What does FedEx, Pfizer, Wachovia, 3Com, Mellon Financial, Shurgard Storage, Sempra Energy and Proctor & Gamble have in common? What board committee exists for only 10% of publicly traded companies but generates 6.5% greater returns for those companies? What is the single largest budget item after salaries and manufacturing equipment?
Technology decisions will outlive the tenure of the management team making those decisions. While the current fast pace of technological change means that corporate technology decisions are frequent and far-reaching, the consequences of the decisions-both good and bad-will stay with the firm for a long time. Usually technology decisions are made unilaterally within the Information Technology (IT) group, over which senior management chose to have no input or oversight. For the Board of a business to perform its duty to exercise business judgment over key decisions, the Board must have a mechanism for reviewing and guiding technology decisions.
A recent example where this sort of oversight would have helped was the Enterprise Resource Planning (ERP) mania of the mid-1990’s. At the time, many companies were investing tens of millions of dollars (and sometimes hundreds of millions) on ERP systems from SAP and Oracle. Often these purchases were justified by executives in Finance, HR, or Operations strongly advocating their purchase as a way of keeping up with their competitors, who were also installing such systems. CIO’s and line executives often did not give enough thought to the problem of how to make a successful transition to these very complex systems. Alignment of corporate resources and management of organizational change brought by these new systems was overlooked, often resulting in a crisis. Many billions of dollars were spent on systems that either should not have been bought at all or were bought before the client companies were prepared.
Certainly, no successful medium or large business can be run today without computers and the software that makes them useful. Technology also represents one of the single largest capital and operating line item for business expenditures, outside of labor and manufacturing equipment. For both of these reasons, Board-level oversight of technology is appropriate at some level.
Can the Board of Directors continue to leave these fundamental decisions solely to the current management team? Most large technology decisions are inherently risky (studies have shown less than half deliver on promises), while poor decisions take years to be repaired or replaced. Over half of the technology investments are not returning anticipated gains in business performance; Boards are consequently becoming involved in technology decisions. It is surprising that only ten percent of the publicly traded corporations have IT Audit Committees as part of their boards. However, those companies enjoy a clear competitive advantage in the form of a compounded annual return 6.5% greater than their competitors.
Tectonic shifts are under way in how technology is being supplied, which the Board needs to understand. IT industry consolidation seriously decreases strategic flexibility by undercutting management’s ability to consider competitive options, and it creates potentially dangerous reliance on only a few key suppliers.
The core asset of flourishing and lasting business is the ability to respond or even anticipate the impact of outside forces. Technology has become a barrier to organizational agility for a number of reasons:
o Core legacy systems have calcified
o IT infrastructure has failed to keep pace with changes in the business
o Inflexible IT architecture results in a high percentage of IT expenditure on maintenance of existing systems and not enough on new capabilities
o Short term operational decisions infringe on business’s long term capability to remain competitive
Traditional Boards lack the skills to ask the right questions to ensure that technology is considered in the context of regulatory requirements, risk and agility. This is because technology is a relatively new and fast-growing profession. CEOs have been around since the beginning of time, and financial counselors have been evolving over the past century. But technology is so new, and its cost to deploy changes dramatically, that the technology profession is still maturing. Technologists have worked on how the systems are designed and used to solve problems facing the business. Recently, they recognized a need to understand and be involved in the business strategy. The business leader and the financial leader neither have history nor experience utilizing technology and making key technology decisions. The Board needs to be involved with the executives making technology decisions, just as the technology leader needs Board support and guidance in making those decisions.
Recent regulatory mandates such as Sarbanes-Oxley have changed the relationship of the business leader and financial leader. They in turn are asking for similar assurances from the technology leader. The business leader and financial leader have professional advisors to guide their decisions, such as lawyers, accountants and investment bankers. The technologist has relied upon the vendor community or consultants who have their own perspective, and who might not always be able to provide recommendations in the best interests of the company. The IT Audit Committee of the Board can and should fill this gap.
What role should the IT Audit Committee play in the organization? The IT Audit function in the Board should contribute toward:
1. Bringing technology strategy into alignment with business strategy.
2. Ensuring that technology decisions are in the best interests of shareholders.
3. Fostering organizational development and alignment between business units.
4. Increasing the Board’s overall understanding of technological issues and consequences within the company. This type of understanding cannot come from financial analysis alone.
5. Effective communication between the technologist and the Committee members.
The IT Audit Committee does not require additional board members. Existing board members can be assigned the responsibility, and use consultants to help them understand the issues sufficiently to provide guidance to the technology leader. A review of existing IT Audit Committee Charters shows the following common characteristics:
1. Review, evaluate and make recommendations on technology-based issues of importance to the business.
o Appraise and critically review the financial, tactical and strategic benefits of proposed major technology related projects and technology architecture alternatives.
o Oversee and critically review the progress of major technology related projects and technology architecture decisions.
2. Advise the senior technology management team at the firm
3. Monitor the quality and effectiveness of technology systems and processes that relate to or affect the firm’s internal control systems.
