FINANCIAL SOLUTIONS PRIORITIZATION AND COST …Financial Solutions - Prioritization and Cost...

FINANCIAL SOLUTIONS

PRIORITIZATION

AND

COST CONTAINMENT

IN THE IT WORLD

Jackie Lucas, FACHE

CIO Consultant

Associate Faculty University of Phoenix Online

Financial Solutions - Prioritization and

Cost Containment in the IT World

Change Drivers in Healthcare and Finance

Today’s Healthcare IT World Challenges

Best Practices and Processes for Driving

IT Success and Cost Containment

IT Cost Containment Tips and Take-Aways

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Healthcare Change Drivers

Healthcare Reform and Regulation

Meaningful Use

Accountable Care Act

Value Based Purchasing

Readmission Reduction

Physician Quality Reporting System

Hospital Acquired Conditions

Patient Experience

ICD10

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Healthcare Change Drivers

Fiscal Restraint

Healthcare 18% of GDP

Current trajectory 34% by 2040

Delivery and Reimbursement Model Changes

High Deductible Plans

At Risk Model

Medicare Rate as Standard

Financial Viability

Mergers and Acquisitions

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Healthcare Change Drivers

Increased Demand and Sustainability

Aging Population

Chronic Disease

More for Less

Need for Innovation and Integration

Inefficiencies and Duplication

Integration of Care Continuum

Physician Employment

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Healthcare Change Drivers

Patient Centered Care

Empowerment and Decision Making

Higher out of Pocket Expenditures

Driving more Care Decisions

Need for Patient Engagement

Patient Responsibility/Accountability

Health and Wellness

Fiscal Responsibility

Patient Experience

Patient Loyalty

Today’s Healthcare IT Challenges

Too Much Demand and Competing Priorities

Few Vendor Options With High Vendor Dependency

Cost and Resource Pressure

IT as a Silver Bullet Syndrome or Perfect Pill

Extreme Demand for Timely and Accurate Date

HIPAA and Security Concerns

Regulations – MU and ICD10

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Today’s Healthcare IT Challenges

Good IT Staff Recruitment and Retention

Lack of Executive and Stakeholder Support

Change Management and Innovation

Explosive Growth in Systems and Support

Physician Employment and EHR Adoption

Increased Need of Business Continuity

Mobility and BYOD Demands

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Best Practices/Processes for Driving

IT Success and Cost Containment

Most Opportunity In Healthcare IT is with:

Business Aligned Strategy and Good Leadership

Successful IT Governance

Executive and Stakeholder Engagement

Prioritization

Best Practices and Processes

Program/Project Management

IT Vision and Strategy

IT Vision and Strategy should:

Align with Enterprise and Business Strategy

Guided by Enterprise Financial Resources

Address Changing Healthcare Landscape

Developed Collaboratively

CEO, Executive and Board Approved

Support Organizational Success

Effect Positive Change

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IT Vision and Strategy

IT Vision and Strategy should:

Be Achievable

Understandable

Clearly Communicated

Supported by the Organization

Consider IT as part of:

Corporate Goals

Management and Staff Goals

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IT Vision and Strategy

IT Vision and Strategy should:

Reinforced by IT Operational Plans including:

Timeframes for Milestones and Deliverables

Resources - Budget Planning and Staffing

Accountability and Reporting of:

Progress

Deliverables

Budget(s)

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IT Leadership

Most important factor in managing IT and costs!

CIO must Lead!

Be Accountable!

CIO must oversee and manage:

IT Functions

Selection Process, Vendors and Contracts

Implementations and Deliverables

Mitigate Risks

Budgets

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IT Leadership

Most important factor in managing IT and costs!

Capable IT Managers/Supervisors who:

Manage day to day operations

Build relationships with Stakeholders/Users

Collaborate and Communicate

Have authority and accountability:

Service Level Agreements

Project Plans

Status Reporting

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IT Leadership

Most important factor in managing IT and costs!

Proactive with seat at the table and/or have access to:

Organizational plans

Critical decision-making information

Be involved in all software and technology discussions and decisions from the start

Best way to manage Vendors!

Should not find out about new IT acquisitions after selection and/or contract is signed …

CIO and CFO can be a Powerful Team!

IT Leadership

Most important factor in managing IT and costs!

Make Collaboration and Communication a Priority

Be fair with Yes and No giving logical explanations and

translations of technology for stakeholders

Set Expectation of High Performance from IT

Insure IT is laser focused on core business –

patient care, quality and organizational needs

Drive IT Value and Benefits attitude and prevent

“Technology for Technology’s Sake!”

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Successful IT

Sponsorship and Governance

CEOs must own as well as sponsor

major IT projects (regardless of reporting

relationships)

Board must at least approve system

purchases to increase their oversight

C-Suite must be actively engaged in IT

Governance process and sponsor IT

projects

CIO can not go it alone and be

successful!

