In 2014, Dr. Michael Dulin, chief clinical officer for analytics and outcomes research and head of the Dickson Advanced Analytics (DA2) group at Carolinas Health Care System (CHS), was preparing for a planning meeting with Carol Lovin, executive vice president and chief strategy officer at CHS. In the three years since DA was formed, the team had successfully unified all analytics talent and resources into one group that served CHS, Rapid increases in computing power and decreases in data storage costs had enabled DA's data architects to build predictive models incorporating complex clinical, financial, demographic, and claims data that would have been impossible to create only a few years before. Although DAP had blazed the trail for applied analytics in healthcare, other players in the value chain were making increased investments in their own modeling capabilities. Healthcare payers, such as Humana and United Health, were increasingly making analytics the focus of a strategic shift toward consumer-centric healthcare, going so far as to create targeted communications strategies for different patient segments and engaging behavioral health companies to provide exercise, nutrition, and other programs that would reduce the healthcare costs of their highest-risk patients. While many agreed that analytics could help the healthcare industry reduce costs and increase access to care, CHS recognized that privacy protections on patient data, as well as competitive rivalries, restricted the sharing of data among the various healthcare stakeholders. Dulin also noted the entry of consumer tech companies into the healthcare space; in 2014, both Apple and Google announced features in their new mobile operating systems that aggregated and tracked the output from various health wearables (like heart-rate monitors or step counters), as well as electronic medical record (EMR) data. Apple's Health Kit could even incorporate the results of lab tests into the dashboard (with the user's permission). Although the tech giants did not yet have access to claims or clinical data, they could potentially enter the field by acquiring an EMR company. Their expertise in analytics, access to demographic and location data, as well as the broad consumer adoption of their devices, led Dulin to consider which industry players consumers would trust to integrate their healthcare data in the future and what role DAP could play. In 2014, the Carolinas Health Care System, headquartered in Charlotte, North Carolina, owned and managed hospitals and acute care facilities that served over 2.2 million patients per year across three states (North Carolina, South Carolina, and Georgia). CHS was one of the oldest healthcare systems in the U.S.; its origins could be traced to the state's first civilian hospital, Charlotte Home and Hospital, established in 1876. The Charlotte Home and Hospital operated until 1940 (although the name was later changed to St. Peter's Hospital), when it was replaced by a new facility, the Charlotte Memorial Hospital, in a different location. During World War II, the hospital's financial difficulties led Rush S. Dickson, a local businessman, to lobby the city and county governments for larger reimbursements for emergency and indigent patients, and solicited financial support from local nonprofits and corporations. In 1943, the Charlotte-Mecklenburg Hospital Authority was organized under the North Carolina Hospital Authorities Act, which provided for oversight mechanisms for Charlotte Memorial Hospital (including rules governing the construction of new facilities, funding and management of day-to-day operations). The act also provided the legal and financial frameworks to support patients who could not afford to pay for healthcare services, In 1990, the name of the Charlotte Memorial Hospital was changed to Carolinas Medical Center (CMC) to reflect the hospital's increasing focus on education. That year, the facility was designated an "Academic Medical Center Teaching Hospital" by the state of North Carolina (one of only five hospitals in North Carolina to receive the designation). Five years later, the authority changed the name of the growing hospital network to CHS. In 2007, CHS opened the Levine Children's Hospital, vhich housed more than 30 medical specialties. In 2010, CHS announced a 10-year, $500 million investment to advance cancer treatment strategies and research through the creation of the Levine Cancer Institute. In 2010, CMC (now a part of CHS) was designated the Charlotte Campus of the University of North Carolina (UNC) School of Medicine and hosted third- and fourth-year medical students By 2014, CHS had become the biggest healthcare provider in North Carolina, with more than 61,000 full-time and part-time employees and an annual budget of over $7.7 billion (see Exhibit 1 for selected financial data). Its medical education and research center included over 300 residents and fellows pursuing a variety of medical specialties and had established research relationships with Oxford (stroke), UNC (dementia), Duke University, and many other academic centers across the U.S. CHS operated 900 care locations and 7,494 licensed beds in three states, including 39 hospitals (21 of which were managed by CHS, and 18 of which were owned), as well as additional virtual care In 1990, the name of the Charlotte Memorial Hospital was changed to Carolinas Medical Center (CMC) to reflect the hospital's increasing focus on education. That year, the facility was designated an "Academic Medical Center Teaching Hospital" by the state of North Carolina (one of only five hospitals in North Carolina to receive the designation). Five years later, the authority changed the name of the growing hospital network to CHS. In 2007, CHS opened the Levine Children's Hospital, which housed more than 30 medical specialties. In 2010, CHS announced a 10-year, $500 million investment to advance cancer treatment strategies and research through the creation of the Levine Cancer Institute. In 2010, CMC (now a part of CHS) was designated the Charlotte Campus of the University of North Carolina (UNC) School of Medicine and hosted third- and fourth-year medical students. By 2014, CHS had become the biggest healthcare provider in North Carolina, with more than 61,000 full-time and part-time employees and an annual budget of over $7.7 billion (see Exhibit 1 for selected financial data). Its medical education and research center included over 300 residents and fellows pursuing a variety of medical specialties and had established research relationships with Oxford (stroke), UNC (dementia), Duke University, and many other academic centers across the U.S. CHS operated 900 care locations and 7,494 licensed beds in three states, including 39 hospitals (21 of which were managed by CHS, and 18 of which were owned), as well as additional virtual care services. Roughly 75% of patients were located in North Carolina, and CHS spent $20 million each year on community outreach in the greater Charlotte area alone. CHS tracked patient satisfaction with mailed surveys or follow-ups within days of an appointment or discharge. Satisfaction was measured by a patient's likelihood to recommend CHS. As part of its role as a public healthcare system, CHS provided healthcare services to underserved patients and communities. CHS offered financial support to patients without insurance (or who were underinsured), subsidies for Medicare and Medicaid recipients, as well as funding for its