The Company
Arlington,Texas
Healthcare Innovations is a major supplier of proprietary medical administration and billing software, as well as part owner of a number of medical clinics throughout the states of Texas and Florida.

Goal
Healthcare Innovations hired Stone Analytics to study the billing procedures used at its medical clinics, and to suggest ways to improve both cash flow and overall profitability. The problem centered on the fact that when an Healthcare Innovations clinic filed a claim form with a patient's insurance carrier, there was seemingly no regularity to the percentage of a claim that was paid.

Approach
Both Healthcare Innovations and Stone took extra precautions with respect to the privacy of the customers whose transactions were being analyzed. Healthcare Innovations supplied Stone with secure patient and billing information from 10 separate clinics, data that included a total of 20,000 transactions covering a six-month period. All the personal and demographic information in this database was abstracted, and destroyed once the analysis was complete. Once conditioned in this manner, it was possible to consider individual characteristics without knowing the individuals. This characterized information was then subjected to intense statistical analyses.

Results
Using this information, Stone analysts were able to construct models that accurately predicted the payoff percentage for various claims. In addition, during the course of their work, Stone analysts discovered two additional relationships in the data. First, it was possible to improve profitability by following specific recommendations Stone developed regarding claim filing. Second, the variation in the rate of claims among carriers could be understood statistically and that understanding could accurately contribute to the overall profitability of operations.

The graph immediately above indicates results from the models. The model could predict within 4% the actual amount of payback that could be expected from any particular claim.

Implementation
Using these models, Healthcare Innovations clinics can not only better manage their cash flow, but improve their rate of return… first by increasing the specificity with which they fill out their claim forms, and second, by focusing on the highest paying carriers.