“Big Data”: A Pathway to Human Capital Risk Management and Healthcare Waste ReductionA Presentation to the Texas Business Group on Health

August 2015

About the Speaker

Justin SchanemanVP of Data AnalyticsHCMS Group

HCMS is a rapidly-growing independent health information technology company that provides cloud-based healthcare reform solutions to health organizations and employers.

Why We Need “Big Data” Analytics?

30|30 10|2

5|50

The US spends 30% more on healthcare compared with similar countries and gets 30% less in health return.

Benefit costs are increasing annually at roughly 10%, while wages are increasing by 2%.

• 5% of people incur 50% of healthcare costs.

• Only 50% of costs in the 5% group is driven by disease. The other 50% is driven by business policy design.

The Healthcare Waste Problem The Lost Wages Problem

The Overtreatment & Incentives Alignment Problem

The HCMS Group “Big Data” ModelHuman Capital & Health Benefits Data Aggregation

Compensation

Records

Workforce Transition Episodes

Work Performance Records

Disability & Lost-Time

Claims

People &Policies Safety &

Workers’ Comp Claims

Health Programs

& Providers

Health PlanClaims

Management

& Training Records

The Power of “Big Data”Supporting Population Health Management

Information

KnowledgeDecisions

Data

Risk Scoring and Stratification

Risk Scoring

A major advantage of “Big Data” aggregation is to support population and individual risk scoring.

1) Allows for easy benchmarking to other companies.

2) Corrects for the selection-bias issue, providing an “apples-to-apples” comparison between groups.

3) Gives Health Programs and Health Providers better information.

Human Capital Risk Index (HUI)

The HUI is weighted by 300 plus variables from the following: Clinical diagnostic and patterns of

utilization from medical claims

Pharmacy classes and patterns of utilization from pharmacy claims

Short-term and long-term disability claims information

Workers’ compensation claims information

The HUI® is a comprehensive, person-centric risk score produced from “Big Data” and is closely correlated with health benefits cost and used in Advanced Data Analytics. It is indexed to 1.0 and higher numbers represent higher risk.

Example HUI Calculation

The Limitations of Self-Report Data

Bottom 95% of population

health

Top 5% of population

health driving over 50% of health costs

Average Individual Integrated Cost $2,383 $40,729Human Capital Risk Index (HUI) 0.86 4.06Health Risk Assessment (HRA) Self-Report Risk Score

90.3 89.5

0.5

1.4

2.8

5.2

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0

200

400

600

800

1,000

1,200

50% 30% 15% 5%

Average HUI Score

Popu

latio

n

Percent of Population

Average HUI = 1.3

$465

$2,987

$11,927

$61,751

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

0

200

400

600

800

1,000

1,200

50% 30% 15% 5%

Average Medical Cost

Popu

latio

n

Percent of Population

Average Cost = $5,987

5% of people drive over 50%

of costs

HUI risk is predictive of cost

= Population = Population= Cost = HUI

Population Risk Analysis by Cost and HUI Risk

Risky overutilization of medications, testing, and specialists. Poor access & utilization of primary medical care &

prevention. Significant utilization of lost-time and workers’

compensation benefits. Typically at out-of-pocket maximum, so utilization is free.

5% of people driving over 50% of costs

$People

The 5% Problem

Sample 5% Patient Risk Profile

Example HUI ProfileHUI Risk Score 10.30HUI Trend UpPercent Medical 74.4%Percent Drug 5.2%Percent Occupational Lost Time 8.3%Percent Non-Occupational Lost Time

12.0%

Health Program Participant NoClinical assessment: High risk score Presence of lost-time Likely impact to work performance Significant medical costs, and likely to go up

further Member of the 5%

Right service to the right person at the right time

WasteSpecialty Care & Prescription

Drug Cost

Person-Centric

Primary Care & Prevention

Health As Human Capital

Cost Savings & Resource for Worker

Wages

Population Risk Management Model

“Big Data” Analytics in Action

Modifiable Waste

A combination of medical and prescription drug over-treatment and misaligned health and lost-time incentives produce significant but manageable waste.

Healthcare ReformProblem Identification – Excise Tax Trend

Healthcare ReformAction

Funded HRA Health AccountEncourages ownership of health spending while limiting deductible exposure.

High(er) Deductible

Primary Care / Prevention CoverageExpanded 1st dollar coverage

Strategic Co-Insurance / OOP IncentivesReinforces utilization of prevention services and primary care.

Wellness Program Participation Incentives

5% Clinical Prevention Service

Prior Offerings New Plan

HMO #1

HMO #2

PPO

HMO #3

Healthcare ReformOutcomes Measurement

20%

-3%

-22%

-7%

-12%

-11%

-30% -20% -10% 0% 10% 20% 30%

Primary Office Visits per Member (HUI>1)

Brand Medication Cost (Plan Paid)

Brand Medication Fills

Specialty Office Visits

ER Visits

Inpatient Days

Percent Change After Healthcare Reform

Plan Design Modeling

0%1%2%3%4%5%6%7%8%9%

0% 20% 40% 60% 80% 100%

Like

lihoo

d of

STD

Cla

im

STD Wage Replacement Percent

Total Absence Analysis

STD LTD Workers'Comp Vacation Sick Leave FMLA

Operations 1,077 1.54 0.60 0.07 15.22 4.41 2.84Marketing & Sales 1,006 0.22 0.25 0.01 13.32 2.45 1.85Human Resources 972 1.22 0.60 0.03 13.66 4.47 2.95Administrative 911 1.03 0.35 0.02 14.17 3.74 2.94Executive 748 1.45 1.39 0.01 12.15 3.45 3.60

Total 4,714 1.08 0.60 0.03 13.80 3.72 2.79

Days per EmployeeOrganizational Unit Employees

Chronic Disease Cost andPrescription Drug Adherence Analysis

PopulationTotal Health Plan Costs

Year 1 Year 2 Change PercentChange

Type-II Diabetes Cohort $5,411 $6,121 $711 13.1%Comparison Group $2,028 $2,303 $275 13.6%Total $2,250 $2,554 $304 13.5%

76%70%

66%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

HDHP HMO PPO

Empl

oyee

Eng

agem

ent

(Per

cent

Fav

orab

le)

Employee Engagementby Health Plan Option

Disability Days per Employeeby Health Plan Option

1.4

3.3

6.0

0

1

2

3

4

5

6

7

HDHP HMO PPO

Annu

al D

isab

ility

Day

s Lo

st P

er

Empl

oyee

Health Benefits Cost of Turnover

Hospital Performance Analysis

HOSPITAL Average

Individual Cost

Average Individual HUI Risk Score

Average Cost per

Unit of Risk

1  $16,450 3.73 $4,404  2 $13,080 2.73 $4,784  3 $16,587 3.13 $5,303  4 $22,388 3.28 $6,831  5 $22,580 2.72 $8,292  6 $21,588 2.43 $8,870  7 $39,420 3.60 $10,936  8 $51,615 4.39 $11,765  9 $75,726 6.25 $12,120

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