education, behavioral health, and community health clinics. CHS gave medical supplies and equipment to nonprofits valued at over $1.5 million in 2013 (see Exhibit 2 for a full list of CHS charitable expenditures for 2013). Roughly 62% of annual revenue came from Medicare and Medicaid patients. By 2014, the vision of CHS had remained unchanged for two decades: healthcare, education, and research. That year, Lovin led an initiative to renew the strategic road map to guide CHS's future growth. She worked with her executive team colleagues to craft a strategy that provided for personalized, high-quality service across a single, unified enterprise. "Our customers are the consumers and patients first payers second," said Lovin. The team developed a list of strategic priorities (see Exhibit 3) and performance measures (see Exhibit 4) to guide the organization toward its goals. Health Provider Industry Background In 2012, healthcare expenditures in the U.S. totaled over $7,600 per capita versus an average of $2,800 per capita among OECD countries. The majority of healthcare expenses were paid for by government-sponsored coverage, such as Medicare and Medicaid, or by health insurance companies that sold plans to employers and individuals (either to those who purchased via healthcare exchanges or those who were eligible for Medicare Advantage). Government reimbursements per Medicare patient to cover healthcare had declined over time (see Exhibit 5); however, the 2010 Affordable Care Act (ACA) offered providers who were organized as accountable care organizations (ACOs) a share of the cost savings generated in the delivery of care to Medicare patients, so long as minimum quality thresholds were met Key changes to the U.S. healthcare landscape over the decade prior had influenced healthcare providers like CHS and other healthcare stakeholders to revisit their care delivery models: Fee-for-value instead of fee-for-service After the ACA's passage, hospital compensation was determined in part by the quality of outcomes, rather than simply on a fee-for-service basis as before. Hospitals faced penalties for high readmission rates and hospital-acquired conditions, but could also receive financial rewards for exceeding clinical quality outcome or patient satisfaction benchmaiss. Many healthcare providers sought to quickly build capabilities in analytics and measurement in order to track quality improvements, and to shift the organizational focus toward the continuous improvement of patient care. Physician shortages in the US, there were roughly 2.5 physicians per 1,000 people (versus an average of 3.3 per 1,000 among comparable OECD countries). The ACA was expected to exacerbate the supply-demand shortfall in the future, since it increased the population covered by health insurance. In 2014 alone, nearly 32 million new people entered the healthcare system. The Association of American Medical Colleges estimated that, by 2025, the U.S. would face a shortage of over 130,000 doctors. Digitization of healthcare In 2011, the U.S. Centers for Medicare and Medicaid Services (CMS) established an incentive system for doctors' offices and hospitals to switch from paper to EMRs. Hospitals that served Medicare patients could receive up to a $2 million incentive for adopting EMRs. Although patients were free to view and request corrections to the data in their EMRs, the platforms made it difficult for providers to extract and model the data held . . . aggregate data from wearable devices, including scales, running apps, and sleep trackers, into a consumer-friendly dashboard. Apple even partnered with several EMR companies to make medical records and lab results available to consumers on their iPhones via the single dashboard Shift to outpatient In an effort to cut costs and increase access to care, providers encouraged patients to seek care via outpatient facilities, or even via virtual checkups, rather than at high- cost treatment locations like emergency departments (EDS). Outpatient care comprised 51% of health expenditures in the U.S., whereas the average among OECD countries was 33%. In 2013, CHS chief executive Michael Tarwater observed: "More than 90% of our patient encounters now take place in a setting other than the bedside of an inpatient hospital room."? New entrants The shift to outpatient care led consumers to seek more convenient and inexpensive healthcare services. Retailers (including CVS, Walmart, Target, and Kroger) began opening healthcare clinics staffed by nurse practitioners in their stores as early as 2000. By 2014, there were 1,600 walk-in clinics in the US, and the number was expected to reach nearly 3,000 by 2015. Cost of care at the clinics for three common illnesses averaged $110, versus $166 at doctors' offices and $570 in EDS.' HIPAA Regulations In 1996, the U.S. House of Representatives passed the Health Insurance Portability and Accountability Act (HIPAA). HIPAA provided for both the portability of employer-provided health insurance (which enabled an individual to keep the same health insurance between jobs) and the establishment of the first set of national security and confidentiality standards for patient health data. The U.S. Department of Health and Human Services (HHS) established a privacy rule to protect individually identifiable patient data, while still enabling stakeholders to access the data needed to provide care. Data protected under HIPAA included physical or mental health conditions (including those that occurred in the past), healthcare provided, payments made for healthcare received, and demographic information that could be used to identify the individual (see Exhibit 6 for examples). Health plans (payers), healthcare providers, and healthcare "clearinghouses" (which included billing services, community health management information systems, value-added networks, and other business associates) were all subject to the privacy standards outlined in HIPAA. Healthcare organizations had to notify patients of their privacy rights (including acceptable use of personally identifiable information) and obtain signed authorization from patients for any use of individual data beyond treatment, payment, and healthcare operations. Restrictions on data use could be waived if data were "de-identified," either by the formal assessment of a statistician to prove individual anonymity was retained, or by the removal of indicators used to identify the individual and his or her relatives, employer, or household members. 