UPMC and Health Catalyst have formed a strategic partnership in an effort to measure and analyze the true cost of healthcare services, a tool that could become increasingly useful with looming bundled-care payment models.
Pittsburgh-based hospital system and insurer UPMC and Health Catalyst, a data warehousing company based in Salt Lake City, on Monday announced they are combining UPMC's activity-based cost management system and Health Catalyst's enterprise data warehouse. Under the agreement, Health Catalyst will license and commercialize technology, content and analytics developed by UPMC.
UPMC has been innovating tools to manage costs since its board tasked officials with tracking the price tag on activities such as surgery. UPMC came up with the same type of tool used by the manufacturing industry, said Robert DeMichiei, executive vice president and chief financial officer at UPMC.
Health Catalyst gathers clinical, operational and financial information from various systems within UPMC, and provides patient-specific cost on a monthly basis. Algorithms developed by UPMC allow its financial analysts to match equipment use and supplies and various clinical activities—such as time in the operating room—to patients. The tool has been live for one year in all of UPMC's Allegheny County hospitals, DeMichiei said, and it will extend to five additional regional hospitals in March. UPMC can now track what's happening within its service lines and drive initiatives based on data, capabilities not previously possible, DeMichiei.
The ability to use the tool to look at the work physicians have been doing has also been crucial, DeMichiei said, and allows the provider to seek the best clinical pathways. In fact, the number of open hysterectomies UPMC performs has dropped 30% since the cost management tool was adopted, DeMichiei said, and physicians are also looking at alternatives for knee replacements ahead of Medicare's Comprehensive Care for Joint Replacement bundled payment program, according to the press release.
“Unless you have data to understand cost, you can't actually have discussions with physicians,” DeMichiei said.
Health Catalyst is providing scale to the work UPMC has already produced, said Kyle Salyers, senior vice president of business development at Health Catalyst. UPMC will be a customer and a development partner, said Salyers, with Health Catalyst eventually marketing the cost management system to other providers, he said.
This isn't Health Catalyst's only recent provider partnership. The company reached a similar deal with Allina Health, based in Minneapolis, with the 14-hospital system signing a $108 million agreement last year to outsource its information technology warehousing, analytics and performance-improvement areas to Health Catalyst over the next decade.
As for UPMC's deal with Health Catalyst, DeMichiei wouldn't disclose financials or the length of partnership, saying only it is a long-term agreement.