,TC To compare how its doctors treated patients with similar medical problems, a hospital in Atlanta last year turned to a small Baltimore company, HCIA Inc. Armed with the information supplied by the company, the hospital told inefficient doctors to change their methods or move elsewhere.
One year later, patients are recovering at the same rate. But the hospital is on a financial roll.
"We discovered we could save 40 percent in one year," said John A. Anderson, medical director of West Paces Medical Center, the lead hospital in the MedFirst Health System, a new health care delivery network strung together by the Hospital Corp. of America.
"We have not been able to apply it over the entire [MedFirst] network yet, but we know now we can take this information and bring it up when we deal with businesses," Dr. Anderson said.
In the battle to corner the managed care market, HCIA has quickly become an important life-support system, pumping information to any hospital willing to buy into its data bases.
As the health care industry realigns by creating networks of providers, information has become critical to buying and selling services.
More than ever, financial -- and medical -- results count. And everybody is rushing to create objective measures.
"The real story on outcome measures is that they are very much in their infancy," said Karen Milgate, manager of public policy
for the Washington Business Group on Health.
But so far, HCIA has one of the most sophisticated health data collections in the industry, one that combines information about a hospital's financial management with data from its medical side.
It is being used increasingly by large insurance companies such as CIGNA Corp., the Aetna Life Insurance Co., and the Blue Cross and Blue Shield Association to help decide which hospitals offer the best and least-costly care.
The bulk of HCIA's clients, however, are hospitals. About 3,000 of them are using it to find out how they can win contracts from managed care companies, typically health maintenance organizations, which must weigh the hospitals' cost with the amount of care its customers will need.
"There's billions of dollars that are spent each year in hospitals due to inefficiency. It's not just paperwork, but physicians prescribing too much of a certain type of medicine or the patient is being kept in the hospital too long," said George D. Pillari, the 30-year-old chairman and chief executive of HCIA.
"We want to position ourselves as a public library type utility," he said. "We're not a consulting firm -- people don't hire us to make them look good."
With its unique set of data bases about the treatment of patients in hospitals around the country, HCIA is assembling information that provides a picture of the standard for care, and helping providers judge how well they meet it. West Paces Medical Center is using the data to convince potential clients that it can maintain quality and cut costs.
HCIA is a subsidiary of AMBAC Inc., the municipal bond insurer, which has funded its growth since AMBAC itself was spun off and sold to the public by Citicorp Financial Guaranty Holdings Inc. in 1991.
HCIA was the brainstorm of Steven C. Renn, a former associate professor of health care finance specializing in hospitals at the Johns Hopkins School of Hygiene and Public Health, and Mr. Pillari, who worked as a researcher for Mr. Renn after graduating in mathematics from Hopkins.
They founded the company in 1985 at the same time that Standard & Poors Corp., AMBAC and other bond raters were beginning to demand more timely information to help them rate the hospitals' tax-free bonds.
By 1988, their biggest client, AMBAC, bought them out. Mr. Renn is now in charge of AMBAC's hospital bond department.
The 8-year-old company turned a profit for the first time in June, according to AMBAC reports. Next month it takes a third floor of spectacular offices vacated by the defunct law firm of Frank, Bernstein, Conaway & Goldman.
In the past two years, the company has completely changed its product line.
In addition to publishing mounds of generic data that hospitals can use to compare and contrast themselves, it sells tailored information to medical providers at prices that range from $1,000 to $200,000.
Already the biggest source of information about hospital finances when it was acquired by AMBAC in 1990, HCIA later began to collect data about the treatment of patients from its own hospital clients.
With $25 million from AMBAC, it aggressively bought companies, equipment and information data bases around the country beginning in 1991. One of the most significant was Healthcare Knowledge Resources Inc., of Ann Arbor, Mich., with 140 employees, which was purchased in 1992, Two other companies from McGraw Hill Inc. allowed HCIA to standardize clinic data it collects.
"By combining this with our financial focus, the company is in a unique position to tie together what goes on in a hospital," Mr. Pillari said.