A Profitability and Cost Management Strategy for Healthcare Providers

A Profitability and Cost Management Strategy for Healthcare Providers

March 2013

2

William Bercik, Director of Healthcare, Oracle

William has over 25 years’ experience in the healthcare industry and specialized in enterprise applications and technology solutions since 1992. Mr. Bercik provides specialist product expertise and develops and executes solution strategies for the healthcare market. Prior to joining Oracle, Mr. Bercik was a former Chief Financial Officer of a 350 bed acute care hospital. .

Tony Coffman, Director Oracle EPM, Perficient

Tony has over 7 years of ERP/BI experience in addition to his 9+ years of Oracle EPM expertise within Healthcare, Oil & Gas and Manufacturing. Tony’s areas of focus are in Program Management/Strategy, Hyperion Planning, Hyperion HFM, Hyperion Essbase/BI, and Master Data Management.

Our Speakers

3

Perficient is a leading information technology consulting firm serving clients

throughout North America.

We help clients implement business-driven technology solutions that integrate

business processes, improve worker productivity, increase customer loyalty and create

a more agile enterprise to better respond to new business opportunities.

About Perficient

4

• Founded in 1997

• Public, NASDAQ: PRFT

• 2012 revenue of $327 million

• Major market locations throughout North America• Atlanta, Austin, Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Dallas, Denver, Detroit, Fairfax,

Houston, Indianapolis, Los Angeles, Minneapolis, New Orleans, Philadelphia, San Francisco, Northern California, Southern California, St. Louis and Toronto

• Global delivery centers in China, Europe and India

• ~2,000 colleagues

• Dedicated solution practices

• ~85% repeat business rate

• Alliance partnerships with major technology vendors

• Multiple vendor/industry technology and growth awards

Perficient Profile

5

Pro

ject

siz

e,

Bre

ad

th o

f Exp

ert

ise

Depth of Expertise, Efficiency & Value, Client Importance

Key Differentiators

As compared to local boutiques:

• Bring solutions expertise & capital

• Deep technology expertise

• Disciplined project execution

• Scale to handle large projects

As compared to large integrators:

• Highly experienced consultants

• Local and national delivery model

• Collaborative, not take-over

• Better value

Market Position

6

Business Solutions• Business Intelligence• Business Process Management• Customer Experience and CRM• Enterprise Performance Management• Enterprise Resource Planning• Experience Design (XD)• Management Consulting

Technology Solutions• Business Integration/SOA• Cloud Services• Commerce• Content Management• Custom Application Development• Education• Information Management• Mobile Platforms• Platform Integration• Portal & Social

Our Solutions Expertise

7

As a leading provider of services in the healthcare industry, Perficient has delivered both strategic consulting and advanced technology solutions to many of the top provider, payor, life science and government healthcare organizations.

Perficient Technology Solutions• Top tier partners of IBM, Microsoft and Oracle • Healthcare Analytics / Business Intelligence• Enterprise Performance Management solutions• Master Data Management solutions• Portal design and development• Multi-Sourcing solutions

Perficient Consulting Services• Business value assessment/financial sustainability modeling• Requirements analysis/product selection• Architecture planning and platform selection• Custom solution design and development• Implementation services• Usability testing and user-centered design• Consumer readiness assessments (PEMM)• ICD-10/5010 conversion• Technology enabled process improvement• Business integration

• Process/workflow design• Enterprise Application Integration (EAI)

Healthcare Solutions

8

Oracle-Perficient Partnership

Inception

Projects

Service Lines

Training

Managed Svcs

CX

1995

500

Order MgmtMarketingSalesforce

Auto.Call Center

Field ServiceAnalytics

Training Ctr

Support.Net

ERP

2000

450+

FinancialsProcurementOrder MgmtDistribution

Mfg/ SCMHR/Payroll

Project AcctgService

Analytics

Vertex

Support.Net

EPM

2002

300+

PlanningEssbase

HFMFDMDRM

HPCMHSF

EAL

Training Ctr

Support.Net

BI & SOA

2009

40+

BIDW

MDMSOA Integr

PortalsBPM

Training Ctr

Support.Net

Over 250 experienced consultants across the

Oracle Practices

9

Oracle EPM

11+ Year RelationshipWorking closely with Oracle product management to provide feedback for software enhancements

Oracle Platinum Partner/Authorized ResellerCertified on the latest Oracle product platforms and technologies, as well as implementation and migration best practices.

Oracle Certified Education PartnerCertified to deliver the official Oracle course curriculum to customers via onsite training classes. Perficient owns and operates one of the national Oracle training facilities listed on the Oracle website

Oracle BI/EPM Specialized PartnerCertified by Oracle to deliver and sell the Oracle BI and EPM applications.

10

Select Healthcare Clients

11

Case Study 1

CHALLENGE

• Budget cycle lasting 6-8 months

• Consolidated financial statements required 24-48 hrs

• Operating target negotiations began after the budget was finalized

EPM SOLUTION

• Phase I – Core Planning application for IDS, replacING Peoplesoft EPM / Excel. Implemented top-down revenue, margin targets. Deployed enterprise-wide, driver-based budgeting for revenue, salary, opex. Calendar year forecast updated monthly and self-service management reporting.

• Phase II – Planning application for TCPA. Driver-based revenue model.

