ACTIONABLE INSIGHTSTHE PURPLE DATA CONSULTING GROUP

FLAVIO MOTA

EXECUTIVE SUMMARY • Actionable Insights about Excessive Medicare

Expenditures• Cost Reduction Opportunities• Limitations of the Data Analyses, Further Opportunities• Conclusion

EXPENDITURES HAVE INCREASED AT AN ALARMING RATE

Costs are Increasing at an Alarming Rate 2013, 2014, and 2015 had Large

Increases This Insight Warrants Further

Investigation Implement Procedures to Reduce

Expenses Create Sustainable Solutions

Use Data Analysis to Solve the Problem

THE DATA REVEALS OPPORTUNITY FOR COST MANAGEMENT

• The Outliers (Extreme Observations)• Not Evenly distributed • Cone Shaped Pattern (Red Flag)• Wide Range of Distances from Red

Line, Red Flag• Investigation of the Outliers is

Required• Expense Predictors (X Variables)• Research the Outliers• Possible Fraud or Mismanagement

• Use this Actionable insight• Launch Cost Control Measures

MORE SIGNS OF TROUBLE • Pattern of Outliers Signals Trouble• Measuring the Predictors against Expenses• Two Large Misplaced Tails (Right and Left)• Outliers are not Evenly Distributed• Possible Mismanagement or Fraud

• Conduct Research• Stricter Due Diligence Requirements for

Payments• Provide more Training to Plan Administrators

• Leverage Business Intelligence• Monitor Activity in Real Time

MORE EVIDENCE OF PROBABLE MISMANAGEMENT

• Graph of Residuals is a Red Flag

• Cone Shaped Pattern• Residuals are unevenly Distributed• Heavy Cluster on the Left Side Suggests a Pattern• Further Analyses will Probably Reveal Valuable

Insights

• 360-Degree Data is Needed

• Industry Research• Similar Industries Need to be Compared to the

Case at Hand• All Available Information Needs to be Considered

THE STRONGEST CULPRITS • The Biggest Predictors of Expenses

• Time• Name Brand Prescription Medicine

• The Problem is Getting Worse Over Time

• Prescription Medications Greatly Predict Expenditures

• Correlation does not Prove Causation• Investigation is Still Warranted

CONCLUSION

• Limitations• Only a Few Regression Methods were Used• Data was Limited to One Data Set• Further Investigation is Needed• Industry Benchmarks are Needed

• Actionable Insights—Recommendations

• Use 360-Degree Data (all Available Sources)• Gather more Data• Use other Statistical Methods• Investigate Spending on Name Brand

Medication