Amidst the plethora of year-end Top 10 lists and trends for the coming year, there’s one “trend” in particular that is mission-critical for healthcare executives to pay attention to in 2018.

In 2011 the McKinsey Global Institute published a report stating that “If US healthcare were to use big data creatively and effectively to drive efficiency and quality, the sector could create more than $300 billion in value every year.” The next year big data debuted for the first time at spot #6 on the Healthcare Executive Group’s annual list of top 10 key issues and concerns facing healthcare organizations.

Fast forward to 2018 and data and analytics is the #1 key issue on HCEG’s 2018 list of top concerns and trends for healthcare executives.

Amidst the swirl of geopolitical fear, political uncertainty and macroeconomic doubt, how did data and analytics manage to usurp such important topics as cybersecurity and healthcare reform? And now that we are here, what should healthcare executives do about data and analytics in 2018 and beyond?

“Surprisingly few companies know where and how analytics can create value.” –  Jit Kee Chin, McKinsey Analytics

How we got here

Despite seeing the powerful potential of data and analytics, in 2011 the computing power, algorithms and data volumes necessary to run advanced analysis were not widely available at a price or usability that made powerful insight generation a reality at scale. But a small group of engineers within Google changed that in 2012.

At around the same time that data and analytics first showed up on the HCEG list and McKinsey forecast massive value creation from data and analytics, a small research team within Google led by Andrew Ng used machine learning to analyze 10 million Youtube videos over the course of three days, taking advantage of newly available computer processing power that is now widely available and inexpensive. The algorithm learned to accurately recognize and categorize images of cats and human faces without being told to do so. The now famous “Cat Paper” research team proved that it was possible for small teams of scientists to quickly analyze enormous data sets to read medical images with high accuracy, quickly detect fraud and effectively segment members.

Just one year after the Cat Paper was published another team of researchers analyzed an order of magnitude more data using affordable, off-the-shelf computing equipment anyone could buy. Since then advances in graphical processing units and data architecture have enabled the use of big data, analytics and artificial intelligence such that delivering radical cost savings at scale is a very real opportunity for healthcare in 2018.

In other words, all the necessary data, tools and algorithms exist in 2018 to know what works to reduce costs at scale.

In 2018 it is possible to affordably analyze millions of data points in near-real time to produce highly accurate predictions and insights that can fundamentally impact business and healthcare outcomes.  

In other words, all the necessary data, tools and algorithms exist in 2018 to know what works to reduce costs at scale.

Why data and analytics are a critical 2018 agenda item for healthcare executives

  1. Data and analytics enable you to know what works. With so many consumer engagement programs running and so many competing priorities for investment dollars it’s critical to build the capability to prove what is worthy of investment and what is not. Data and analytics has the power to show you what works and what’s wasted this year. NextHealth clients routinely use NextInsight to discard poor-performing campaigns and invest in those that drive proven cost savings.
  2. Data and analytics are under your control. You can identity an important use case, kickoff a project and generate outcomes within the span of this fiscal yearOne NextHealth client reduced ER overuse-related costs 39% in six months in a medicaid population. Other trends such as healthcare reform are more complex with more moving parts outside of your control in 2018.
  3. You already have the data you need to generate results. The algorithms, data, and cheap computing power to analyze that data are in place to deliver meaningful impact on ROI and patient care this yearWe have seen clients move from data ingestion to realization of $6, $24 and even $42 PMPM cost savings in less than nine months.
  4. Data scientists are scarce but machine learning algorithms are plentiful. There is a well documented shortage of qualified data scientists and AI experts for hire so staffing your way to better insights is not realistic. Google, Facebook and Alibaba have likely hired most of them already. Yet the expertise you need to generate results exists in machine learning and Deep Learning algorithms that your current team can access and deploy this year. One NextHealth client’s analytics team deployed the NextHealth modified Welch’s T-test on top of their data in a few months to deliver results in less than a year.
  5. Data and analytics will fuel success in many of the other key issues you face. A key part of solving the affordability issue and reducing costs is knowing what programs work and which ones don’t. Healthcare payers spend millions of dollars on intervention programs in hopes of reducing costs without knowing precisely which ones work and which ones are a waste of time and money. NextHealth clients will use big data and prescriptive analytics to pinpoint which programs work and which ones don’t this year in order to realize proven medical cost reduction.


