In the late 1990’s, as executives cobbled together central Pennsylvania’s PinnacleHealth from three smaller healthcare groups, executives within the new organization became quick converts to the world of the outsourcing buyer as they considered how their new IT infrastructure could most efficiently serve their patients.
Once the envisioned state-of-the-art health system began to take shape, it was clear that Pinnacle could not develop and maintain such an ambitious health IT network throughout its far-flung region. The hoped-for advanced data delivery and care management was beyond the healthcare provider’s IT capabilities.
“Our core wasn’t running IT,” says Roger Longenderfer, MD, President, and CEO. “We needed a partner that could not only build our IT staff and infrastructure but also create a technology roadmap so we could plan and grow strategically.”
Pinnacle needed a business solution that could simultaneously enable this IT metamorphosis and consolidation. “We needed to outsource it,” confesses Longenderfer. And through its association with partner-provider Siemens Managed Services, both firms would soon find themselves on the cutting edge of what is now a vibrant, efficient, responsive healthcare IT outsourcing industry that in this case saves millions for Pinnacle as it improves patient care.
Joanne Galimi, Research Director for Gartner, notes healthcare IT staffing is at its lowest point since 1999. And yet the growth in healthcare IT outsourcing is growing. She observes that “healthcare IT operating and capital budgets have increased every year since 1999 because more are outsourcing the task.”
Harnessing provider efficiency to create workflow management
PinnacleHealth’s goals for its IT outsourcing engagement were twofold. The first involved optimizing the quality and safety of satellite clinics and support services. The second was to leverage clinical and technological innovation to produce clear leadership in overall patient care throughout the organization.
Siemens’s on-site IT development and maintenance personnel provide the systems and technology support for PinnacleHealth to achieve its growth and modernization goals, while leaving executives free to deal with IT strategy, management, and transformation. “In short, together we proposed and Siemens disposed,” says Longenderfer.
In the first six months of the partnership, Siemens delivered a new practice management system to Pinnacle’s family medicine centers. Six months later, a new health information system went live in Pinnacle’s first hospital and soon expanded to the other two. This fully integrated management system includes general financials, human resources, payroll, radiology, and document imaging to name a few; the supplier installed and integrated all of them during the height of Pinnacle’s merger, consolidation, and modernization activities.
Since the initial delivery in 2000-2001, Pinnacle and Siemens incorporate between 50-75 new IT projects annually. A joint steering committee conceives and manages them, then assigns priority and executive sponsors to projects to ensure alignment to business requirements. The IT data network is co-located at several Pinnacle facilities and also mirrored at Siemens’s regional IT center in Harrisburg, Pennsylvania.
As a result, average patient hours in the hospitals have been reduced by two-thirds, thereby maximizing Pinnacle’s total 750+ bed space. Outsourcing cut reliance on paper forms drastically because performance metrics and support data are immediately accessible via the system. Data collection times are down by 98 percent for staff nurses, nurse managers, and other personnel. These reporting capabilities allow management to improve overall care and efficiently monitor compliance throughout the organization.
“Workflow automation, or business process management, empowers healthcare providers to define individual steps, people, and computer systems that directly impact healthcare quality,” says Sam Brandt, M.D., Chief Medical Informatics officer at Siemens Medical Solutions. “And it allows healthcare providers to determine what information they need when making individual caregiver decisions.”
Provider delivers savings, efficiencies, improved patient care
Pinnacle’s COO Phil Guarneschelli is pleased with the long-term financial impact, which he suggests is “at the very least millions directly and even more in a tertiary sense through greater cost-saving efficiencies.”
But he adds that the primary goal is to improve quality of care. “For us, lower operating costs are a by-product rather than the goal of a successful IT outsourcing relationship.” Guarneschelli also emphasizes that the spirit of partnership and trust are what make the Pinnacle/Siemens outsourcing relationship work.
He notes that projects to support improved finances have helped Pinnacle reduce accounts receivable (AR) days by nearly half–from 80 to 44–and an application filter that eliminates unnecessary bill prints, producing an annual savings of “around $200,000.”
This partnership also allowed PinnacleHealth and Siemens to take part in groundbreaking IT test-case research during the early days of HIPAA, the Health Insurance Portability and Accountability Act. Working on behalf of the U.S. Department of Health and Human Services, Siemens took Pinnacle data housed on several Siemens-managed systems, scrambled, then unscrambled it, then finely parsed it, looking for system-handling errors and their cause. These tests not only produced data that was still largely intact but also showed general areas where data integrity might be less than sound. This helped produce pro-forma guidelines that are now a foundation of HIPAA data management procedures.
“Being involved in such groundbreaking research was not only satisfying considering its place in making HIPAA work,” says Longenderfer, “but it clearly illustrates to me that outsourcing was absolutely the right thing to do.”
The now mature Siemens/Pinnacle partnership has placed the healthcare provider in an even more enviable position in light of President Bush’s recently announced initiative of having a personal electronic health record (EHR) for the majority of Americans by the year 2014.
This places greater emphasis on highly efficient use of IT, according to Healthcare Initiatives Industry Analyst Marc Holland. He feels hospitals can create and maintain EHRs through the use of “efficient, effective, and uniform IT architecture to store and retrieve the healthcare information collected throughout a person’s life.”
That’s all well and good in a “big-picture sense,” according to Janet Dillione, President of Siemens Health Services. But she notes healthcare in the United States happens within 20 miles of someone’s home. “It remains predominantly a local delivery system. This is why outsourcing an effective patient data exchange system in regional areas improves and enhances that local, personal care in so many ways.”
Lessons from the Outsourcing Journal:
- Healthcare providers that outsource IT to produce efficient workflow automation processes find they are further empowered to define and deliver efficient, better-quality patient care for much less money, a strategic goal. The providers now have better information about patients faster.
- PinnacleHealth’s decision to outsource IT was an easy one because the regional care facility had neither the talent nor the money to create and grow a leading edge data management system on its own.
- Though direct-hire IT staffing in the healthcare industry continues to dwindle, Gartner Analyst Joanne Galimi notes healthcare provider’s outsourcing expenditures for IT continue to increase every year.