A Supplier Comes to the Rescue as a Hurricane Brings New Changes to IT | Article

Outsourcing Excellence Award – Best ITO – Touro Infirmary and Siemens

The events of Hurricane Katrina are deeply etched in the memory of the IT department of Touro Infirmary in New Orleans, Louisiana.

After the August 29, 2005, hurricane, it took two days to evacuate 200 patients from the Garden District hospital by helicopter. It was the IT department’s job to get the IT infrastructure for the 156-year-old medical facility up and running amid the devastation. The flood waters never reached Touro, the second-oldest Jewish hospital in the United States; however, a labor shortage and lack of electricity posed major challenges.

Touro is one of the major employers in New Orleans. Bob Ficken, senior vice president and chief financial officer, says the majority of the hospital’s employees fled to other parts of the country. “We were missing a lot of content knowledge. Because of the city’s condition, we were unable to recruit these experts locally or nationally,” he says.

The citizens of the city needed healthcare now. “We didn’t have the luxury of waiting six months to hire people. We needed to resolve our issues immediately,” he recalls.

Outsourcing was the only prescription possible. “The Siemens people came in from all over the country and helped us,” says Ficken.

Handling the emergency

The hurricane took out power lines as far north as Baton Rouge. “The hospital needed to get its patient systems up and the staff needed to prepare its financial statements,” says Alan Gold, vice president, Managed Services, Siemens.

Today’s hospitals use IT to do everything from billing to monitoring prescriptions. Touro used Siemens Medical Solution’s patient accounting and clinical software. The internal IT department ran the system from its in-house data center.

“We had a list of potential suppliers we never really considered,” says Ficken. “We had a good relationship with Siemens. We needed to move expeditiously and work with people we knew. Due diligence was pretty easy when you find a company that offers the best solution to your problem.”

So the hospital turned to its local Siemens rep and said, “What can you do to fill this void? We need to make a number of command decisions because of the urgency of the situation.”

Siemens steps in to help before new contract signing

Siemens stepped in to help. At first the two considered an ASP relationship because of the dire circumstances. But they decided a complete IT outsourcing relationship was the best way to go long term.

“Siemens immediately recognized the issues,” Ficken says. “Siemens got to workr ight away. They recognized our situation and committed to starting on many of our issues because they knew we couldn’t wait.” Adds Gold, “We enjoy a long-term partnership. Good faith is what is needed in a time of crisis.” Contract specifications were happening concurrently.

Both groups rolled up their sleeves, having discussions about how to rebuild IT so they could reopen the hospital.

First, the partners set priorities. Rebuilding the hospital’s entire infrastructure and staffing the IT department was the highest priority. “We rallied our resources to help them,” says Gold. The supplier sent experts from all over to New Orleans to fill the gaps.

Touro opened its doors 29 days later. “It was one of the first hospitals to come back after the storm,” says Gold.

Siemens moved the hospital’s financial system to its Atlanta operations two days after the levies broke, reports Gold. “We were able to run both their payroll and other financial systems,” he recalls.

Siemens eventually moved the hospital’s data processing and mainframe center to its facility in Malvern, Pennsylvania. “Why should they put their IT in harm’s way again?” says Gold.

“We made sure all transition activities minimized any negative impact on patient safety and quality of care. The transition was seamless from a patient’s perspective,” recalls Gold.

Needing help before Katrina

“The IT department took a hard look at the IT operations in light of what happened,” says Gold. “They realized they had to rebuild. They had the foresight to say, ‘We have to look at IT differently than we did before.”

Gold says the IT department used the opportunity to make its IT operations “second to none in the area.”

Rebuilding IT capabilities

Sixty days after Katrina, the partners had enough data “to define the real situation and come up with a game plan that gave us all confidence that we could move in the right direction,” recalls Gold.

Gold says hospitals generally spend between 2.5-4 percent of their operating budget on IT, sometimes just half of what financial services companies spend. He says the IT department told him, “We are not in a position to spend any more money than we do today. We need to do things better, faster, and cheaper with today’s dollars.”

The partners put together a 56-item to-do list. Item No. 1: Transferring the hospital’s 38-person IT department to Siemens’s payroll.