Fundamentally, the Board’s role in IT Governance is to ensure alignment between IT initiatives and business objectives, monitor actions taken by the technology steering committee, and validate that technology processes and practices are delivering value to the business. Strategic alignment between IT and the business is fundamental to building a technology architectural foundation that creates agile organizations. Boards should be aware of technological risk exposures, management’s assessment of those risks, and mitigation strategies considered and adopted.
There are no new principles here-only affirmation of existing governance charters. The execution of technology decisions falls upon the management of the organization. The oversight of management is the responsibility of the Board. The Board needs to take appropriate ownership and become proactive in governance of the technology.
Do Boards need a Technology Audit committee? Yes, a Technology Audit Committee within the Board is warranted because it will lead to technology/business alignment. It is more than simply the right thing to do; it is a best practice with real bottom-line benefits.
With social media, healthcare providers have many tools at their disposal to help build their businesses. Social network sites can be a powerful tool in the hands of persons who know how to leverage it to its full potential. When social media is misunderstood or misapplied, it can turn into a time sink where many hours that could have been spent more productively in other ways to build your business. Since social media is easily misunderstood, it will help to clarify some of those areas.
One of the things that makes it confusing is that social media uses terms that people often assume they understand, like ‘networking’, yet in the realm of social media, it has very different meanings.
Social Media and Meetings
With 128 million people using the internet in the US, the way of reaching people and being relevant to their needs has changed. This means that the way of doing business has changed as well. The public now consults their phone for the best buys on products and services. They are also using their phones to purchase items. The changes in the way business is conducted also impacts healthcare.
Social Media offers many tools that you as a healthcare professional can use to build your business. With the use of social (interactive) media, the nature of business building has changed. Social network sites provide an interactive way of dealing with potential clients. In previous generations, the relationship between a healthcare provider and potential clients was limited to one way interactions dominated by the healthcare professional. Today, the patients talk back to you using Facebook, email, twitter or some other service, asking questions and want you as a healthcare professional to be responsive. If you provide good service, they can tell others, if your service is lacking, your reputation suffers much faster when they use social media.
In previous generations, any kind of marketing consisted of ads telling about the services provided and contact information. If the healthcare professional had social skills, they may even engage in networking as a way to develop their business. In previous generations, networking consisted of joining local business promotion groups in the local community. A healthcare professional typically joined the Chamber of Commerce, local professional group of their specialization, a business group like the lions or rotary or if they are really adventurous, toastmasters.
With social media, the groups that an aspiring healthcare professional joins have changed. Sure, there are still some of the old groups used in previous generations, which can be used. Social media provides more options. There are physician only sites like Sermo.com, which are a social media site devoted to only physicians.
In other healthcare areas, professional groups like the American Psychological Association and the American Association of Marriage and Family Therapy have developed their media presence. This allows the old professional groups to have a new place to meet on the internet.
In addition to those groups, there are groups on social media sites, themselves. LinkedIn has many professional groups on its site, as does Facebook. These groups vary by specialty. There are groups on oncology, depression, healthcare professional support, etc. Such groups often provide forums where you can discuss issues of concern to yourself as the healthcare provider. I recall a recent lively discussion on the existence on Sexual Addictions on LinkedIn, where healthcare professionals addressed the issue from many different perspectives. These provide a place to find out the latest information and to stay in touch with colleagues.
These groups provide a forum where healthcare professional meet and connect with others sharing similar interests. This is a new application of old style social networking. The networking that occurred at monthly or annual meetings is now available on a daily basis. Meetings and relationship continue remaining an important essential for a healthcare professional to develop in building their business.
The New Networking and New Challenges
Social media is changing the application of the term ‘networking’ in new ways. With social media, the healthcare professional is faced with the new dimension when you have to deal with interactive media. In previous generations, building a practice involved the use of static media. With social media, the relationship between the healthcare provider and client becomes interactive. It is no longer one way with the healthcare provider telling the public that they are the expert and the patient has to accept that. Now the public talks back to you, wanting evidence of your expertise, caring and empathy. In the past, you could get away with just ‘being the healthcare professional’. In the age of social media, they want to know something about Dr. Jane, or Jack the therapist.
With the new application of ‘networking’ including the interaction with the client, healthcare professionals are in new game. The clients now ask questions and interact with them in an environment where the healthcare provider is not the one in control. The healthcare professional and the potential clients now share control. Potential clients now ask questions and engage in social interactions that did not exist ten years ago. With social media, the potential client is empowered.They know more and want more than they did ten years ago.
With social media, today’s patients often self-diagnose before seeing the healthcare professional. In one study 81% of respondents indicated that they expect to find help on the internet, including medical help. This means that the public is going to the internet, and its social media for their healthcare help including self-diagnosis. In one recent study 47% of those seeking medical information also made self-diagnoses. This practice is becoming so prevalent, there is a tendency to refer to Dr. Google. One of the big challenges related to this information is is that the public is not always verifying the veracity of information they obtain.
Not only are the public going to the internet looking for help, they are often diagnosing themselves with the information they have access to. Dr. Bryan Varabedian said “Information is the new third party in the exam room”. (Dr. Varabedian maintains a blog addressing the convergence of social media and medicine.) Healthcare providers building their business now have to deal with patients having and using more information.Some of the information is good, while some is not from proven sources. Another challenge is when patients have the right information but are using it in an unorthodox manner.
