Using Splunk to find Healthcare Cost Efficiencies

I was reading the September 2011 issue of the Harvard Business Review and the article entitled “How to Solve the Cost Crisis on Health Care” by Robert Kaplan and Michael Porter got my attention. Given all the talk about health care over the last 3 or so years you’d think think that every aspect of this topic had been covered. I was pleasantly surprised to see this was a fresh approach to the problem. Kaplan and Porter content that “The biggest problem with health care isn’t with insurance or politics. It’s that we’re measuring the wrong things the wrong way.”

They contend that “few health care providers measure the actual costs for for treating a patient with a given medical condition over a full cycle of care, or compare the costs they incur with the outcomes they achieve.” The whole ‘fee-for-service model’ is really the problem. A single service (say a hip replacement) is charged the same without regard to whether the total time of the care was 20 hours 30 hours or 70 hours. Overhead is allocated arbitrarily based on crude formulates that spread overhead costs  across each department’s billable activities.  Kaplan and Porter call this the “peanut butter approach.”

So what does this have to do with Splunk? The authors posit that every service in the hospital is a time based transaction and Time-Driven Activity-Based Costing (TCABC) can be applied to every interaction between care giver and patient. Simple formulas can allocate the cost across administrators and care providers based on the capacity of the resource (salary, benefits, the space the person occupies, and equipment they use, divided by the actual hours they are actually available).  For so called fixed costs, space allocated to the patient for recovery can be allocated across time.

The ‘electronic foot prints’ of all the time-based activities are locked in the logs of health care applications.  Splunk can monitor all the care giver – patient interaction log data as transactions. For example, the amount of time registration, intake, clinician visit, plan of care discussions, and plan of care scheduling take can be measured with by Splunk monitoring electronic records and performing a look-up to a cost allocation DB.  Splunk can be used to measure the amount of time between when a particular medication is to be administered to a patient and when it actually happens. Trends can be monitored over time and efficiencies found for the transactions. Resources can be reallocated as needed for better time-based efficiencies.

When TCABC was applied at the University of Texas Anderson Cancer Center, they were able to reduce process time by 16%, realize a 12% decrease in technical staff, and a 65% reduction in costs for professional staff. “Accurate measurement of costs and outcomes is the previously hidden secret for solving the health care cost crisis.” It should be noted that TCABC was implemented as a manual approach — there was not a system identified in the article that could perform the costing function. Splunk – a time-indexing big-data engine with analytics and visualization capabilities is perfectly suited to perform this sort of analysis.

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