What to do in 2018

Here are three ways to use data and analytics in 2018 to generate powerful insights and outcomes.

Create a test and learn culture

Data and analytics thrive in an environment of experimentation. It all starts with a question or hypothesis that drives outcomes. Which population segments are most at risk of opioid overuse? Which one of those segments can we actually impact? How can we reduce opioid overuse across our members and reduce medical costs at the same time? Data and analytics are only as good as the insights and outcomes they produce and insights come from testing, experimenting and learning.


Measure and optimize

In 2012 when data and analytics first appeared on the HCEG Top Ten list it showed up as “Big data, warehousing and capability expansion.” In 2018 getting big data is no longer the problem. Getting meaningful and actionable insights from the data is now the challenge. The NextHealth platform ingests enormous amounts of member and third-party data to generate insights that allow healthcare payers to optimize their investment only in what works. Here is an illustrative version of a client campaign optimized for impact:

Data: Millions of member utilization and demographic data points identified 100,000 members at risk of overusing the ER

Analysis and Insight: Only 1,000 of the 100,000 segmented high risk members are predicted to change their behavior in a way that reduces costs.

Optimize: Instead of trying to engage all 100,000 high risk members, targeted outreach was delivered to only the 1,000 members who are predicted to change behavior to a lower cost alternative

Outcome: 90% (900) of the 1,000 members used alternate care solutions and reduced costs accordingly.


Generate quick wins on critical use cases

Pick a use case that will make a meaningful impact on a key part of your business or in the lives of your members and focus resources on making an impact there. Start small, test a hypothesis, get the win and then focus on scaling to the larger population or enterprise.

Data quantity is not the problem. It’s all about generating insights from the data and optimizing to the right outcomes based on those insights. And that is the hard part and one of the reasons why we haven’t realized the $300 billion in collective value foretold by McKinsey in 2011.

Here are four insights and lessons we learned in 2017 after analyzing hundreds of millions of data points that you can immediately use to redirect your efforts toward what works:

  • For any consumer engagement or outreach campaign, you need to start with clean and up-to-date member contact information.
  • Choice overload is real for consumers. Start with only one campaign and keep it simple. Throwing spaghetti at the wall to see what sticks only increases costs and disguises the real signal.
  • If you are targeting interventions toward rural populations, use a nurse advice line.  It is one of the most effective channels for rural populations.
  • Rural adults and women with children are more impactable than urban healthy adults.

We’ve seen healthplans reduce avoidable ER visits by 25% and reduce associated costs by $42 per member per month. That kind of savings at scale fundamentally changes the cost and care landscape while at the same time fundamentally improving outcomes for patients through more appropriate care at the right time in the right place.

Download a whitepaper to learn more about how NextHealth clients achieve causal outcomes and use behavioral nudges to change member behavior.


The Healthcare Executive Group’s Top 10 for 2018) is member-driven effort to develop an accurate pulse of what’s on the mind of healthcare executives. For 2018, Clinical and Data Analytics made the top of the list for the first time since 2011. As it turns out some form of IT, data and analytics first appeared on the list of key issues for healthcare executives in 2012 and it’s been slowly climbing the rankings since:

  • 2012: #6 – Big Data, Warehousing and Analytical Capability Expansion
  • 2013: #9 – Innovation and Collaboration of Business and IT for Competitive Advantage
  • 2014: #8 – Big Data and Race to Advanced Analytics
  • 2015: #7 – Big Data and the race to advanced analytics and informatics
  • 2016: #8 – Big data and advanced analytics: identifying patterns, opportunities in vastly detailed data sets
  • 2017: #3 – Clinical and Data Analytics: leveraging big data with clinical evidence to segment populations, manage health and drive decisions
  • 2018: #1 – Clinical and Data Analytics: Leveraging big data with clinical evidence to segment populations, manage health and drive decisions

McKinsey Global Institute Report

HCEG Top 10 for 2018

Cat Paper in NY Times, Original Research Paper

See how the NextHealth analytics solution reduced avoidable emergency room visits by 25%.