With patients knowing more, they have begun to self-diagnose their presenting issues or problems.The whole idea of patients daring to self-diagnose is seen as threatening by some healthcare professionals. In Texas, a physician’s group has sued the Chiropractors, podiatrists and family therapists because they dared to diagnose clients. This is a far cry from Pennsylvania, where all 277 of University of Pittsburgh Medical Center (UPMC) sent out e-mails, offering digital house calls. In that state, some patients receive a diagnosis without seeing a doctor (or any healthcare professional) in person or even speaking to one on the phone. It remains to be seen how those healthcare professionals will respond to patients diagnosing themselves. Today’s social media savvy patients also present with more information and ask more informed questions than previous generations. Healthcare professionals now have to be prepared to deal with this challenge of patients having a knowledgeable voice in their healthcare decisions. The patients of today do not always go along with healthcare choices, just based on your word. They may also compare your information with what they find on the internet. This means the healthcare professional needs to provide good information and be on top of the latest trends and developments in their field.
The input of patients in healthcare decisions has great potential in improving the quality of healthcare. By using social media, the patients are not only making informed choices, they are speaking out. With patients having a voice, the healthcare providers who listen to their voices and respond will be seen as the expert. This means that healthcare will have to become more responsive to patients overall if they want their business to thrive.
Potential patients also want to know about their healthcare providers. When patients are often limited as to who the patient can see, when the patients do have some choice, they often have questions and want to interact with the provider. Social media provides a way for them to “get to know” their healthcare provider. Providers that learn how to use social media in dealing with patients will be ahead of their competition. Those providers will also need to develop written “social media policies” in dealing with those patients. Healthcare providers using social media will need to be clear concerning the boundaries between themselves and clients, specifying what information they will share about themselves and their accessibility.
In using the new social media, the public is now going to Facebook or Google to find help before they go to the yellow pages. This means that healthcare providers who do not have a social media presence will be passed over. They will not even by considered by potential patients that are seeking out healthcare.
The Importance of Social Media
When millions of people are using social networks, those healthcare providers who choose not to be a part of it by exercising ‘social media abstinence’ are missing out on the changing way that people interact. Healthcare professionals who choose to avoid social sites altogether are crippling themselves. The public now use them extensively. Whether in the use of their computers or phones, or both, it is a reality. Social media has changed the way people interact in the marketplace.
Dr. Ross Speck, who researched social networks back in the 1970’s saw the changes coming. He stated, “If the psychotherapist is to maintain a healing relationship with human beings in this predicament [social change]-if he is to be of value in relieving distress-he has to innovate”. Although Dr. Speck’s comments were directed at psychotherapists, it has application to any healthcare professional in practice today. It is becoming important for healthcare providers to know how to use social media, or hire someone for them who does.
Dr. Ken Cohn MD, has observed the importance of the new media and medical practice. He often addresses this subject. He sees the time for healthcare providers to act on social media is now, “…because physician leaders over the next 2 years will influence patterns of care delivery for the next 25 years”.
Social media is also a way for an aspiring healthcare professional to compete with much larger competition, whether it be from other people in healthcare, publishing or speaking. Using social media removes the size advantage that some exploit in providing healthcare.
Dr. Ken Cohn who has pioneered collaborative work between physicians, hospitals and patients has used the new media to present the message of his work to others. In promoting his book, “I see social media as a great equalizer.” He has seen social media improve the quality of care for hospitals. He has also seen how he, with his book could compete with larger publishers using social media.
Social media also allows the little person just starting out to make a name for themselves. A highly responsive healthcare professional can establish a name for themselves with the public rather than always having to be dependent on the power brokers of established practices.
Social sites are is changing healthcare, including how healthcare providers build their practice. It changes how clients find them, interact with them, and services are delivered. It also changes the way that healthcare providers will find potential patients. Knowing how to use and master social media is critical for any healthcare professional wanting to build their business in today’s social media saturated culture.
Social Media Tools
Once you as a healthcare provider has a social media policy, you need to use the tools available. Below are some of the social media tools and ways they can be used by a healthcare professional in building their business.
Facebook: Facebook is the largest social community. With increasing frequency, people search Facebook for their needs. You can have business page to establish awareness of your business. Given the size of Facebook, it is critical that the healthcare provider have a page in order to remain relevant.
LinkedIn: This social site allows healthcare professionals to network with other professionals. 80% of small business owners in one 2011 survey report using LinkedIn. Having a profile will let others know that you are in business and lead to important business leads. Building a business often involves joint ventures. LinkedIn is a way to find potential partners for joint ventures.
Twitter: This site provides a platform to keep people informed of “what is going on”. The public often likes to know about what is new. Keeping them informed as to events and new items coming out. In the US, 13% of the population online use twitter.
Digg: This news site can be used to develop a following for healthcare providers.
Google: Although not often seen as a social media, it has many functions that involve social interactions. This is where people look for services. Having a good Google ranking can make a difference in your business visibility.