12 De-identified data became propriety to the company that held it. HIPAA supported use of patient data to perform analysis necessary to make improvements to healthcare systems, including quality reviews, utilization reviews, and population reviews (often for a given condition, such as diabetes). Such information could be shared with other entities also subject to HIPAA, such as payers. Employers like CHS, who both provided healthcare and self-funded insurance to their employees, were not permitted to view their employees' disaggregated healthcare data; in addition, employee information collected through the human resources department was kept Dickson Advanced Analytics (DA) Following CMC's designation as a teaching hospital in 1990, CHS established partnerships with 11 academic research centers. There was no medical school located in Charlotte at the time, so one of the independent centers was designated a branch of UNC. The Dickson Institute for Health Studies, as the center was known, provided education and training facilities to 300 residents, nurses, and graduate students. It partnered with UNC-Charlotte and UNC-Chapel Hill to provide health-data- focused projects to PhD candidates. The Dickson Institute initially focused on improving acute care quality, but the mission was later broadened to cover an array of healthcare projects under the leadership of Dr. Roger Ray, executive vice president and chief physician executive at CHS. Although the Dickson Institute conducted research, data analysis, and public reporting of key metrics for CHS, Ray noted that its activities did not influence the majority of day-to-day operations that occurred within the CHS network. Beginning in the 2000s, CHS embarked on a visioning and process-development project to determine what data analytics capabilities would be integral to CHS's operations in the future. It determined it would need to develop a distributed data system and create a corporate data warehouse and decided to coalesce analytics personnel who were currently working in small silos throughout the organization to achieve the vision CHS Information Services leadership anticipated that cost of data storage would plummet, based upon their experience implementing the EMR system at CHS in 2006, so the team decided to build generous data storage to support the new analytics team. Prior to CHS's adoption of EMR, most of the data it collected was financial data generated through transactions. The EMR rollout served as a proof-of-concept that patient data and financial data could be combined to provide decision support. With increasing computing power, CHS and other providers could collect, store, and model a variety of clinical data (including unstructured data) that it could not have assembled previously. CHS hired consultants to advise the organization on the creation of a unified analytics group through the development of a high-level road map. Lovin was interviewed by the consultant group and asked to provide executive leadership for the initiative, and she recruited Dulin to help execute on CHS's vision of creating a unified, data-driven system. Dulin was trained in electrical and biomedical engineering and worked as a quality control specialist for a microchip manufacturer before attending medical school. At the time, there were many groups within CHS that handled analytics, but most were tied to a particular business, function, or geography with no integration CHS decided to differentiate on the basis of its analytics capability and made investments to raise the analytics "IQ" of the organization. CHS leadership and others believed the system could move beyond its current analytics-related key performance indicators (KPIS) to include data in key decisions that would change patient care and save money over the long term. The new analytics group could have adopted a hybrid model structure wherein descriptive analysis linked to performance metrics was performed internally and more rigorous analytics were outsourced, but CHS instead chose to develop both its foundational descriptive analytics and more advanced predictive and prescriptive models in-house. Creation of DA Dickson Advanced Analytics (DA) was launched in 2011 with an annual budget of $14 million. It preceded DA. Much of DAF's capacity was devoted to providing tools to support CHS-affiliated hospitals in delivering best-in-class healthcare to patients, although, over time. DA also developed analytical tools for evidence-based population health management, personalized patient care, and predictive modeling The success criterion for DAP was to improve outcomes, rather than increase the size of CHS. As Ray explained, "Healthcare is a massive cottage industry." He estimated that one-third of clinical work was "nonstandard," meaning that it diverged from a care plan and/or choices were made in the absence of evidence. Deploying analytics could help improve outcomes for work that was previously considered nonstandard. DA also played an important role in the communication strategy, since improving quality of outcomes often required engaging the patient to change his or her behavior. Many at CHS believed the key to DA's success was a continuing commitment to build strong relationships with the physicians and nurses. The data DA used was collected at many points of care through the CHS networks, in addition, any recommendations and tools derived from the data had to be implemented by the physicians (often by the clinical lead). DA sat outside of the organization's businesses, but still operated as a cost center. DA reported to Lovin and the strategy function, rather than information services. As a result, Dulin and his team created a business plan for DA to show its return on investment (ROI) over the long term, and prioritized projects of strategic importance to the organization DAP was composed of five groups: * Applied Outcomes Research." "Data Services," "Client Services," "Project Management." and "Advanced Analytics." Compulsory reporting was one of DA's core responsibilities: most of the staff of 120, including 12 PhD-level analysts, worked on reports submitted to the government. Within DA over time, a 15-person team dedicated to serving the medical group performed predictive work. A smaller research team worked to help measure the strength of the models and the interventions they delivered. Another DA team studied cost analytics to measure the ROI of quality increasing investments. The businesses focused on identifying revenue opportunities, and DA helped to assess what each opportunity would be worth. Patient data could be used to support investment decisions, such as which surgical devices to purchase, since patient data contained information on the quality of outcomes (which DA then combined with cost and device lifespan to assess ROT). One of Dulin's responsibilities was managing DA s internal customers, whose demand for analytics quickly outstripped the team's capacity. Many saw the potential for DAd to become an additional revenue stream by outsourcing its analytics services to third parties in the future. Shortly after DA latached, the team received more than twice as many requests as it had capacity to accept. DAcreated ek advisory board for issues related to effectiveness, priority setting, and other key focus areas. Then, CHS created a priority-setting process for developing predictive analytics first, DA conducted interviews with the clinical teams and an internal focus group (which was incorporated into the proposals for each project), then DA determined each proposal's alignment with existing systems and CHS strategy, and balanced the resources the proposal required against those needed for DAP to conduct ongoing reporting and data warehouse management responsibilities. Finally, it assessed the projects against a matrix of criteria, including size, patient impact, mortality vs. quality-of-life improvements, speed of implementation, cost, and commercial viability. Included in the process, DA would provide updates to the Clinical Integration Council (CIC), the highest physician leadership team. DA2 sought outside partners to improve the breadth and quality of its data. In 2013, CHS partnered with four healthcare systems and IBM to form the Data Alliance Collaborative (DAC), which focused on improving population health by creating scalable data models. The healthcare partners contributed data to a communal warehouse, which contained data from over 100 hospitals and 1,600 non-acute care sites serving 28 million patients.IBM provided the data infrastructure, which could incorporate clinical, claims, and financial data, to support the analytics. 