Pegasus Knowledge Center

The Digital Age Collides with Healthcare - Business Analytics for the Healthcare Industry
Author: Paul Parmar, CEO of Pegasus Blue Star Fund,
A Healthcare focused Private Equity Fund.

What ever happened to the good old days? When we got sick we called a doctor, they came to the house and determined what was wrong and told us what to do to get better. Before they left we gave them a check or a chicken for their services. Thankfully those days are long gone, but the basic concept is still around. Physicians provide services to patients with ailments and request to be compensated in return. While this sounds simple, the reality is that few, if any, actually pay for the services directly. Most patients have some sort of private or public insurance. These payers have agreements with Healthcare providers limiting what can be paid for each particular type of service and they have large staffs and automated systems to ensure that they do not over pay for services rendered.

Physicians today find themselves at a disadvantage with the private and public insurance organizations they must deal with to be compensated for their services. The large payers are equipped with complex computing systems, large staffs of programmers and clerks, and a myriad of different payment plans and contracts to make the process of revenue collection very complex. Physicians on the other hand have small staffs, with little or no computing capability, and no time to deal with the complexities.

The majority of medical practices have solved the problem of collecting revenue by engaging a medical billing company to collect the revenue for them, using professional staff and complex computer systems. While on the surface this seems to even the playing field, in reality, the physicians are still at a huge disadvantage, because the payers all have sophisticated business intelligence tools to ensure that they don't pay one penny more than necessary and that they negotiate contracts that severely limit the physician's ability to collect full compensation for services provided.

As the CEO of Pegasus Blue Star Fund, a private equity fund specializing in Healthcare Services Investments, I have over 20 years of experience investing and managing Healthcare Services companies in the areas of Cancer treatment centers, Surgery centers, Practice management, Medical Group Purchasing Organizations, EHR, Medical Revenue Cycle Management, Patient Portal, Claims Optimization, Claims Authorization, Patient collections, Bad debt collections etc. It is my goal to even the playing field by taking steps to ensure that physicians will be able to turn the tables on the payers. My approach is to provide the Healthcare Industry with a Business Analytics Tool specifically designed to provide physicians the data they need to manage their practices more profitably and to negotiate with payers. The Healthcare specific Business Intelligence tool will provide data and capability to analyze proposed contracts to see in advance what effect the proposed contract will have on revenues and profitability. At a recent conference for Anesthesiologists I made the prediction that with-in the next three years there will be off the shelf software specifically designed to model costs and revenue streams for medical specialties that will improve the ability of the practice to negotiate financially advantageous contracts with most payers. The basis for this bold assertion is the work currently underway at Orion HealthCorp. They have developed a Business Intelligence Tool called Pegasus that analyzes data from their 5 operating units, Rand, RMI, MBS, WSB, and NEMS and provides their clients with the ability to monitor performance on every aspect of their business. It also provides detailed feedback to Orion on how efficient and effective their operations are. Jamie Kerestes, CEO of NEMS, and recent Orion acquisition heard back from a gathering of NEMS clients that the new business intelligence tool was helping them improve their operations and that they were looking forward to the time when they will have gained the proficiency necessary to help them with payer contract negotiations. The clients also shared with Ms. Kerestes that they are happy with the support that they receive from the Orion Pegasus team, which is making the learning curve very easy to get through.

What company today does not use business analytics to model the impact of large contracts on their revenues and profitability? HR departments use business analytics to model the effects of new Insurance plans, new wage agreements with unions and non-represented staff alike. Manufacturers model the impact of new products at multiple volume and price points to optimize the profitability of the new product. With new business analytics tools, like the Pegasus product from Orion, physicians and practice managers can now understand the impact of reimbursement changes to each procedure performed in the office and are now in a position to challenge payers when they offer new agreements that will have an adverse impact on revenues and profits.