Once a healthcare provider has visibility, they will need to use social media in interacting with their potential clients.
The healthcare provider can use these tools for announcements, patient education, answering frequently asked questions, dealing with common healthcare issues, and healthcare topics that would be of interest to them.
Summary of how to use social media
To sum up how a healthcare professional can use social sites to build their business the following steps can be taken:
1. Network with other professionals and people in the local community.
2. Provide good patient information. Become a resource. For example, if you are a chiropractor, you could write a series of articles, blog posts, etc. on exercise, health eating, how to lift heavy loads, etc. With each article, it would enhance your expertise in the eyes of potential clients.
3. Have a written social media policy, then use social media to promote your business.
4. Interact on social sites regarding questions and concerns. Be willing to answer questions and make yourself accessible on such sites. You can use them to post interesting articles, videos, etc.
5. Know how to use social sites to their full potential. Social media has many opportunities. You can set up a blogtalk radio show, have regular episodes on your own YouTube channel, have book club on LibraryThing. You are limited only by your own imagination in reaching out to clients and provide good quality patient care.
The model trends in the healthcare system have been changing over the period of time. The old trend gave importance to the individual patients and the emphasis was on treating illness. The goal of the hospitals was to do inpatient admissions, fill up the beds and more emphasis was given to acute inpatient care. The role of managers in the old paradigm was to run the organization and coordinate services. In the old system, all providers were essentially the same. The hospitals, physicians and health plans were separate and not integrated.
The newer trends that evolved gave importance to the population as a whole. It not only treated illness, but emphasized on promoting the wellness of the people. The goals of the healthcare system after being transformed over the years is to provide care at all levels which is continued. The role of managers in the new paradigm is more broad. They see the market and help in quality and continued improvement. They not only run the organization, but also go beyond the organizational boundaries. In the evolving system, the providers are differentiated according to their ability. The hospitals, physicians and health plans have formed an integrated delivery system.
One of the current trend in the healthcare delivery model is that continued care is emphasized. The key professionals are not only treating patients for their illness, but they are promoting and managing quality of health. For example, a patient with high cholesterol visits a doctor. He is not only given one-on-one medical treatment, but he is also offered to attend a group session where information is provided on how lifestyle and behavioral change can help. The patients learn from the clinicians and also from each other. Another current trend is to take care of the health of the defined population and not only individual patients. All the health needs of the population as a whole are identified and served. It is emphasized that the community uses the health and social services provided. Healthcare has become more population-based. Another trend that has evolved is that the hospitals, physicians and health plans have got connected and have formed an integrated delivery system. More investments are being made with a goal of providing services to the customers and retaining them.
There is a beneficial impact in the transformation of healthcare towards emphasizing continued health. The way healthcare has been viewed in the past has been changing. The shifting of care from treating acute illnesses to providing continued care is resulting in enhancement of the health of the people. The only appropriate and feasible model is to provide a continuum of care with the emphasis firmly on the family and community. The health of the population and community is considered as a whole. This is advantageous as it creates value in the healthcare delivery system. The healthcare providers work with the community as a whole and consider to improve the health of the general population. Even though this requires new kinds of ways of organizing and managing healthcare services, it helps in understanding the health needs of the target population. By studying their needs, the right health and social services could be provided to them. Examples of promoting wellness of the whole community are organizing health campaigns and providing preventive education to the people in general. Another example is providing awareness about flu vaccines and encouraging people to get the vaccination.
Integrating the healthcare delivery system has led to certain advantages to the patients. For example, they can be offered alternative sites of care depending on their convenience. It helps in meeting the needs of the customers and their preferences which is taken into account. The number of providers are expanded and the patients get to have a choice. The relationship between providers and health plans are organized in the current trend and this ensures that the right care is provided in a convenient way to the customers.
There are defined budgets and expenditure targets for the populations which implies that there is a need to be efficient and productive. The formation of strategic alliances, networks, systems and physician groups can also add value. There are capitated payments and budgets allotted to the healthcare organizations. These are used to provide care to the defined population. The organization might like to improve on the payments and budgets as the expenditures of the companies increase. This results in the management to make decisions like forming strategic alliances with other organizations and increase the total resources. The growth of such networks will help in providing better care to the customers. Financial resources greatly influence the efficiency and productivity of the organization.
The aging population is influencing the healthcare delivery. There is increased demand for primary care of people over 65 years and for chronic care of people over 75. The ethnic and cultural diversity is also influencing the healthcare delivery. This provides a challenge in meeting patient expectations on one hand and diverse workforce on the other. Biological and clinical sciences have met with technological advances and have led to new treatment modalities. This has led to open new treatment sites and manage across the organization. External forces change the supply of certain areas of health professionals like physical therapy and some areas of nursing. The management needs to compensate for such shortages and they need to develop different teams of caregivers at different work sites. Changes in education of health professionals implies that the management be more creative in offering healthcare services. With an increase in diseases like AIDS and morbidity from drugs and violence, there is more and more need to work with community agencies, form social support systems and there is a need for more chronic care management. Advances in information technology is another area where there is a need to train the healthcare employees in new advances. They also need to manage issues of confidentiality and rapid information transfer. Increasing expansion of world economy has led to more competitive management of strategic alliances, care of patients across the nations and of different cultures.