15 CHS used strategic partnerships to incorporate provider and payer data with consumer data into its predictive algorithms. Dulin believed that such data would give DA additional insight into communities and patient populations, and provide indications for early interventions for potential problems beyond EMR data. The spending data, along with other inputs, were used to create a risk score for admitted patients, which were then distributed to doctors and other healthcare providers to reprioritize care delivery. This approach allowed the hospital system to focus limited resources on high-risk patients to improve their outcomes and their health status. DA2 and the Data Governance Committee In 2012, CHS established a data governance committee, headed by Alicia Bowers, vice president of corporate privacy, and Michael Trumbore, assistant vice president of advanced analytics (and sponsored by Ray). The group included representatives from DA, clinical and translational research, information services, human resources, financial services, audit services, systems business, and the office of the general counsel. Members of the CHS institutional review board (IRB)* also had seats on the committee. Since CHS was a research organization, it followed the IRB standards to guide its handling of data. For example, one of the IRB privacy standards dealt with creating a geographically informed dataset and prevented disclosure of information if fewer than 50 people lived within a single census tract The data governance group was formed to protect, manage, and determine accountability for the data genelated in the day-to-day operations of CHS, CHS recognized that the organization had a data strategy, whether or not it was made explicit. With the formation of the data governance group, it hoped to signal executive support for DA and facilitate engagement with the information services, clinical, and business groups. The group met monthly to: Create data governance policies. Prioritize data governance initiatives (including pilot programs). Define data governance policies, standards, processes, metrics, and principles Communicate the vision and activities of the group to the broad CHS organization Address the governance structure, data access, and data quality. A key initiative of the advisory group was the appointment of "domain owners," who were responsible for upholding governance standards for the data and business processes in a given domain. Domains referred to clusters of data that were organized around CHS businesses. For example, the research domain might contain documentation of patient consent, IRB compliance, and grant information, whereas the patient domain could contain EMR information and treatment plans. The domain owners led multifunctional teams composed of process owners, data stewards, and project managers, as well as representatives from information services and data governance who were responsible for tracking performance against KPIs, data quality, and compliance with internal data governance policies. The domain owners reported to the Strategic Governance Council, chaired by Dulin, who ultimately reported to the Executive Governance Council, led by Lovin (see Exhibit 7 for an organization chart). . . Exhibit 1 CHS Summary Financials, 2013 Dollar Total (million) Percentage of Total $5,832 $293 $53 $1,487 $225 $469 $8,358 68% 4% 1% 18% 3% 6% 100% Revenues Tertiary & Acute Care Services Continuing Care Services Specialty Services Physicians' Services Other Services Non-Operating Activities Total Revenues Expenses Wages, Salaries & Benefits Materials, Supplies & Other Depreciation & Amortization Financing Costs Funding for Facilities, Equipment & Programs Total Expenses Source Company documents 55% 31% $4,616 $2,615 $454 $125 $547 $8,358 5% 2% 7% 100% I Exhibit 2 CHS Charitable Expenditures, 2013 S, million Charitable Expenditures Cost of financial assistance to uninsured patients Bad debt costs by patients who do not pay for services Losses incurred by serving Medicare patients Losses incurred by serving Medicaid patients Cost of community-building activities and other services Cost of medical education, research, and cash and in-kind contributions to charities Total value of uncompensated care and other community benefits $324 $290 $563 $161 $56 $146 $1.540 Strategic Priority Details Quality & Patient Experience Design a customer relationship management tool; Increase health literacy: improve critical and diabetes care; improve clinical outcomes via collaboration software. Integrated System of Care Deploy the CHS care management platform; manage population health; deploy virtual care; transform service lines, continuing care, community health and point of care. Strategic Growth Deliver competitive, consumer-facing retail services, commercialize existing CHS services; develop payer/risk strategies with payers; deliver best-in-class specialty care. Transformative Operations Improve processes to reduce patient wait times; share and implement best practices across the organization; put the patient first in operational decisions; leverage engaged workforce. Source: Company documents. Exhibit 4 CHS Strategic Performance Measures, 2014 Performlence Measures Metrics Quality & Patient Experience Inpatient mortality: breast cancer screenings: physician satisfaction; patient likelihood to recommend patient safety score; diabetes treatment outcomes; appropriate care score (for both ambulatory and acute care) Integrated System of Care Readmission rate, CHS/payer collaboration performance progress against integrated system of care goals; Medicare spend per beneficiary: CHS medical plan performance Strategic Growth Actively managed primary care patients; population share; commercial managed care population; use rates (versus industry benchmarks); evidence-based screening volumes, commercialized products or services. Transformative Operations Average length of stay; emergency department transformation score; operating cash flow margin; productivity improvement; revenue cycle improvement process enhancement product standardization savings and speed. Teammate Engagement Commitment indicator score (percentile ranking) Community Benefit Number of individuals screened for pre-diabetes; hours of community service. Objective of the Case Study: 1. To explore how big data analytics can add value to a hospital system that is changing strategy in response to Affordable Care Act. 2. To compare the strategic potential of various players (in addition to hospital providers to lead in the integration of patient specific data. 3. To discuss challenges of in-house data analytics department in fulfilling its strategic mission Please answer the following questions - Q1. Why CHS invested in DA? Q2. What was DA's success criterion? Q3. Why do you think DA reported to the Strategy function even though it was a cost center? Q4. What was the role of the Data Governance Committee? I Q5. Describe the four DA pilot programs summarized in the case? Which one of the four presents the toughest challenge? Q6. How successful has DA been so far? Apart from quality of DA's work, are there other factors that explain its success? Q7. What are Dunlin's most important challenges going forward? Q8. Which organizations are best-placed to provide integrated data management for individual patients? In 