the top of their heads. And they need to be able to identify the stiffest competition. Your purchasers, payers and patients, and even your competition know how you stand in the rankings. No matter where you stand in those rankings, or who is doing the ranking, your organization needs to exploit its business intelligence capabilities to make sure each person, in each clinic or hospital wing, knows how he or she contributes to the established metrics – either positively or negatively. You should know, they should know, and everyone should act accordingly. Despite being called “failure” metrics, these metrics actually represent a powerful opportunity to improve your organization.

Thanks for reading!


  1. Silverthorn S. The Two Most Important Lists You'll Ever Keep, BNET May 2009. http://www.bnet.com/blog/harvard/the-two-most-important-lists-youll-ever-keep/2171

  2. Clark C. Surgical Survival Predictors May Be Next Big Quality Metric, HealthLeaders Media, May 2011. http://www.healthleadersmedia.com/content/QUA-266394/Surgical-Survival-Predictors-May-Be-Next-Big-Quality-Metric

  3. Carrns A. Health Reform Takes Aim at Hospital Readmission Rates, U. S. News Health, July 2010. http://health.usnews.com/health-news/best-hospitals/articles/2010/07/21/health-reform-takes-aim-at-hospital-readmission-rates

  4. McGee M. Better Clinical Analytics Means Better Clinical Care, Information Week, May 2011. http://www.informationweek.com/news/healthcare/clinical-systems/229502482?cid=RSSfeed_IWK_All

  5. Half of US hospitals reporting to Leapfrog say they won't bill for a “never event”". The Leapfrog Group. September 2007. http://www.leapfroggroup.org/media/file/Release_-_Adoption_of_Leapfrog_Never_Events_Policy_2007.pdf

  6. Serious Reportable Events (SREs): Transparency & Accountability are Critical to Reducing Medical Errors". National Quality Forum. October 2008. http://www.qualityforum.org/Publications/2008/10/Serious_Reportable_Events.aspx

  7. Factsheet Never Events. The Leapfrog Group. March 2008. http://www.leapfroggroup.org/media/file/Leapfrog-Never_Events_Fact_Sheet.pdf

  8. Never Events, Agency for Healthcare Research and Quality, Retrieved May 30, 2011. http://psnet.ahrq.gov/primer.aspx?primerID=3

  9. Medical Tourism Costs, Discover Medical Tourism, Retrieved May 30, 2011. http://www.discovermedicaltourism.com/costs/

  10. The Doctor Will See You—In Three Months, BusinessWeek, July 2007. http://www.businessweek.com/magazine/content/07_28/b4042072.htm
  • Scott WanlessScott Wanless

    Scott is the Healthcare Analytics Director for Cipe Consulting Group. He has more than 30 years of experience in business intelligence strategic planning, analytics application development and business analysis across numerous industries including hospitals, physician groups, healthcare payers, laboratory research, insurance, lending, manufacturing, retail and state government. Scott can be reached at scott.wanless@cipeconsulting.com.

    Editor's note: More healthcare articles, resources, news and events are available in the BeyeNETWORK's Healthcare Channel featuring Scott Wanless and Laura Madsen.

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