Current environmental trends impact the healthcare delivery model. Organization’s success depends on its external and internal environment. The complex environments made up of uncertainties and heterogeneity of components leads to different organizational designs. The current environmental trends influence managerial and organizational decision making. The unique challenges facing the healthcare delivery organizations should be analyzed in order to develop and implement new and effective operational processes and strategies. As an impact of current environmental trends, the healthcare delivery system needs to improve individual, team, and organizational accountability and performance. The impact of advances in medical knowledge and information technology on the process of healthcare delivery should also be examined, and it should be leveraged to improve quality of care, process and cost controls, and revenue. New strategies would need to be identified and implemented for learning and performance improvement to create a culture that supports accountability, safety, and high-quality care. Innovative models in healthcare delivery would also be required in order to develop and implement strategies that promote organizational success and competitiveness.
Due to the current environmental trends, more emphasis is given to the customers and there is more of a patient-focused care. The healthcare delivery model has been shifting to the community based care. There has been an increased modification in care processes. The traditional ways are being challenged and more experiments are being performed to fulfill the demands to improve the quality of care. Due to the shift in the environmental trends in the healthcare delivery model, more emphasis is given to quality improvement. This will help improve the performance levels of key processes in the organization. The performance levels are being measured, the defects are eliminated and new features are being added to meet the customer’s need efficiently.
There is a new emerging contemporary trend in the U.S. healthcare system. Presently, the management research and assessment have been offered increased recognition. The emerging trend seen is that this is slowly forming an integral part of managerial and organizational effectiveness. With the emerging efforts in information management, it is leading towards clinical and financial networking. The trend seen among the physicians and nurses is that they are being increasingly involved in managerial activities. The managerial trends are also changing with respect to role performance and changing values. The managers role is getting more and more recognized in managing finance and human resources. Management training, lifelong and distance learning is being offered in preparing future managers.
The healthcare executives and managers will be faced with the major responsibility and challenge in the years ahead. They will be working with other healthcare providers and will be creating a competitive future for their organizations. They will not only be managing organizations but also a network of markets, services and joint ventures. Formation of more and more strategic alliances and partnerships will lead the management to manage across boundaries. The management will change from managing a department to managing the continuum of care. The management will be following a community-based approach. Trend in management is also shifting from just coordinating services to providing improvements in quality.
As the demands in healthcare are increasing, the management is responsible for forming performance standards. The management is also challenged to maximize the productivity and quality to serve the health needs of the community. The management is looking after the demands of the external environment as well as attending to the performance of the internal environment. The management is responsible for the performance of the organization.
Healthcare organization leadership will be responding to new trends and competitive forces. It will respond to continuum of care, overall health status of the population and more complex organizational structures. These emerging trends in the healthcare system will effect the organization’s leadership. The future managers would need leadership skills and vision to integrate the organizations and help in providing the best care. The managers will have to be committed to leadership and work on giving their organizations the best place and help their organizations adapt to the changing circumstances. More value will be given to leaders who will be able to lead the change process. As changes are inevitable for the betterment of the organization, the leaders should be able to identify how the change is to be received and how it is to be communicated at all levels of the organization without damaging the implementation process. The leaders might have to deal with increased pressures due to organizational complexity.
The leader in the organization provides strategic direction to the organization, manages diverse stakeholders, becomes mentors for management, is willing to take risks, helps the organization interact with the external environment and attends to the internal needs as well. Where required the leader will involve physicians in governance process and align physician and organizational interests. There will be a need for formation of learning organizations. Transformational leadership will create the required vision for the organization. Leaders will have a greater role complexity and they themselves will have to adjust rapidly to new situations. The healthcare organization leadership will have to live up to the values of the organization and will help in fulfilling the mission of the organization.
Individuals and groups within the healthcare organizations require more and more competencies. An enhanced lifelong learning is required due to the fast, changing environment. The individuals and groups within the healthcare organizations will be benefitted as there will be rapidly developing medical technologies which will result in increased services. More sophisticated health services will be provided to the consumers. The range and quality of services provided will be regulated for the benefit of people requiring home care, long term care and ambulatory care. The anticipated future development will also result in the increased competition among the health services organization. The individuals and groups will be involved more and more with the community for issues like drug abuse, teenage pregnancy and violence.
Individuals and groups will be faced with increased strategic planning and management in the healthcare organizations as there will be ever increasing involvement by the trustees and physicians. As the future environment in the organizations will be more complex, the individuals and groups in the healthcare organizations might feel more pressurized. They will need to serve the changing demands of the community as the population of elderly patients will increase. These individuals will require more professional training, increased levels of education and should be taking part in continuing education programs.
Due to the anticipated future development in the healthcare organizations, those individuals and groups will be valued, who are adaptable, committed, are able to add value and embrace change. These individuals will be required to experiment more and help in redefining the mission and goals of the healthcare organizations.