The reality is there are really many applications for Business Analytics in a medical practice. The vast majority of the analytical tools on the market today are focused and limited to financial applications based on billing system data only. Dale Brinkman, CEO of Orion points out that only the most innovative tools, like Pegasus, have gone beyond billing information to provide a holistic and integrated solution for the entire medical practice.

To provide this holistic view of the practice the Business Analytics Tool must have access to data from all critical components of the practice. While each practice will have unique nuances, the core of all practices will be the following:

  • Patient Portal and Patient Demographic Information
  • Electronic Health Records
    • Patient ailment and visitation History
    • Test Results
    • Medication History
    • Diagnosis and Treatment
    • Referrals
    • Etc
  • Billing information
    • Charges by patient and procedure, payer, etc.
    • Payments by patient, procedure, payer, etc.
    • Denials and Partial payments
    • Coding and Demographics
    • AR days, etc.
  • Payer information
    • Contracts and Agreements,
    • Payment History
    • Denial History
    • Contact information
    • Coverage information
  • HR and Payroll information
    • Salaries
    • Bonuses
    • Benefit Costs
    • Sick and Vacation time
    • Training and Professional conferences
  • Financial Information
    • Medical Equipment Costs
    • Medical and Office Supplies
    • Professional Fees, Training, etc.
    • Taxes and Licenses
    • Loans, Rent, etc.
  • Regulatory and Compliance Information
  • Third Party Provider Information (agreements, contacts, etc.)
    • Clinics and Testing Facilities
    • Physical Therapy
    • Hospitals
    • Etc.

While most industries today have years of experience using Business Intelligence and Business Analytics Tools, the Healthcare Industry is still in its infancy. There are no products on the market today that can provide the complete solution for optimizing a medical practice. Mr. Parmar is actively working to fill the void by making targeted acquisitions of key technology enablers, like Orion's Pegasus tool and consolidating the tools to create a state of the art business intelligence platform that will deliver robust business analytics and modeling to the medical practices in the US. Mr. Parmar has predicted major changes in other industries in the past (private jets, financial services, and consumer products) and he is now focused on Healthcare. He predicts that within 5 years the Business Intelligence Tools available to the Healthcare Industry will have the same sophistication and capability as the tools used by the Financial Services Industry today. To support his claims he points to the rapid progress being made by the largest RCM providers, such as Orion, as they partner with their clients to deliver world class Business Intelligence capability.

As we were leaving the Anesthesiology Conference we happened to run into Paul Parmar. After a brief discussion on his views of Medical Business Intelligence he concluded by telling us that the BI tools we are discussing today are only the beginning, he envisions a time in the near future when the BI tools will support the clinical processes, with access to world disease control data, medical diagnostic and symptom data bases, and physicians will be able to access this data quickly and easily to improve their diagnostic and treatment decisions, resulting in a much improved level of patient care.

Paul Parmar is a thought leader in the Private Equity Space. His primary focus is on transforming industries by creating new business models and optimizing the key business processes in each business and leveraging the appropriate technologies. Although he has successfully owned and managed businesses in several industries (the Healthcare, Private jet industry, the media and entertainment, and Real Estate development) his passion is clearly in the healthcare industry. His Healthcare investments are in the areas of Cancer Centers, Free Standing Surgery Centers, EMR, Patient Portal, Practice Management, RCM Services, RCM software, and GPO's for Physicians. Most recently he has turned his sights on dramatically reducing the cost of healthcare by investing in medical practice management. Mr. Parmar's most recent investments in healthcare are focused on optimizing the business practices, improving the financial transparency and lowering the cost of operations for hospitals and large medical practices.

Pegasus Blue Star Fund is a private equity fund specializing in Healthcare Services Investments, with 20+ years of experience of investing and managing Healthcare Services companies in the areas of Cancer treatment centers, Surgery centers, Practice management, Medical Group Purchasing Organizations, EHR, Medical Revenue Cycle Management, Patient Portal, Claims Optimization, Claims Authorization, Patient collections, Bad debt collections etc.