2014, Dr. Michael Dulin, chief clinical officer for analytics and outcomes research and head of the Dickson Advanced Analytics (DA2) group at Carolinas Health Care System (CHS), was preparing for a planning meeting with Carol Lovin, executive vice president and chief strategy officer at CHS. In the three years since DA was formed, the team had successfully unified all analytics talent and resources into one group that served CHS, Rapid increases in computing power and decreases in data storage costs had enabled DA's data architects to build predictive models incorporating complex clinical, financial, demographic, and claims data that would have been impossible to create only a few years before. Although DAP had blazed the trail for applied analytics in healthcare, other players in the value chain were making increased investments in their own modeling capabilities. Healthcare payers, such as Humana and United Health, were increasingly making analytics the focus of a strategic shift toward consumer-centric healthcare, going so far as to create targeted communications strategies for different patient segments and engaging behavioral health companies to provide exercise, nutrition, and other programs that would reduce the healthcare costs of their highest-risk patients. While many agreed that analytics could help the healthcare industry reduce costs and increase access to care, CHS recognized that privacy protections on patient data, as well as competitive rivalries, restricted the sharing of data among the various healthcare stakeholders. Dulin also noted the entry of consumer tech companies into the healthcare space; in 2014, both Apple and Google announced features in their new mobile operating systems that aggregated and tracked the output from various health wearables (like heart-rate monitors or step counters), as well as electronic medical record (EMR) data. Apple's Health Kit could even incorporate the results of lab tests into the dashboard (with the user's permission). Although the tech giants did not yet have access to claims or clinical data, they could potentially enter the field by acquiring an EMR company. Their expertise in analytics, access to demographic and location data, as well as the broad consumer adoption of their devices, led Dulin to consider which industry players consumers would trust to integrate their healthcare data in the future and what role DAP could play. In 2014, the Carolinas Health Care System, headquartered in Charlotte, North Carolina, owned and managed hospitals and acute care facilities that served over 2.2 million patients per year across three states (North Carolina, South Carolina, and Georgia). CHS was one of the oldest healthcare systems in the U.S.; its origins could be traced to the state's first civilian hospital, Charlotte Home and Hospital, established in 1876. The Charlotte Home and Hospital operated until 1940 (although the name was later changed to St. Peter's Hospital), when it was replaced by a new facility, the Charlotte Memorial Hospital, in a different location. During World War II, the hospital's financial difficulties led Rush S. Dickson, a local businessman, to lobby the city and county governments for larger reimbursements for emergency and indigent patients, and solicited financial support from local nonprofits and corporations. In 1943, the Charlotte-Mecklenburg Hospital Authority was organized under the North Carolina Hospital Authorities Act, which provided for oversight mechanisms for Charlotte Memorial Hospital (including rules governing the construction of new facilities, funding and management of day-to-day operations). The act also provided the legal and financial frameworks to support patients who could not afford to pay for healthcare services, In 1990, the name of the Charlotte Memorial Hospital was changed to Carolinas Medical Center (CMC) to reflect the hospital's increasing focus on education. That year, the facility was designated an "Academic Medical Center Teaching Hospital" by the state of North Carolina (one of only five hospitals in North Carolina to receive the designation). Five years later, the authority changed the name of the growing hospital network to CHS. In 2007, CHS opened the Levine Children's Hospital, vhich housed more than 30 medical specialties. In 2010, CHS announced a 10-year, $500 million investment to advance cancer treatment strategies and research through the creation of the Levine Cancer Institute. In 2010, CMC (now a part of CHS) was designated the Charlotte Campus of the University of North Carolina (UNC) School of Medicine and hosted third- and fourth-year medical students By 2014, CHS had become the biggest healthcare provider in North Carolina, with more than 61,000 full-time and part-time employees and an annual budget of over $7.7 billion (see Exhibit 1 for selected financial data). Its medical education and research center included over 300 residents and fellows pursuing a variety of medical specialties and had established research relationships with Oxford (stroke), UNC (dementia), Duke University, and many other academic centers across the U.S. CHS operated 900 care locations and 7,494 licensed beds in three states, including 39 hospitals (21 of which were managed by CHS, and 18 of which were owned), as well as additional virtual care In 1990, the name of the Charlotte Memorial Hospital was changed to Carolinas Medical Center (CMC) to reflect the hospital's increasing focus on education. That year, the facility was designated an "Academic Medical Center Teaching Hospital" by the state of North Carolina (one of only five hospitals in North Carolina to receive the designation). Five years later, the authority changed the name of the growing hospital network to CHS. In 2007, CHS opened the Levine Children's Hospital, which housed more than 30 medical specialties. In 2010, CHS announced a 10-year, $500 million investment to advance cancer treatment strategies and research through the creation of the Levine Cancer Institute. In 2010, CMC (now a part of CHS) was designated the Charlotte Campus of the University of North Carolina (UNC) School of Medicine and hosted third- and fourth-year medical students. By 2014, CHS had become the biggest healthcare provider in North Carolina, with more than 61,000 full-time and part-time employees and an annual budget of over $7.7 billion (see Exhibit 1 for selected financial data). Its medical education and research center included over 300 residents and fellows pursuing a variety of medical specialties and had established research relationships with Oxford (stroke), UNC (dementia), Duke University, and many other academic centers across the U.S. CHS operated 900 care locations and 7,494 licensed beds in three states, including 39 hospitals (21 of which were managed by CHS, and 18 of which were owned), as well as additional virtual care services. Roughly 75% of patients were located in North Carolina, and CHS spent $20 million each year on community outreach in the greater Charlotte area alone. CHS tracked patient satisfaction with mailed surveys or follow-ups within days of an appointment or discharge. Satisfaction was measured by a patient's likelihood to recommend CHS. As part of its role as a public healthcare system, CHS provided healthcare services to underserved patients and communities. CHS offered financial support to patients without insurance (or who were underinsured), subsidies for Medicare and Medicaid recipients, as well as funding for its