The lack of a healthcare specific, compliant, cost-effective approach to Enterprise Information Management (aka EIM) is the #1 reason integration, data quality, reporting and performance management initiatives fail in healthcare organizations. How can you build a house without plumbing? Conversely, the organizations that successfully deploy the same initiatives point to full Healthcare centric EIM as the Top reason they were successful (February, 2009 – AHA). The cost of EIM can be staggering – preventing many healthcare organizations from leveraging enterprise information when strategically planning for the entire system. If this is prohibitive for large and medium organizations, how are smaller organizations going to be able to leverage technology that can access vital information inside of their own company if cost prevents consideration?
The Basics –
What is Enterprise Information Management?
Enterprise Information Management means the organization has access to 100% of its data, the data can be exchanged between groups/applications/databases, information is verified and cleansed, and a master data management method is applied. Outliers to EIM are data warehouses, such as an EHR data warehouse, Business Intelligence and Performance Management. Here is a roadmap, in layman terminology, that healthcare organizations follow to determine their EIM requirements.
Fact #1: Every healthcare entity, agency, campus or non-profit knows what software it utilizes for its business operations. The applications may be in silos, not accessible by other groups or departments, sometimes within the team that is responsible for it. If information were needed from groups across the enterprise, it has to be requested, in business terminology, of the host group, who would then go to the source of information (the aforementioned software and/or database), retrieve what is needed and submit it to the requestor – hopefully, in a format the requestor can work with (i.e., excel for further analysis as opposed to a document or PDF).
Fact #2: Because business terminology can be different WITHIN an organization, there will be further “translating” required when incorporating information that is gathered from the different software packages. This can be a nightmare. The gathering of information, converting it into a different format, translating it into common business terminology and then preparing it for consumption is a lengthy, expensive process – which takes us to Fact #3.
Fact #3: Consumers of the gathered information (management, analysts, etc) have to change the type of information required – one-off report requests that are continuously revised so they can change their dimensional view (like rotating the rows of a Rubik’s cube to only get one color grouped, then deciding instead of lining up red, they would really like green to be grouped first). In many cases, this will start the gathering process all over again because the original set of information is missing needed data. It also requires the attention of those that understand this information – typically a highly valued Subject Matter Expert from each silo – time-consuming and costly distractions that impact the requestor as well as the information owner’s group.
Fact#4: While large organizations can cope with this costly method in order to gather enough information to make effective and strategic business decisions, the amount of time and money is a barrier for smaller or cash strapped institutions, freezing needed data in its silo.
Fact #5: If information were accessible (with security and access controls, preventing unauthorized and inappropriate access), time frames for analysis improve, results are timely, strategic planning is effective and costs in time and money are significantly reduced.
Integration (with cleansing the data, aka Data Quality) should not be a foreign concept to the mid and smaller organizations. Price has been the overriding factor that prevents these tiers from leveraging enterprise information. A “glass ceiling”, solely based on being limited from technology because of price tag, bars the consideration of EIM. This is the fault of technology vendors. Business Intelligence, Performance Management and Data Integration providers have unknowingly created class warfare between the Large and SMB healthcare organizations. Data Integration is the biggest culprit in this situation. The cost of integration in the typical BI deployment is usually four times the cost of the BI portion. It is easy for the BI providers to tantalize their prospects with functionality and reasonable cost. But, when integration comes into play, reluctance on price introduces itself into the scenario. No action has become the norm at this point.
What are the Financial Implications for a Healthcare Organization by maintaining the status quo?
Fraud detection is the focal point for CMS in their EHR requirements of healthcare organizations, Let’s take a deeper, more meaningful look at the impact of EHR. Integration, a prominent component of Enterprise Information Management in the New Approach, brings data from all silos of the organization, allowing a Data Quality component to verify and cleanse it. The next step would be to either send it back to its originating source in an accurate state and/or put it into a repository where it will be accessible to auditing (think CMS Sanctions Auditors), Business Intelligence solutions, and Electronic Health Records applications. With instantly accessible EHRs, hospitals and their outlying practices can verify patients with payors, retrieve medical histories for diagnosis and treatment decisions, and update/add patient related information. What impact to treatment does a review of a new patient’s history have for both patient and practice? Here are some elements to consider:
1. Diagnosis and treatments that are based on previous patient dispositions – reducing recovery time, eliminating Medicare/Medicaid/Payor denials (based on their interpretation as to fault of the practitioner in original treatment or error incurring additional treatment).
2. Instant fraud detection of patients seeking treatment for the same malady across the practices within the organization. Prescription abuse and Medicare fraud saves money not only for the payors, but the healthcare organization as well.
3. The Association of Fraud Examiners states that 9% of a Hospital’s revenue each year is actually lost to fraud.
One overlooked but common impact is in the cost of managing patient records. Thousands of file folders in storage with new instances being added each time a new patient enters into the system. Millions of pieces of paper capturing patient information, payer data, charts, billing statements, and various items such as photo copies of patient IDs, are all stored in those folders. The folders are then stored in vast filing cabinets – constantly being accessed by filing clerks, nurses, practitioners and assorted staff. Contents of the files being misplaced or filed incorrectly. Hundreds, if not thousands, of square feet being consumed for storage. The AHA projects that an enterprise leveraging Electronic Health Records will recover no less than 15,000 square feet of usable space. That space can be used for additional services, opening up new channels of revenue. The justification is easy: how much would it cost the hospital to build out 15,000 square feet for a new service? The average cost to build space utilized for Health Services is $65 per square foot, or $975,000 total. An EIM solution through the New Approach would be less than 20% of that. Not only has the EIM solution reduced dollars lost to fraud, lowered the days for payor encounters to be paid, increased cash on hand, but it will also open up new services for the patient community and revenue back to the healthcare organization.
