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There’s a bit of a catch-22 in financial benchmarking in healthcare, and that’s this. Suppose you drop information into a sort of giant national database (or even if it’s not a giant but a national database). And this is what we frequently see when we see “benchmarking,” where somebody might say, for example, “Okay, we want to compare ourselves to other providers,” and they get some information back. However, the problem is, it’s not very specific. 

Alternatively, you could do a co-op petition type agreement, where some groups of providers band together to benchmark. It’s also critical to share data to achieve their financial betterment, especially given that healthcare providers are effectively fighting against insurance companies for reimbursement.

The value of co-opetition

Why don’t we see more of this type of co-opetition, especially with benchmarking or sharing financial data that might allow everybody to make more money and perform more successfully? There’s this catch-22.

Let’s focus on the co-op petition for a second. If one was to do a co-op petition, one of the big problems, of course, is that it’s hard to get a group of physicians or healthcare providers to agree on anything. You would have to make sure effectively that no one is directly competitive with anyone else, but this defeats the purpose. This comes back to that kind of catch-22: if nobody is competitive with each other, the data isn’t going to be helpful because the data needs to be similar to be valid.

Here’s an example

Let’s take a straightforward example of you wanting to do AR aging benchmarking. There are many better metrics than this, but everyone understands AR aging, so AR days: 35 days, 96 days, something like that. Some metric that’s easily quantified. To have a worthwhile comparison, that is apples to apples. You need those other providers to be the same specialty. Otherwise, it doesn’t tell you anything because how fast you get paid for knee surgery isn’t related to how fast you get paid for an E&M or PT or something else. They have to be the same specialty. Okay, but you’re probably not going to want to share data with a group of the same specialty.

Further, that’s down the street, where you’re both competing with business. That’s not going to happen. But you kind of need to because you need the payer data to be very similar.

Who’s your partner?

If one provider is dealing with AmeriCorps or something like that, they’re only in one part of the country. You’re dealing with payers that are in a different part of the country, even other states, or even just something much more proximate. We do see a lot of regional and local differences in payers. Suppose you don’t have a lot of overlapping payers. In that case, you’re essentially comparing apples to oranges again because you really can’t compare BCBS Alabama to AmeriCorps or Amerigroup or something like that. Those need to be similar as well, again, which means you’re now back to needing the same specialty, the same geography.

Collect the right data

For the data to be valuable, you need more than just two providers compared to each other. Or at least, that would generally be what you’d want to have. The reason why is because if you’re trying to compare, “Okay, how am I doing relative to somebody else?” Which is the purpose of benchmarking. So, if you look over and say, “Hey, I’m ahead of that person over there. Okay! Great, I’m doing pretty well.” Still, there are only two of you in the dataset. That’s not great because you might not realize that person is 97th in the race, and there are only 110 people in the race. 

So being number one out of two isn’t particularly significant, which means you need to have a good amount of datasets. Five is a bare minimum, but ideally, you’d have more than that. So now you’re in a scenario, and you’re like, “Okay, we want five cardiology groups or five orthopedic groups that are all in the same area to share data.” You can’t get five groups to agree on anything, much less to agree on sharing data that would be very competitive information.

Determine how to share your data

How would you get around this? This is a catch-22. You want to share that data, but how do you do that? And who could do that? I think many organizations have now gone back to some national organization like HFMA or somebody like that and tried to share data. The problem is, it’s so general that it’s not very helpful. It’s useless. I’m not trying to pan anybody’s data, but, for the most part, the benchmarking data we’ve seen coming back to providers has not been beneficial. At best, it’s misleading, and at worst, it’s not helpful at all or, actually, entirely wrong.

To summarize

That’s the real challenge that I think where partners get can drown. But there is a way to get around. Thus,  if you can figure out how to have it be anonymized, the providers don’t realize who else’s data is in the dataset and that many providers are in the same geography, which requires much density and many economies of scale. All of that data is segmented out such that it can be made sure that there are enough providers of a similar type. It’s also vital to have a similar region and that to compare, which you can accomplish. And that is what we’re trying to achieve.

That’s the only way I can think of to get around the catch-22, but let us know if you have any other suggestions.