education, behavioral health, and community health clinics. CHS gave medical supplies and equipment to nonprofits valued at over $1.5 million in 2013 (see Exhibit 2 for a full list of CHS charitable expenditures for 2013). Roughly 62% of annual revenue came from Medicare and Medicaid patients. By 2014, the vision of CHS had remained unchanged for two decades: healthcare, education, and research. That year, Lovin led an initiative to renew the strategic road map to guide CHS's future growth. She worked with her executive team colleagues to craft a strategy that provided for personalized, high-quality service across a single, unified enterprise. "Our customers are the consumers and patients first payers second," said Lovin. The team developed a list of strategic priorities (see Exhibit 3) and performance measures (see Exhibit 4) to guide the organization toward its goals. Health Provider Industry Background In 2012, healthcare expenditures in the U.S. totaled over $7,600 per capita versus an average of $2,800 per capita among OECD countries. The majority of healthcare expenses were paid for by government-sponsored coverage, such as Medicare and Medicaid, or by health insurance companies that sold plans to employers and individuals (either to those who purchased via healthcare exchanges or those who were eligible for Medicare Advantage). Government reimbursements per Medicare patient to cover healthcare had declined over time (see Exhibit 5); however, the 2010 Affordable Care Act (ACA) offered providers who were organized as accountable care organizations (ACOs) a share of the cost savings generated in the delivery of care to Medicare patients, so long as minimum quality thresholds were met Key changes to the U.S. healthcare landscape over the decade prior had influenced healthcare providers like CHS and other healthcare stakeholders to revisit their care delivery models: Fee-for-value instead of fee-for-service After the ACA's passage, hospital compensation was determined in part by the quality of outcomes, rather than simply on a fee-for-service basis as before. Hospitals faced penalties for high readmission rates and hospital-acquired conditions, but could also receive financial rewards for exceeding clinical quality outcome or patient satisfaction benchmaiss. Many healthcare providers sought to quickly build capabilities in analytics and measurement in order to track quality improvements, and to shift the organizational focus toward the continuous improvement of patient care. Physician shortages in the US, there were roughly 2.5 physicians per 1,000 people (versus an average of 3.3 per 1,000 among comparable OECD countries). The ACA was expected to exacerbate the supply-demand shortfall in the future, since it increased the population covered by health insurance. In 2014 alone, nearly 32 million new people entered the healthcare system. The Association of American Medical Colleges estimated that, by 2025, the U.S. would face a shortage of over 130,000 doctors. Digitization of healthcare In 2011, the U.S. Centers for Medicare and Medicaid Services (CMS) established an incentive system for doctors' offices and hospitals to switch from paper to EMRs. Hospitals that served Medicare patients could receive up to a $2 million incentive for adopting EMRs. Although patients were free to view and request corrections to the data in their EMRs, the platforms made it difficult for providers to extract and model the data held . . . aggregate data from wearable devices, including scales, running apps, and sleep trackers, into a consumer-friendly dashboard. Apple even partnered with several EMR companies to make medical records and lab results available to consumers on their iPhones via the single dashboard Shift to outpatient In an effort to cut costs and increase access to care, providers encouraged patients to seek care via outpatient facilities, or even via virtual checkups, rather than at high- cost treatment locations like emergency departments (EDS). Outpatient care comprised 51% of health expenditures in the U.S., whereas the average among OECD countries was 33%. In 2013, CHS chief executive Michael Tarwater observed: "More than 90% of our patient encounters now take place in a setting other than the bedside of an inpatient hospital room."? New entrants The shift to outpatient care led consumers to seek more convenient and inexpensive healthcare services. Retailers (including CVS, Walmart, Target, and Kroger) began opening healthcare clinics staffed by nurse practitioners in their stores as early as 2000. By 2014, there were 1,600 walk-in clinics in the US, and the number was expected to reach nearly 3,000 by 2015. Cost of care at the clinics for three common illnesses averaged $110, versus $166 at doctors' offices and $570 in EDS.' HIPAA Regulations In 1996, the U.S. House of Representatives passed the Health Insurance Portability and Accountability Act (HIPAA). HIPAA provided for both the portability of employer-provided health insurance (which enabled an individual to keep the same health insurance between jobs) and the establishment of the first set of national security and confidentiality standards for patient health data. The U.S. Department of Health and Human Services (HHS) established a privacy rule to protect individually identifiable patient data, while still enabling stakeholders to access the data needed to provide care. Data protected under HIPAA included physical or mental health conditions (including those that occurred in the past), healthcare provided, payments made for healthcare received, and demographic information that could be used to identify the individual (see Exhibit 6 for examples). Health plans (payers), healthcare providers, and healthcare "clearinghouses" (which included billing services, community health management information systems, value-added networks, and other business associates) were all subject to the privacy standards outlined in HIPAA. Healthcare organizations had to notify patients of their privacy rights (including acceptable use of personally identifiable information) and obtain signed authorization from patients for any use of individual data beyond treatment, payment, and healthcare operations. Restrictions on data use could be waived if data were "de-identified," either by the formal assessment of a statistician to prove individual anonymity was retained, or by the removal of indicators used to identify the individual and his or her relatives, employer, or household members. 