Electronic data is costly in its own way. Bad aka “Dirty” data has enormous impact. Data can be corrupted by error in data entry, systems maintenance, database platform changes or upgrades, feeds or exchanges of data in an incompatible format, changes in front end applications and fraud, such as identity theft. The impact of bad data has a cause and effect relationship that is pervasive in the financial landscape:
1. Bad data can result in payor denials. Mismatched member identification, missing DRG codes, empty fields where data is expected are examples of immediate denials of claims. The delay lowers the amount of Cash on Hand as well as extends the cycle of submitted claim to remittance by at least 30 days.
2. Bad data masks fraud. A reversal of digits in a social security number, a claim filed as one person for the treatment of another family member, medical histories that do not reflect all diagnosis and treatments because the patient could not be identified. Fraud has the greatest impact on cost of delivering healthcare in the United States. Ultimately, the health system has to absorb this cost – reducing profitability and limiting growth.
3. Bad data results in non-compliance. CMS has already begun the architecture and deployment of Sanctions Data Exchanges. These exchanges are a network of data repositories that are used to connect to health healthcare system, retrieve CMS related data, and store it for auditing. The retrieval will only be limited to the patient encounters that show a potential for denial or fraud, so the repository will not be a store of all Medicare and Medicaid patient encounters. But, the exchange has to be able to read the data in its provider data source in order for CMS to apply certain conditions against the information it is reading. What happens when the information is incomplete or wrong? The healthcare system is held accountable for the encounters it cannot read. That means automatic and unrecoverable denials of claims PRIOR to an audit, regardless of claim legitimacy.
The Price Fix by Big Box Healthcare Technology Firms
Are the major healthcare software and technology vendors (Big Box) price gouging? Probably not. They are a victim of their own solution strategies. Through acquired and some organic growth (McKesson, Eclipsys, Cerner, etc), they find their EIM solutions lose their agnostic approach. This is bad…very bad for health systems of all sizes. With very few exceptions, the vast majority of healthcare organizations DO NOT BUY all applications and modules from a single stack player. How could they? Healthcare systems grow similarly – some organic, some through acquisition. When a hospital organization finds over the course of time, an application that is reliable, such as a billing system, there is tremendous reluctance to remove a proven solution that everyone knows how to use. Because the major technology providers in the healthcare space act as a “One Stop Shop”, they spend most of their time working on integrating in their own product suite with little to no regard to other applications. Subsequently, they find themselves trapped: they have to position all products/modules to maintain the accessibility and integrity of their data. This is problematic for the hospital that is trying to solve one problem but then must purchase additional solutions to apply to areas that are not broken, just to be able to integrate information. That is like going to the hardware store for a screwdriver and coming back with a 112 piece tool set with a rolling, 4 foot cart built for NASCAR. You will probably never use 90+% of those tools and will no longer be able to park in your own garage because the new tool box takes up too much space!
IT resources – including people – must be utilized. In today’s economy, leveraging internal IT staff to administer a solution post-deployment is a given. If those IT resources do not feel comfortable in supporting the integration plan, then status quo will be justified. This is the “anti” approach to providing solutions in the healthcare industry: the sales leaders from Big Box technology firms want their sales people in front of the business side of the organization and to stop selling to IT. While this is a common sense approach, the economy in 2010 mandates that IT has to at least validate their ability to administer new technology solutions. The prospect of long-term professional consulting engagements to follow post installation has been shrinking at the same rate as healthcare organizations profit margins.
Empowering the healthcare organization to utilize its existing IT staff to administer and develop with the new products is not part of the business plan when Big Box players market to the industry. It is the exact opposite – recurring revenue from lengthy, and sometimes permanent, professional services consulting engagements is part of the overall target. The initial price quote for a Big Box solution is scary enough, but the fact remains that it is still not representative of what the ongoing cost to maintain through consulting arrangements. This is a variable cost, which is difficult to predict, and drives finance managers and executives crazy.
Solving the Dilemma – A Better Solution through a New Approach at a Fraction of the Cost
When Healthcare Business Experts combine talents with Technology Architects, EIM Solutions cost drop dramatically. This is the New Approach to Healthcare EIM, providing the way health organizations will be able to provide successful solutions at significantly reduced costs – opening the door for health systems of all sizes.
