The annual Places Rated Almanac ranks Pittsburgh, Pennsylvania as the “most livable city” in the United States for the year 2007. The almanac considers nine categories about the metropolitan areas it surveys; as healthcare is one of the categories, Jefferson Regional Medical Center is a contributing factor to making the city number one this year.
Jefferson Regional is one of only four US hospitals that The Commonwealth Fund (a private foundation supporting independent research on health matters) distinguished for quality and cost. Among the hospital’s many awards and accolades from industry associations as well as patients is the Premier Award for Quality in clinical quality of care and operational efficiency and performance excellence, which recognized Jefferson for delivering outstanding patient care while reducing the cost of healthcare by improving resource utilization.
And it’s a profitable institution.
But only six years ago, it was $16 million in the red and in danger of losing its independence by having to merge with another health system just to survive.
The net new patient service revenue had dropped and private physician practices affiliated with the hospital were also losing money. Regarding IT, there was no help desk, no one was tracking performance trends, the hospital had put a hold on IT and other capital expenditures that could improve patient care, and it had not invested in upgrading the IT team’s skills.
What happened during the six-year interval that made the difference between between looming failure and healthcare excellence and profitability is a roadmap to success that other hospitals can now follow.
Choosing the Route
The starting point on the map is top management’s recognition that IT is not a hospital’s core competency. A new CEO and other new managers at the time acknowledged the existing in-house management of IT services was no longer appropriate for Jefferson Regional (known at that time as South Hills Health Systems).
In 2001, its data center was expensively housed in an old building nearly 10 miles away and the main applications were facing sunset–no longer going to be maintained. James Witenske, CIO at Jefferson Regional, recalls that management wanted not only to find a way to “quickly stop our hemorrhaging at the bottom line” but also to find a way to ensure IT would move strategically ahead despite capital constraints.
First stop on the map: determine the business case for outsourcing IT and consider potential service providers. Once they realized that outsourcing was the best way to achieve their objectives of reducing costs yet implementing IT that would meet the hospital’s strategic goals and improve patient care, Witenske says the management team wanted to find a service provider that would take a holistic and collaborative approach (not just take over the hardware, software, and people).
The hospital’s management team also wanted an outsourcing provider that would focus on the end users’ business needs. “Before we outsourced, there was no plan for solving the business issues of our end users; we didn’t even understand their needs and how we could possibly work with them to solve their business issues,” he says.
Transforming IT and enabling medical excellence began in 2001 when Jefferson Regional chose Siemens Medical Solutions as its IT service provider after a competitive bid process and signed a 10-year contract.
The next stop on the map was crucial to success. As Witenske explains, “We really have tried to live up to what being a partner is, and Siemens has also been there as a partner for us. We make sure that what we do is really a win-win for everybody.” That approach, established in the beginning of the relationship, is key to the way they have traveled together to meet their original objectives–most of which were achieved in just two years. That mind-set also preventing “nickel-and-diming” even though there were changes in service requests or in implementing applications that had not been included in the contract.
An early challenge arose at the outset of the transition phase: clinicians did not want to deal with productivity losses over the short term because of implementing new technology. And end users did not want to have to learn to use new applications.
Siemens and Jefferson Regional jointly created a Clinician Informatics Committee to foster open communication around IT. The committee assessed and conveyed the interests and needs of the hospital’s physicians, nurses, and department representatives to the IT team; ensured that the IT strategy matched up appropriately with the hospital’s goals and business objectives; and planned and tracked progress of IT projects.
Witenske recalls, “We engaged a lot of our end users in the design, development, and roll-out of our applications. We communicated with them far more than in the past and listened to what their issues were. So they had a voice in what we are now delivering from an application standpoint.”
Siemens and the hospital also jointly designed and executed various training sessions for end users.
Moreover, Siemens also worked with the hospital to help people understand change-management aspects of the process, culture, people, and applications changes in the new environment.
Right after contract signing, Siemens moved the old data center over a weekend to a new temporary facility. It went smoothly and created a strong first impression among the hospital administrators, physicians, and staff that Siemens had the skills to accomplish Jefferson Regional’s objectives.
Siemens took another important first step in the transition phase in the way it dealt with the hospital’s 35 IT staff who became Siemens employees. Even though the hospital had not been funding training for its IT staff and their skills were not up to date, Witenske says Siemens “bumped up every one of their salaries.” The provider put them through training not only to bring their technical skills up to date but also to give them new project-management skills. “Siemens really did a nice job of bringing them in and making them feel whole and that there was a future for them,” he adds.
Living in a New Culture
Tom Timcho, CEO, Jefferson Regional, sums up the outcomes they achieved so far in this outsourcing relationship from the perspective that really matters: “Our patients now recognize us as a high-tech and high-touch hospital.”
