DAYTON, OH – Before Fall 2004, the Dayton, Ohio-based managed care company CareSource didn’t have analytics tools and was creating reports out of its claims system using Excel spreadsheets.

Since CareSource implemented SAS’s analytics software, business intelligence, or BI, has become a driving force for the not-for-profit Medicaid managed plan serving approximately 700,000 members in Ohio and Michigan.

“If you haven’t incorporated business intelligence, you’re dead in the water,” said Robert Gladden, vice president of Information Management and Analysis for CareSource. He said one aspect of the healthcare reform debate is how to use information more effectively.

BI takes the data and provides a holistic view of members and the organization, Gladden said. BI can pinpoint problems, but it also asks bigger questions and therefore enables payers to address issues differently.

For example, if utilization is rising at one physician group, it may mean the members have a higher risk burden and not that a problem exists with the physician group.

“You don’t want to isolate things,” Gladden said. “If you don’t look at the whole picture, you can misdirect resources.”

BI has contributed to CareSource’s 5.1 percent administrative cost, which Gladden says is one of the lowest among health plans in the country.

He said BI is replacing retrospective reporting with predictive analysis and prospective reporting. Gladden likened the move to forwarding people’s view to what’s coming, as opposed to looking at the rear-view mirror.

“Analytics is playing an enormous role in the health plan space,” said Rick Pro, principal healthcare strategist at SAS. “It’s really ramping up the discussions on healthcare reform.”

If reform includes a government option, Pro said that payers will need to know more about the health needs of their members on the individual versus the employer level. Analytics can take a payer’s entire book of business and develop predictive modeling around the needs of individuals, he said.

Analytics can deliver actionable information to help payers manage their care, case and disease management program, as well as identify such problems as fraud detection and over-utilization, said Lynne Dunbrack, program director for Health Industry Insights.

She said analytics tools are a valuable information technology investment – especially in these economically challenged times – because they address myriad problems payers face.