The EIM Firm (using the New Approach) versus Big Box Healthcare Technology Providers:
Smaller, more agile firms bring many benefits to Healthcare Organizations of any size. The benefits:
1. They are focused on specific verticals – just like the Big Box Health Technology providers. Subject Matter Experts (SME) in the smaller firms typically are industry veterans with years of experience and success in their approach who see their resume as a service offering better utilized when they are able to apply their methods for successful strategy planning as opposed to learning the methods of a Big Box player. Their income is better since their revenue is applied into a smaller operating cost, extending lower pricing for solutions that are MORE EFFECTIVE and offering stronger client/vendor relationships as the SME limits themselves to a certain number of clients.
2. Solutions built on proven approaches and strategies. Again, the firm’s SMEs are able to define a methodology that can be re-used or re-configured in each client instance. This saves time and money for the client as delivery is accelerated and the cost of architecting is eliminated.
3. The firms themselves develop solutions and methodologies agnostically. Their understanding of the diversity of systems that exist in the technology of a healthcare organization allows them to not only develop adaptable solutions but also add a Business Process Management Plan (BPM). The BPM will define for the organization EXACTLY how information is received, processed, cleansed, stored, shared and accessed. It also will define an action plan for training IT for administration and support as well as end users at all levels on how they will leverage it going forward. BPM planning in a healthcare organization is a low six figure investment with an outside consulting group. The EIM firms will include it in the cost of the solution. Basically, it is the difference in being told what is wrong and here are the recommendations to fix it versus here is what is wrong and this is how it will be fixed with the new solution.
What is a typical EIM Firm solution?
1. Solution Assessment, noting the current systems, data sources and methods of sharing information as well as business processes, key personnel identification that are gate keepers if information, timeliness of providing information and overall effectiveness in leveraging enterprise information for strategic business planning. See figures 1 for an example of the information process flow visual component of an actual assessment.
2. EIM solution that contains an integration engine that accesses all data sources – reading and writing back to the database or application, providing data quality services and maintaining HIPAA as well as HL7 requirements. See Figure 2 for a diagram.
3. EHR Data Warehouse. A repository to build Electronic Health Records through the integrated data flow.
4. EHR Portal for patient entry (when additional information needs to be added) via a browser.
5. Business Intelligence Dashboards for metrics, AD Hoc analysis and Performance Management Scorecards on organizational goals and objectives.
6. Onsite implementation and integration of the EIM solution.
7. Onsite training during installation for IT and end users. Ongoing training provided via webinars, documentation and technical support staff.
8. Relationships maintained by the Subject Matter Experts for the life of the solution.
9. Stimulus “HITECH” Act pays $44,000 per physician for an EHR solution implemented. The SME creates the grant request to be submitted so the healthcare organization receives Stimulus funds to pay for the total EIM solution
Key Element of the Solution
Onsite Delivery and full time support are key. But, the most important element is training. Why? As noted earlier, it is paramount that existing IT investments, namely personnel, be able to not only administer but also conduct development as the need arises. In Healthcare, CMS managed Medicare/Medicaid is already margins that are in the negative. As private payers follow suit, the number of uncollectable encounters will increase, impacting current profitability models and increasing future cost for treatment. By mitigating IT costs, the Total Cost of Ownership (TCO) qualifier should actually evolve to a Return on Investment (ROI). ROI is immediate for this solution approach, but it is sustained year over year by leveraging internal IT to support and develop. Now, the Healthcare Organization has eliminated costly professional service consulting engagements and re-investments into new feature licensing. This takes a variable cost every year and makes it a fixed, yet smaller amount – a sensible financial approach to accomplish a proven strategy.
Why EIM? Whether it is Omnibus, “Obama”-care or an edit (not overhaul) of the Healthcare industry, Healthcare Organizations know these truths:
1. Electronic Health Records are necessary for the Fraud detection unit of CMS. Each organization must comply with accessibility, HIPAA and format. Fraud reduces overall revenues for a hospital by 9% (ACFE)
2. EHR/EHR have proven to be highly effective in eliminating internal waste, patient fraud, practice fraud and paper overhead. Vast amount of space within the facilities that had been used to store patient records in hard copy can now be utilized to provide additional services and open new revenue streams.
3. Bad or “dirty” data in electronic or hard copy format is costly. According to the AHA (September, 2008), the average cost of a patient record with good or accurate information is $343 annually. The annual cost of a patient record with bad information is $2,054 annually. On average, 18% of patient information within a healthcare organization is bad.
4. Strategies developed by healthcare organizations without 100% of the information they own that is also timely and relevant are ineffective. Objectives cannot be defined, successful processes cannot be identified and improvement plans have little to no metrics in which to determine success.
5. Stimulus/HITECH Act pays $44,000 per physician when EHR is part of the EIM solution. With the smaller EIM firms, Stimulus pays for the entire solution.
Why a New Approach EIM Firm?
1. Subject Matter Expertise from consultants that have proven methodologies.
2. Agility to adapt to the client need instead of the Big Box approach of the client adapting to their product limitations.
3. A Better Solution at a Fraction of the Cost. Their solutions are based on needs and not features.
4. Relationships with the vendor, resulting in improved services, maximum values from vendor solutions and a focused approach to the client needs and goals.
5. A Return on Investment as opposed to a Total Cost of Ownership. Clients need to see solutions that immediately pay for itself and then recover lost revenue while offering channels to new profit centers.