12 De-identified data became propriety to the company that held it. HIPAA supported use of patient data to perform analysis necessary to make improvements to healthcare systems, including quality reviews, utilization reviews, and population reviews (often for a given condition, such as diabetes). Such information could be shared with other entities also subject to HIPAA, such as payers. Employers like CHS, who both provided healthcare and self-funded insurance to their employees, were not permitted to view their employees' disaggregated healthcare data; in addition, employee information collected through the human resources department was kept Dickson Advanced Analytics (DA) Following CMC's designation as a teaching hospital in 1990, CHS established partnerships with 11 academic research centers. There was no medical school located in Charlotte at the time, so one of the independent centers was designated a branch of UNC. The Dickson Institute for Health Studies, as the center was known, provided education and training facilities to 300 residents, nurses, and graduate students. It partnered with UNC-Charlotte and UNC-Chapel Hill to provide health-data- focused projects to PhD candidates. The Dickson Institute initially focused on improving acute care quality, but the mission was later broadened to cover an array of healthcare projects under the leadership of Dr. Roger Ray, executive vice president and chief physician executive at CHS. Although the Dickson Institute conducted research, data analysis, and public reporting of key metrics for CHS, Ray noted that its activities did not influence the majority of day-to-day operations that occurred within the CHS network. Beginning in the 2000s, CHS embarked on a visioning and process-development project to determine what data analytics capabilities would be integral to CHS's operations in the future. It determined it would need to develop a distributed data system and create a corporate data warehouse and decided to coalesce analytics personnel who were currently working in small silos throughout the organization to achieve the vision CHS Information Services leadership anticipated that cost of data storage would plummet, based upon their experience implementing the EMR system at CHS in 2006, so the team decided to build generous data storage to support the new analytics team. Prior to CHS's adoption of EMR, most of the data it collected was financial data generated through transactions. The EMR rollout served as a proof-of-concept that patient data and financial data could be combined to provide decision support. With increasing computing power, CHS and other providers could collect, store, and model a variety of clinical data (including unstructured data) that it could not have assembled previously. CHS hired consultants to advise the organization on the creation of a unified analytics group through the development of a high-level road map. Lovin was interviewed by the consultant group and asked to provide executive leadership for the initiative, and she recruited Dulin to help execute on CHS's vision of creating a unified, data-driven system. Dulin was trained in electrical and biomedical engineering and worked as a quality control specialist for a microchip manufacturer before attending medical school. At the time, there were many groups within CHS that handled analytics, but most were tied to a particular business, function, or geography with no integration CHS decided to differentiate on the basis of its analytics capability and made investments to raise the analytics "IQ" of the organization. CHS leadership and others believed the system could move beyond its current analytics-related key performance indicators (KPIS) to include data in key decisions that would change patient care and save money over the long term. The new analytics group could have adopted a hybrid model structure wherein descriptive analysis linked to performance metrics was performed internally and more rigorous analytics were outsourced, but CHS instead chose to develop both its foundational descriptive analytics and more advanced predictive and prescriptive models in-house. Creation of DA Dickson Advanced Analytics (DA) was launched in 2011 with an annual budget of $14 million. It preceded DA. Much of DAF's capacity was devoted to providing tools to support CHS-affiliated hospitals in delivering best-in-class healthcare to patients, although, over time. DA also developed analytical tools for evidence-based population health management, personalized patient care, and predictive modeling The success criterion for DAP was to improve outcomes, rather than increase the size of CHS. As Ray explained, "Healthcare is a massive cottage industry." He estimated that one-third of clinical work was "nonstandard," meaning that it diverged from a care plan and/or choices were made in the absence of evidence. Deploying analytics could help improve outcomes for work that was previously considered nonstandard. DA also played an important role in the communication strategy, since improving quality of outcomes often required engaging the patient to change his or her behavior. Many at CHS believed the key to DA's success was a continuing commitment to build strong relationships with the physicians and nurses. The data DA used was collected at many points of care through the CHS networks, in addition, any recommendations and tools derived from the data had to be implemented by the physicians (often by the clinical lead). DA sat outside of the organization's businesses, but still operated as a cost center. DA reported to Lovin and the strategy function, rather than information services. As a result, Dulin and his team created a business plan for DA to show its return on investment (ROI) over the long term, and prioritized projects of strategic importance to the organization DAP was composed of five groups: * Applied Outcomes Research." "Data Services," "Client Services," "Project Management." and "Advanced Analytics." Compulsory reporting was one of DA's core responsibilities: most of the staff of 120, including 12 PhD-level analysts, worked on reports submitted to the government. Within DA over time, a 15-person team dedicated to serving the medical group performed predictive work. A smaller research team worked to help measure the strength of the models and the interventions they delivered. Another DA team studied cost analytics to measure the ROI of quality increasing investments. The businesses focused on identifying revenue opportunities, and DA helped to assess what each opportunity would be worth. Patient data could be used to support investment decisions, such as which surgical devices to purchase, since patient data contained information on the quality of outcomes (which DA then combined with cost and device lifespan to assess ROT). One of Dulin's responsibilities was managing DA s internal customers, whose demand for analytics quickly outstripped the team's capacity. Many saw the potential for DAd to become an additional revenue stream by outsourcing its analytics services to third parties in the future. Shortly after DA latached, the team received more than twice as many requests as it had capacity to accept. DAcreated ek advisory board for issues related to effectiveness, priority setting, and other key focus areas. Then, CHS created a priority-setting process for developing predictive analytics first, DA conducted interviews with the clinical teams and an internal focus group (which was incorporated into the proposals for each project), then DA determined each proposal's alignment with existing systems and CHS strategy, and balanced the resources the proposal required against those needed for DAP to conduct ongoing reporting and data warehouse management responsibilities. Finally, it assessed the projects against a matrix of criteria, including size, patient impact, mortality vs. quality-of-life improvements, speed of implementation, cost, and commercial viability. Included in the process, DA would provide updates to the Clinical Integration Council (CIC), the highest physician leadership team. DA2 sought outside partners to improve the breadth and quality of its data. In 2013, CHS partnered with four healthcare systems and IBM to form the Data Alliance Collaborative (DAC), which focused on improving population health by creating scalable data models. The healthcare partners contributed data to a communal warehouse, which contained data from over 100 hospitals and 1,600 non-acute care sites serving 28 million patients.IBM provided the data infrastructure, which could incorporate clinical, claims, and financial data, to support the analytics. 