“At first employees were hesitant about that,” says Gold. “We told them they would be better off as Siemens employees. In the end, there were no employee issues because we made each individual feel valued,” he reports. “Our Human Resources people made the employee transition seamless for them,” Gold continues.

The partners had a celebration the day of the employee transfer. “They celebrated their affiliation with Siemens that was strong and becoming stronger,” says Gold. “We all felt we lifted a weight off their shoulders.”

A footnote: Gold says today these former employees are happy at Siemens. “Many have told me they are glad they were transferred to Siemens because they have professional opportunities they didn’t have before,” he says. “Some have left New Orleans to work at other Siemens facilities.”

Another footnote: Today that 56-point list is less than one page long.

Business benefits

Gold says Touro elected not to fill an open CIO position. Instead, it chose to allow the Siemens site executive to take over that role too. “This eliminated a level of management and expense,” he explains. “It also flattened the reporting structure and gave us more nimble responses to immediate challenges.”

The outsourcing relationship has allowed the hospital to totally rebuild its IT infrastructure. The hospital has remote back-up and redundancy. “IT has become a significant part of their strategic plan,” says Gold.

Gold also mentions that today Touro is up to date on all the latest software system releases. He points out the hospital runs 30 other systems besides Siemens’s.

“Now they have a solid governance plan,” adds Gold. Siemens provided service level agreement reporting tools so the hospital can measure IS outcomes and support activities objectively. “These tools were too expensive for a standalone hospital to purchase and support,” he explains. Now the IT department can “precisely measure” Touro programs against key performance indicators. “This provides a level of operational transparency that fosters the continued growth of our business relationship,” says Gold.

For the first time, Touro has a 24/7 help desk. Today, Gold says the help desk is “improving the IT operational performance of the hospital.” The result: lower costs and improved satisfaction.

Another first: there is a focus on IT workforce training and education. “They didn’t have this before because they spent every day handling day-to-day issues,” says Gold.

Ficken says the hospital’s cost to outsource breaks even as compared to the in-house solution. The not-for-profit hospital also has saved money on equipment purchased from Siemens.

Finally, outsourcing is helping the hospital grow. “They want to have a presence in locations throughout the metropolitan area,” says Gold. Touro is already looking at opportunities in the marketplace. This is important because many hospitals of this size find themselves sold to big hospital corporations to get the IT systems they typically can’t afford. “They want to stay independent,” says Gold. “We provided the infrastructure and processes they needed so they don’t have to go to a bigger healthcare system for IT.”

Making IT advances

The IT department is now working on projects like electronic medical records (EMR) or computerized physician order entry (CPOE) that would have been impossible before. “Less than one percent of hospitals the size of Touro have these. But they told us they want to move in that direction,” Gold says.

The hospital’s doctors felt they were “behind everyone else on getting electronic medical records.” Siemens helped the IT department put together a presentation on what the records will look like, how long it will take to implement, and what it will cost.

Why this relationship works

Both outsourcing partners have clear paths of responsibility. Gold also attributes the relationship’s success to transparency. “It’s the power of not looking at things as us-versus-them. It’s the power of being together.” He says he’s been in healthcare IT for 25 years and has “never had a relationship that works this way.”

The Siemens executive says he makes sure the IT department understands his challenges, whether they be dollars or resources. “I communicate to them the obstacles I face. I tell them what my world is like. They tell me what their world is like. Then we work things out,” says Gold.

The value of outsourcing

Gold calculates it would have taken the hospital two years to accomplish what Siemens did in less than six months. “We are an example of how two companies can come together to solve significant IT challenges in a crisis.”

“I can tell you today that we would not be where we are now if we had not made those critical decisions right after the storm. We knew what we had to do, but we didn’t have the manpower or the knowledge base to move from point A to point B. Siemens gave us an affordable game plan.” says Ficken.

Lessons from the Outsourcing Journal:

  • Having a good relationship with your outsourcing partner can help in a time of dire crisis; buyers can build on that trust to handle an emergency. In this case, the supplier began work based on existing contracts while concurrently working on specifications on the new agreements.
  • Outsourcing IT can allow small hospitals to stay independent and ensure they have advanced IT options so they won’t have to sell out to a larger entity.
  • Transparency is key to outsourcing success, but it’s vital in a crisis. Also, when the provider and client shared their worlds with each other, it helps both groups make better decisions.


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