Risk-based payment models and shared savings agreement require hospitals and healthcare organizations to capture more and more accurate data and apply analytics it more precisely and effectively than they have in the past.

Better data and analytics will be particularly useful in the realms of cost management and quality bonuses. It is likely that payments and reimbursements will fall as more patients are covered by Medicare and Medicaid. Thus, hospitals must find ways to reduce excessive cost everywhere they can, while simultaneously making the most of quality bonuses and other incentives associated with value-based care.

According to HealthCatalyst, hospitals have particular upside in reducing waste – no matter where they are in the transition from fee-for-service to value-based payment models. The first step is gaining deeper visibility into their costs:

Any investment in streamlining operations and eliminating waste from the system goes directly back to the hospital, not the payer. Hospitals must develop the sophistication to understand their cost structure in granular detail. Reducing every category of waste—waste that stems from work that isn’t standardized, unnecessary orders, and patient injury—is absolutely essential for improving margins.

Better data and stronger analytics are also necessary when it comes to measuring quality – specifically in the tracking of treatment outcomes. Both government and private payers require detailed data for the payment of bonuses for quality outcomes. Large employers definitely expect more and better data.

“Large employers … are becoming laser-focused on this issue; they want their employees and members to go to the highest-performing facilities for care and incentivize them to do so. Increasing patient volume is key to counteracting the loss of procedure volume that comes with a value-based system.”

These large businesses increasingly use data to manage and monitor every aspect of their operations. Naturally, they will expect more data as they embrace value-based care and begin routing their employees to centers of excellence for specific procedures and treatment. Hospitals may have a long way to go to meet those high standards. But there is reason to believe that it will soon become a baseline expectation.