Many health plans are making investments in analytics that are becoming solutions in search of a problem.  If executives don’t engage their analytic staffs on critical issues, the result can be “analytic drift.” The analytic staff is adrift when they are spending their talents—and the plan’s money—on “interesting” problems not connected to real-world problems facing the plan.

Symptoms of analytic drift can be both subtle and obvious. Here are some self-diagnostics:

  • Can you cite three examples where analytic technology and staff have played a meaningful role in understanding or solving an important problem?
  • Do you know the topics and issues that your analytic resources are focused on?
  • Do you know how these priorities are managed?
  • Are these priorities relevant to the problems you are working on?

Is the staff working to improve depth of understanding of known issues, or is it engaged with developing basic, early, and actionable points of view about emerging issues? 

Executives can counter drift by using a framework to refocus their analytical resources. The key parts of Nolan’s method for refocusing analytics include:

  • What is the pattern, problem, or potential that the plan needs to resolve?
  • What capabilities need to be created, modified, and redirected to help resolve the issue?
  • What key dialog does the plan need to have to understand how to change its capabilities?
  • What question(s) do we need to ask and answer to drive action?

Here is a specific example of how the framework can focus resources on a practical problem created by healthcare reform. The Medical Loss Ratio and rebate provisions make health plans rethink cost allocations across functions and products. Although plans have well-established processes for cost allocation, the allocation game has changed. Functional allocation now has a more significant importance to the plan. Allocation methods need to change to help the plan manage a new requirement: rebate calculation and management. The key topic of inquiry is “Can we allocate process costs at product level to more accurately calculate product line MLRs and rebates?” The specific actionable question that analytical resources can ask and answer is “If we allocated call center expense based on total talk time expended by product line, rather than product line membership, what would be the impact on our product lines?”

Nolan has developed a tool kit of methods that will help plans improve their analytics. These services range from a comprehensive review of how the analytic resources are managed to narrower technical reviews concerning specific data analysis. We focus on helping plans use their analytic capabilities to solve new problems and opportunities created by reform.