15 CHS used strategic partnerships to incorporate provider and payer data with consumer data into its predictive algorithms. Dulin believed that such data would give DA additional insight into communities and patient populations, and provide indications for early interventions for potential problems beyond EMR data. The spending data, along with other inputs, were used to create a risk score for admitted patients, which were then distributed to doctors and other healthcare providers to reprioritize care delivery. This approach allowed the hospital system to focus limited resources on high-risk patients to improve their outcomes and their health status. DA2 and the Data Governance Committee In 2012, CHS established a data governance committee, headed by Alicia Bowers, vice president of corporate privacy, and Michael Trumbore, assistant vice president of advanced analytics (and sponsored by Ray). The group included representatives from DA, clinical and translational research, information services, human resources, financial services, audit services, systems business, and the office of the general counsel. Members of the CHS institutional review board (IRB)* also had seats on the committee. Since CHS was a research organization, it followed the IRB standards to guide its handling of data. For example, one of the IRB privacy standards dealt with creating a geographically informed dataset and prevented disclosure of information if fewer than 50 people lived within a single census tract The data governance group was formed to protect, manage, and determine accountability for the data genelated in the day-to-day operations of CHS, CHS recognized that the organization had a data strategy, whether or not it was made explicit. With the formation of the data governance group, it hoped to signal executive support for DA and facilitate engagement with the information services, clinical, and business groups. The group met monthly to: Create data governance policies. Prioritize data governance initiatives (including pilot programs). Define data governance policies, standards, processes, metrics, and principles Communicate the vision and activities of the group to the broad CHS organization Address the governance structure, data access, and data quality. A key initiative of the advisory group was the appointment of "domain owners," who were responsible for upholding governance standards for the data and business processes in a given domain. Domains referred to clusters of data that were organized around CHS businesses. For example, the research domain might contain documentation of patient consent, IRB compliance, and grant information, whereas the patient domain could contain EMR information and treatment plans. The domain owners led multifunctional teams composed of process owners, data stewards, and project managers, as well as representatives from information services and data governance who were responsible for tracking performance against KPIs, data quality, and compliance with internal data governance policies. The domain owners reported to the Strategic Governance Council, chaired by Dulin, who ultimately reported to the Executive Governance Council, led by Lovin (see Exhibit 7 for an organization chart). . . Exhibit 1 CHS Summary Financials, 2013 Dollar Total (million) Percentage of Total $5,832 $293 $53 $1,487 $225 $469 $8,358 68% 4% 1% 18% 3% 6% 100% Revenues Tertiary & Acute Care Services Continuing Care Services Specialty Services Physicians' Services Other Services Non-Operating Activities Total Revenues Expenses Wages, Salaries & Benefits Materials, Supplies & Other Depreciation & Amortization Financing Costs Funding for Facilities, Equipment & Programs Total Expenses Source Company documents 55% 31% $4,616 $2,615 $454 $125 $547 $8,358 5% 2% 7% 100% I Exhibit 2 CHS Charitable Expenditures, 2013 S, million Charitable Expenditures Cost of financial assistance to uninsured patients Bad debt costs by patients who do not pay for services Losses incurred by serving Medicare patients Losses incurred by serving Medicaid patients Cost of community-building activities and other services Cost of medical education, research, and cash and in-kind contributions to charities Total value of uncompensated care and other community benefits $324 $290 $563 $161 $56 $146 $1.540 Strategic Priority Details Quality & Patient Experience Design a customer relationship management tool; Increase health literacy: improve critical and diabetes care; improve clinical outcomes via collaboration software. Integrated System of Care Deploy the CHS care management platform; manage population health; deploy virtual care; transform service lines, continuing care, community health and point of care. Strategic Growth Deliver competitive, consumer-facing retail services, commercialize existing CHS services; develop payer/risk strategies with payers; deliver best-in-class specialty care. Transformative Operations Improve processes to reduce patient wait times; share and implement best practices across the organization; put the patient first in operational decisions; leverage engaged workforce. Source: Company documents. Exhibit 4 CHS Strategic Performance Measures, 2014 Performlence Measures Metrics Quality & Patient Experience Inpatient mortality: breast cancer screenings: physician satisfaction; patient likelihood to recommend patient safety score; diabetes treatment outcomes; appropriate care score (for both ambulatory and acute care) Integrated System of Care Readmission rate, CHS/payer collaboration performance progress against integrated system of care goals; Medicare spend per beneficiary: CHS medical plan performance Strategic Growth Actively managed primary care patients; population share; commercial managed care population; use rates (versus industry benchmarks); evidence-based screening volumes, commercialized products or services. Transformative Operations Average length of stay; emergency department transformation score; operating cash flow margin; productivity improvement; revenue cycle improvement process enhancement product standardization savings and speed. Teammate Engagement Commitment indicator score (percentile ranking) Community Benefit Number of individuals screened for pre-diabetes; hours of community service. Objective of the Case Study: 1. To explore how big data analytics can add value to a hospital system that is changing strategy in response to Affordable Care Act. 2. To compare the strategic potential of various players (in addition to hospital providers to lead in the integration of patient specific data. 3. To discuss challenges of in-house data analytics department in fulfilling its strategic mission Please answer the following questions - Q1. Why CHS invested in DA? Q2. What was DA's success criterion? Q3. Why do you think DA reported to the Strategy function even though it was a cost center? Q4. What was the role of the Data Governance Committee? I Q5. Describe the four DA pilot programs summarized in the case? Which one of the four presents the toughest challenge? Q6. How successful has DA been so far? Apart from quality of DA's work, are there other factors that explain its success? Q7. What are Dunlin's most important challenges going forward? Q8. Which organizations are best-placed to provide integrated data management for individual patients