1. Aurora Health Care’s Journey Towards Better Cost Information
Patrick Nolan, Vice President of Finance, Aurora Health Care
Tracy Greiten, Director of Operational Informatics, Aurora Health Care

2. Situation
Opportunity: As an organization we needed more comprehensive and meaningful cost data to support everything from quality initiatives to population health management.
Problems:
Cost accounting system was antiquated
Cost allocation methods were not developed with a standard approach
Only hospital cost data was available
We were not leveraging critical cost information in the system
Cost information was not being utilized where critically needed

3. New Program Implementation
Aurora selected Strata Decision Technology software to supports it’s cost data development
Implementation Goals
Improve processing time and leverage improved system flexibility
Standardize cost allocation methods across service lines
Develop cost data for clinic based services
Leverage actual supply and drug costs contained within other systems
Optimize the use of cost information across the system

4. System Improvements
Processing time went from 24 hours to 2 hours for full costing
Corporate expenses allocated at a more detailed level
Enhanced ability to reallocate cost outside the general ledger
Easier system maintenance
Better validation tools
Improved reporting

5. Service line Standardization
Developed Cost Allocation Teams focused on service lines
Initially focused on labor allocations in our largest service areas
Teams have representation from cost accounting, financial planning, and operations. Each function plays a specific role on the team
Developed clear timelines and goals for each team
Allocation teams have guiding principles
Focus on the pursuit of meaningful variation
Keep materiality in mind
Don’t get distracted by perfection
Consider on-going maintenance in your approach
All changes must be tested and validated

6. Clinic Costing Developed a clinic cost model for the first time
Learned about approaches from other Strata clients
Navigated the unique challenges of professional billing and our clinic org structure
Use Medicare based RVUs as a basis for allocating cost
Aligns closely with physician compensation and reimbursement
Other methods used where we had more detailed information or where RVUs were not assigned

7. Hospital Supply and Drug Costing
Leverage actual supply acquisition cost in key areas
For our ORs and Cath labs we are able to leverage existing utilization and purchasing data to incorporate actual acquisition cost for supplies (even those not charged)
Leverage actual drug acquisition cost in hospitals
Utilize Epic utilization data to apply GPO pricing to administered drugs
Apply 340b savings where applicable

8. Cost Data Optimization
Developed an approach to ensure we maximize the impact of our costing work
Includes a strategic rollout and communication plan
Targeted use in key areas
Growth and capital planning
Population health analysis
Pricing
Quality and utilization variation analysis
Operational improvement activities

9. Questions?