Monday, February 24, 2014
Don't Expect Analytics Alone to Change Outcomes
by Karen Wolfe
Research suggests 40% of major business decisions are based not on facts, but on the manager’s gut. Most of those gut-based decisions are not life-endangering. However, many of them can directly impact the organization’s viability.
In Workers’ Compensation, critical decisions are made not only by managers, but by front-line workers. Claims adjusters make course-swerving decisions every day. How accurate and timely are the decisions they make? What about the decisions made to ignore information and avoid taking action?
How are outcomes traced back to the decisions made and not made? What accountability is built into the process? What kind of decision support is available? Are any of the decisions based on objective data?
Business intelligenceBusiness intelligence, derived from analytics (data analysis) can inform business decisions throughout the organization. More importantly, the analytics must be infused into operations to lead to action. Only analytics that are linked to operations can consistently and positively provide decision support that create positive outcomes.
“If you really want to put analytics to work in an enterprise, you need to make them an integral part of everyday business decisions and business processes—the methods by which work gets done and value gets created.”
Sequestered knowledgeBoth garden variety analytics and highly sophisticated predictive modeling are common now in many organizations. But few apply the analytics to their operational process effectively to make a significant impact on outcomes and profitability. Unfortunately, the best practice exceptions are not often found in Workers’ Compensation. Applied analytics in Workers’ Compensation, and particularly those relating to the medical aspect of claims, is rare.
In Workers’ Compensation, analytics are most often sequestered in the executive suite. Analytic results are shared at board meetings and are lavishly portrayed at marketing shindigs or annual reports. They are represented in colorful graphics while decision-makers ponder their meaning. Nevertheless, just executing and reviewing analytics has little impact on decisions made by middle managers and front line workers.
Analytics must be linked to operations to make them actionable.
Dashboards are not actionableDashboards have become a fashionable way to display analytic results, but they don’t link the analytics to operations. They do not change behavior. They are designed to portray conditions in the organization across a broad swath of indicators in one view.
An example is a hospital where a dashboard displays vital operational statistics including admissions and discharges for the period, average lengths of stay, and acuity rates. Dashboards are interesting and informative of business activity. The remaining question is, who should do what to incorporate the knowledge? What should be done operationally to effect the indicators going forward?
Basically, dashboards are for viewing only, and unless the organization has designed response procedures for assigned persons, the impact is negligible. Dashboards have no direct relationship with operations and no mechanism for tracking responses to the information. Changes in process are anecdotal only.
Corporate communications, regardless of how sophisticated, do not effectively translate analytic knowledge into action on the front line.
Actionable analyticsFor analytics to be actionable they must be linked to, and fused into operations automatically. Front line workers must be led by the information process to take appropriate action.
The best way to do this in Workers’ Compensation is to electronically monitor the data, execute the analytics in real time, and initiate the desired actions among workers by means of an automated electronic message. This approach hurdles the communication log jam found with immediate, specific information sent directly to the person who can best act on it.
Infusing analytics into operations requires a computerized system specifically designed to monitor and analyze all transactions and to automatically send alerts, thereby communicating the results of current analytics to the appropriate persons.
AccountabilityWhen the computer system identifies a high risk situation in a claim, the appropriate person is automatically notified electronically. At the same time, the system should also keep an audit trail noting all claims identified, the reason, and to whom the alert was sent. The end-to-end process will infuse analytics into the process, render the process more efficient, and establish accountability.
When a person is alerted of a high risk claim, action is expected. Some organizations have formal procedures for the actions required under a specific set of circumstances. Such actions are documented so that outcomes can be traced back to the claim conditions, initiatives taken, and the persons involved. The results are exponentially improved while the data gathered in the process enhances organizational performance intelligence.
ResultsAnalytics by themselves cannot and will not change outcomes. But analytics linked to operations through specifically designed systems will effect both the process and outcome. Only actionable analytics create value.
Karen Wolfe is the founder and president of MedMetrics®, LLC, an Internet-based Workers’ Compensation analytics company. MedMetrics offers online medical management apps that link analytics to operations, thereby making them actionable. firstname.lastname@example.org