As some of the many changes they accomplished together, they deployed 30 new applications, implemented a help desk, established a disaster-recovery system, upgraded to a more robust network, and automated many manual processes. They also implemented wireless communications.
Technology changes resulted in a reduction in medical error risk and medication administration errors, facilitated more efficient care delivery by clinicians, and enabled higher responsiveness to patient needs. The improvements also decreased the turnaround time for consults and assistance, decreased information delays and hand-offs, and enabled teamwork and higher productivity.
Invoices were issued faster and more accurately. Patient satisfaction surveys indicated the new dietary system was a hit. Hand-held technology devices helped in lowering inventory costs.
The technology improvements brought other changes, some unanticipated. End users had to become more PC literate. Technology-enabled reports and management tools, resulted in management starting to hold people accountable for budget variances.
“Technology forced us to put process controls in place where we didn’t have them before,” stated Witenske. “It was a whole cultural change from a technology standpoint. It got us to a point where we could focus on revenue-generation and controlling our costs.”
Witenske says success also created a situation where the pendulum swung from the hospital’s former culture of lacking IT to one where the hospital leaders, physicians, and staff think Siemens can do anything and do it overnight. He admits he has had instances of trying to manage those expectations. This effort will be important again as the hospital moves to electronic medical records.
The manner in which Jefferson Regional and Siemens committed to a joint management structure of their relationship from day one and their early success with the joint Informatics Committee remains important.
Their joint ITech committee meets monthly. The hospital’s business objectives for the year are posted in the room where the meetings are held. Participants are the IT executive council (including the Siemens executives who sold the outsourcing solution and made the original promises), along with the hospital’s CEO, COO, Chief Nursing Officer, Chief of Ambulatory Services, and Vice President of Medical Affairs. They discuss the things that went right (or wrong) in the prior month, any barriers to expectations, end-user problems, etc.
At the meetings, Siemens also brings the hospital up to date on what the provider is seeing at other businesses around the country regarding implementing electronic medical records, who’s doing what with voice and text, and what the more avant garde institutions are doing in the United States and also globally. And Siemens explains what it’s doing in these areas and how it will help Jefferson Regional. “We have very frank, open discussions,” says Witenske.
Even more important, Witenske says the meetings are a time when Siemens “talks to us about whether we’re out of line or if we’re off target with some strategic initiatives and business objectives.”
In addition, the IT team’s analysts now meet monthly with all of the hospital’s nursing staff to identify and prioritize their issues. The IT team does the same thing with the hospital’s patient accounting, general ledger, accounts payable, and materials management staffs. “We’re actively going out and working hand in hand with our users and IT,” Witenske says. “It really is a very collaborative effort.”
The Snowball Effect
And it’s a highly successful effort.
The savings that derive from process efficiencies and technology improvements since the outsourcing relationship with Siemens was established are significant. For example, they recovered over $1 million by restructuring the billing processes and $400,000 by correcting clinical documentation. Another example: Improving the contract-management processes for evaluating insurers’ fees yielded $1.3 million.
The hospital invested the savings in initiatives that enhance patient safety and satisfaction such as the Siemens’ Med Administration CheckTM system and bar code technology, online access to laboratory results for physicians, and a system for caregivers to quickly establish contact through wireless communication devices to speed care to patients. The hospital also implemented fingerprint technology for physician access to patient information via personal digital assistants (PDAs), thus increasing security and reducing the time for physician rounds. Notably, physicians collaborated on and planned the pilot study with the IT group.
“We’ve turned the institution around,” Witenske points out. “Now people see the need to invest in technology, as it drives our profitability, which then allows us to invest in additional technology driving better patient care and more profitability. It’s a good snowball to have.” The nice thing, he adds, is that Siemens not only brings the hospital value but provides technology improvements in a cost-effective way because of the outsourcing model.
Lessons from Outsourcing Journal:
- Hospitals running in the red and that are in danger of losing their independence by having to merge with another health system just to survive need to consider the alternative of outsourcing processes that will yield significant cost savings.
- Outsourcing a hospital’s IT systems and processes will not only reduce operational costs but also enable the hospital to bring in new technology cost-effectively on an ongoing basis.
- By outsourcing, hospitals can use the savings derived from their operational cost reduction to invest in IT initiatives that will improve patient care and satisfaction, reduce medical errors, and improve physician satisfaction.
- A key to success in outsourcing a hospital’s IT is to assess and convey the needs of the physicians, clinicians, and end users of the applications to not only ensure the IT strategy matches the hospital’s objectives but also meets the users’ needs and solves their issues.