Americans spend a higher percentage of GDP on healthcare – 16% – than just about any other country. One Midwestern health insurer is using data analytics to do its part in reducing that percentage. BlueCross BlueShield (BCBS) of Kansas City brought IT and business people together to design and implement an enterprise data warehouse as a single information resource for the business.

In 2003, after two less-than-successful data warehouse deployments, executives at the insurer decided it was time to get their data management house in order. BlueCross BlueShield of Kansas City (BCBSKC) wanted to break down analytic data silos that had cropped up across its various business units to ensure that everyone was working with the same set of numbers. Additionally, a centralized enterprise data warehouse would also help the insurer create repeatable analytic functions so that BCBSKC workers weren’t essentially starting from scratch each time they set out to do data analysis.

Most importantly, though, the insurance firm wanted to harness the power of data analytics to better manage member care and improve patient health – and BCBSKC’s financial health. “The healthier our member population is, the more financial savings there will be for the health plan,” said Darren Taylor, the insurer’s VP of integrated business systems.

This was a multi-year effort. The first two phases included building an enterprise-wide data warehouse (EDW) and integrating data from 45 disparate sources into that warehouse. The next step was proactive data analytics. Until then, BCBSKC relied mostly on historical reports to monitor patient care. This “after the fact” reporting helped inform executives, but they were unable to react in real time to change patient outcomes. Using this EDW and other analytical tools like SPSS, the insurer was able to get more involved in patients’ day-to-day care.

Take diabetes patients, for example. It’s generally accepted by doctors that diabetes patients should have their eyes examined at least once a year, as the disease is the leading cause of blindness in adults aged 20 to 74. Diabetes patients who forget to have their annual exam are more likely to develop serious eye problems, which are costly to treat, costs borne by BCBSKC. So the insurer analyzes member data in its EDW to determine when a diabetes patient is due for an annual eye exam and sends a reminder.

Data analytics technology also helps BCBSKC identify which members are at risk for other diabetes-related complications, including foot and nerve damage, and recommends treatments accordingly. BCBSKC has applied similar data analytics techniques to help members better manage other chronic diseases like congestive heart failure, asthma and obstructive pulmonary disease. The insurer is also using data analytics to improve operational efficiencies and reduce internal administrative costs.

This connected data resource has enabled a business transformation resulting in major improvements in both member health and internal operations, including:

• Total savings of $23.1M since 2005
• $2.5M reduced administrative expenses; $7.2M avoided patient care costs
• Improved aggregate wellness score of members from 82.9% to 85.7% in 2008(1)

(1) ROI on Population Health Management presentation in Sep 2009 at Information Management Symposium

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Blue Cross and Blue Shield of Kansas City is the largest health benefits provider in the greater Kansas City region and northwest Missouri, serving approximately 1M members in 32 counties. Founded in 1938, the not-for-profit health insurer employs nearly 1,000 people and offers a variety of health benefit plans for individuals, families, and employers.