Successful IT

Sponsorship and Governance

Business and clinical executives must be

responsible change agents

Business and clinical executives must be

accountable for IT projects supporting business

and clinical initiatives

Business and clinical executives must have

responsibility for justifying and securing funding for

key IT projects

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Successful IT

Sponsorship and Governance

What entities or areas should be represented on the IT Governance or Steering Committee?

What model should be used for representation such as functional or federated?

How will the committee make decisions and recommendations?

What are the roles of the committee members?

How will the members be held accountable for owning, sponsoring and communicating about IT projects?

How will members be selected? What will term be?

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Successful IT

Sponsorship and Governance

IT Governance Committee Roles and

Responsibilities:

• Set high-level policies

• Approve I/S strategic plans

• Evaluate strategic programs and projects

• Approve project funding

• Approve project prioritization

• Delegate authority for project-level

decisions

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Successful IT

Sponsorship and Governance

Other Governance Committees:

Physician Advisory or

Leadership Committee

CMIO/Physician Leadership

and Champions, CIO

Ensure physician input,

engagement and

understanding of IT initiatives

Chaired by CMIO/Designated

Lead Physician

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Successful IT

Sponsorship and Governance

Other Governance Committees:

Hospital User Groups (depending on

entity size)

Hospital project prioritization

Evaluate appropriate projects

Represent the operational viewpoint

Identify and investigate

cross-functional issues

Prepare project requests for review

Executive and Stakeholder Engagement

CIO must be transparent:

Meeting agendas must be proactive and meaningful Must do more than present

updates and reports!

Must include accurate picture of IT status – the good and the bad (SWOT)

CIO must share and support IT governance and decision-making

CIO must foster, support and require prioritization of IT programs, projects and budgets

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Executive and Stakeholder Engagement

CIO and Governance Committees must:

Collaborate and Partner

Hold each other, IT, and the organization accountable for success of IT programs and project

Committee members must be proactive - engaged

Not just come for lunch

Users and Stakeholders much be involved, engaged and held accountable for programs and projects

Standard and strong project management is:

Key to insuring Stakeholders and Users are engaged and held accountable for successful projects/implementations.

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Prioritization

Prioritization of IT Projects and Capital Expenses:

One of the best ways to control and contain IT

Cost!

Distributes limited IT resources – staff and budget

Supports prioritization based on project value/benefits

Prevents IT project failure from “Fire Fighting” mode

Improves quality and success of approved projects

Improves IT operations and support

Prevents IT’s constant “NO” mode

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Prioritization

Ways to Achieve Prioritization

Classify Projects into:

MUST DO, COULD DO, or SHOULD DO

Strategic, Regulatory, Obsolescence, Support

Force Ranking

Federated Model – Round Robin

Value/Benefit analysis

Project proposals developed/presented by stakeholders

Create Separate Tracks

Hospital Strategic Initiatives – Multi-entity

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Prioritization Example

INFORMATION TECHNOLOGY PROJECT PRIORITIZATION FOR 2015

PROJECT CLASSIFICATION JUSTIFICATION DESCRIPTION BUDGETED RANK

Project A Should Do Strategic Supports New Hospital Y 2

Project B Must Do Regulatory Upgrade Required for ICD10 Y 1

Project C Must Do Obsolescence Server Replacements Y 1

Project D Should Do Strategic Analytics for VBP Y 2

Project E Must Do Regulatory Upgrade Required for Meaningful Use 2 Y 1

Project F Could Do Support New System Requested by Rehab Dept. N 4

Project G Should Do Support Upgrade to HRIS - New Functionality Y 3

Project H Must Do Regulatory Upgrade for HIPAA Y 1

1 Top Priority - Start As Soon As Can be Scheduled

2 Start Project as Resources Become Available

3 Project Needs to be Presented for Prioritization

4 Delay to Next Budget Year

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Polling Question 1

What is the most important factor in managing IT

and IT cost?

A. Developing an IT Budget

B. CIO and IT Leadership

C. Managing Service Contracts

D. Outsourcing Services

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Best Practice and Processes

Here are the policies and procedures for the paperless medical record!

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Best Practice and Processes

Still True - People, Process and Technology!

Pay Now or Pay Later!

Re-implementation more expensive than doing it right once!

Garbage In = Garbage Out!

System implementations must now include:

Standardization

Best Practice – Change Management

Physician, Clinician and User Engagement/Acceptance

Integration across Healthcare Continuum

Best Practice and Processes

Achieving Best Practice and Process Change

Leadership and Expertise

Best when:

Internally Driven

Team Orientated

Vendor Assisted

Consultant Assisted

Hybrid

Look to those that have been successful

Allow time to do process work!

Program and Project Management

Would you start on a long trip to a destination with a deadline without a map or app?

Why start a project without one?

Even experienced travelers get derailed by detours –road conditions – the unexpected!

Have alternative routes!

Lack of planning can derail the best implementations!

All projects should have project plan that is part of the IT Project Portfolio overseen by the CIO and IT Governance Committee

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Program and Project Management

IT Project Portfolio All IT Projects with Active and Planned Dates

Project Plan Active projects should have a project plan

Functional or System Project Owner Functional Owner and Leader of Project

Project Manager - IT Project Manager

Project Team - Cross-functional – IT, Vendor, Users

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Program/Project Management Models

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Program/Project Management Models

Vendor

Polling Question 2

What is the best practice for driving and

achieving best practice and process change?

A. Internally Driven

B. Team Oriented

C. Vendor Assisted

D. All of the Above

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Cost Containment Tips Take-Aways

“A cynic is a man who knows the price of

everything and the value of nothing.”

Oscar Wilde

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Total Cost of Ownership

Can’t Contain Cost if Don’t Have Full Picture!

Proposed IT Applications and Systems should

include TCO over 3, 5, 7 Years etc.

Capital Purchase, ASP, SaaS, Cloud, etc. Costs

Software License, Hardware, Infrastructure

Implementation

Staffing and Consulting – Staff Augmentation

Best Practice and Training is Critical

Hosting, Support, Maintenance, Security, HIPAA

Upgrades and New Modules/Functionality38

Vendor Partnership and Management

Three Types of Vendors

Partner Established Track Record

Value Added – No Nickel and Diming

Long-term Outlook and May Go at Risk

Good Vendor Trustworthy and Meets Deliverables

Too Small or Uninterested in Partnership

Managed Vendor Challenging – Nickels and Dimes

Requires Oversight and Management

Short-term Outlook on Relationship39

Vendors and Selection

Vendor Selection and

Implementation Cost

Few Vendor Choices Lead to Little

Negotiation

Try not to have a one vendor show

Budget Appropriately!

Most large enterprise EHR

implementations now end 30% to

50% or more over original budget

Budget a contingency for large

implementations/projects40

Vendor Contracting

Good Contracting Practices Before Signature Prevent Acceptance of Standard Contracts if possible

Have Contracting Policies and Rules

Use Expertise - Attorney or Contract Analyst Review

Contract Management

Insure Contract Adherence – Both Sides

Expirations Tracked to Prevent Dollar Escalation

Time Contract Negotiation, Extensions, Renegotiations

Vendor Quarters and Year Ends

Going Early Can be an Option

Vendor Instability and M&A

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Budget Management

Budget Management and Cost Containment

Strong budget management of IT and implementations

Many different roles – CIO, CMIO, CNIO, CTO

Identify who is clearly responsible for budget

Identify how implementation expenditures approved

Insure transparency in budgets and expenditures with

IT Governance, CEO and CFO – Finance

Reprioritize and stop legacy systems work to divert

internal resources to high priority strategic

implementations and projects

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Consultants and Contract Staff

Consulting and Contracting Cost Containment

Evaluate Use of Small Firms VS Large or National Firms

Use Experienced Resources

Use one firm with a good solid negotiated price

Back Fill Internal Staff VS Contracting for Project

Payment Based on Milestones and Deliverables

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Standardization

Standardization Whenever and Wherever

Standardized Implementation and Project Mgmt.

Est. 30% Savings on Implementations

IT and Operational Stakeholders/Departments

Process change and Standardization

Can lead to Operational Savings

ex. Supply Chain, Surgical Supplies and

Schedules

Use Buying Power of Purchasing Groups

Check Pricing and Rebates VS Own Your Own44

Outsourcing

Outsourcing of IT Services Vendor Experience is Critical

Check Listed and Unlisted References

All about the Contract

Buyer Beware on Timeframes

Five Years or Under – Depending on Service

Pay for Performance

Prevent Nickle and Diming

Evaluate to Insure Real Long-Term Savings

Staff Transition and HR Impact

Out Clauses

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Outsourcing Opportunities

Disaster Recovery/Business Continuity – Must Do!

Second Duplicate Data Center

Shared or Outsourced

Prioritization of Systems – Saves!

Most Critical – Patients to Nice To Have

M&A Presents Options

Software Vendors as Options

Weigh Expense VS Risk

Security Consulting and Penetration Audits

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Extending Current and Future

IT Investments

Extend the Life of Current Applications

Add Bolt-On-Applications for Needed Functionality

Web Front Ends that Added Needed Integration

Upgrade Current Investments and Delay New

Consolidate and Decrease Current Applications

Multi-entity, M&A and Departmental Duplication

Contract for Upgrades and Future Functionality

No or Low Price

Lock in Prices - Options

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Polling Question 3

What are best practices for IT Success and Cost

Containment?

A. People, Process and Technology Focused

B. Consultants, Outsourcing and Cloud Hosting

C. Business Aligned Strategy, IT Leadership and

IT Governance

D. Both A and C

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IT Success and

Cost Containment Summary

Business Aligned Strategy

Good Leadership and Governance

Transparency and Accountability – IT and Stakeholders

People, Process and Technology Focused!

Partnership – Internal and External

Practice Cost Containment

Financial Solutions - Prioritization and

Cost Containment in the IT World

Questions?

Thank You!

Jackie Lucas, FACHEjlucasjl@aol.com

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