• Ranked #6 Pediatric Hospital by USNWR

• 1.7B Revenue, 6500+ Employees

• Leader in Neonatology, Pediatric Cardiology, Oncology

• “Integrated Delivery System” includes:• Texas Children’s Health Plan• Texas Children’s Pediatric Associates• Texas Children’s Health Centers• Texas Children’s Women’s Specialists

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METRIC BEFORE AFTEREFFICIENCY

GAINS

Variance Budget vs. Target(First Pass)

First Pass $90M First Pass$20M

77%

Prep Time (Operating Targets) 12 Hrs 2 Hrs 83%

Consolidate Data 24 Hrs 15 Min 99%

Budget Season 8 Months 4 Months 50%

Cost Avoidance (3 Staff) $225K $0 100%

Case Study 1

13

Case Study 2

Christus Health is a Catholic, not-for-profit health system comprised of almost 350 services and facilities including more than 50 hospitals and long-term care facilities.

Ranked among the top ten Catholic health systems in the United States by size, the Christus Health system in North America includes facilities in eight US states and Mexico.

CHALLENGE• Multiple GL systems including Oracle EBS, Lawson,

Yardi, MAS 200, McKesson, Peachtree, and Great Plains. Meditech EMR.

• Offline databases and XL models for IC elims, account reconciliation, and ETL

• Hyperion Enterprise reaching end-of-life

SOLUTION• Replace Enterprise/Ledgerlink with Hyperion

• Financial Management and Financial Data Quality Management

• Created financial reporting packages/SV

BENEFITS• Common, rationalized financial master data

• Automated business logic and performance metrics via HFM rules

• Robust web-based architecture for reporting and analysis

Copyright © 2012, Oracle and/or its affiliates. All rights reserved.14

Transforming HealthcareWith Oracle’s Decision Support Solution

WILLIAM BERCIKDirector, Healthcare North America


The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

Safe Harbor Statement


Performance Management Excellence:The Next Competitive Edge

Time

CompetitiveAdvantage

OPERATIONAL EXCELLENCE

MANAGEMENT EXCELLENCE

Transactional SystemsHistorical and Current Data

EPMHistorical, Current and Forward

Link strategies to plans and execution,

Monitor financial and operational results against goals, and apply analytics to

Drive enterprise-wide performance improvement.


EDW

Defining a Business Decision Support System

• A fully integrated business and clinical repository • Gives executives and managers the tools to:

• control cost• improve productivity• manage change

• Retrospective and prospective (planning) view

• Merges clinical and financial information

• Real-time access• Care process and results

orientation

Business Decision Support Systems Clinical Decision Support Systems

• increase quality• achieve successful clinical outcomes • plan strategically in an increasingly competitive

and volatile health care environment


Need for Profitability & Cost Management in Healthcare


DSS is Key to Enterprise Management Reporting

End UsersExecutive

TeamInformation

Quality Management Information

Physician/Clinical Management Information

FinancialInformation

Managed Care Information

Data Integration(Comprises the processing engine to collect, cleanse,transform, and aggregate data from different sources)

Enterprise Portal(Provides a single, secure and integrated point of access to reports, content, and applications)

Data Aggregation and Storage(Comprises the data repository of historical details and summary transaction data)

Presentation, Personalization

Access / Authorization

Views Views Views Views Views Value Delivered

Business Intelligence(Provides reporting and analytic capabilities across varying levels of granularity and timeliness (e.g., historical, operational, predictive and what-if analysis) C

IS

Sup

ply

Cha

in

DS

S

Rev

enue

Cyc

le

Infrastructure(Comprises the infrastructure platformto host, maintain and operate the BI solution)

Online Analytical Processing Pre-Defined Data Cubes Pre-Defined Reporting

Data Consolidation

Historical data Data Extraction Data Cleansing Data Loading

Data Sources, Real time data

Certain operational reports

Data Acquisition(Comprises internal, external, reference,and shared sources of data)

Hardware, Software Network Operations

ERPCISRevenue

CycleDecision Support


Strategy Development

Capital Allocation

Revenue Cycle Management

In what services do I make money? Lose money? Why? How do my hospitals services compare across the health system? How can I optimize service location? Should I consolidate services?

What is my profitability across service lines by hospital? Where should I focus my cost reduction initiatives? How do I track success? Why are costs for X service increasing, is it labor, supplies or physician practices? How can we

decrease these costs? Are patient care processes following protocols? Why not? Is it physician or patient complexity driven?

What impact to my bottom line will a rate change create? Can I afford to sign this managed care contract?

What types, how much and where are my denials originating? Are my payors paying correctly? Timely? Can I compare my payors profitability and score them? Am I charging for all the services I am performing?

Operations Improvement

What services should I invest capital? What financial return can I expect? What incremental ancillary capacity will be affected by additional capital purchases?

Decision Support Systems Help Answer Critical Questions


Hyperion Financial Decision Support SolutionDecision Support Analytics tightly integrates cost accounting, contract modeling, patient analytics and performance management through budgeting, flexible variance reporting and productivity management to support data driven decision making and advanced decision tools for forecasting and planning.

Decision Support Analytics

Cost Accounting

Contract Modeling

Patient Analytics

Forecasting / Modeling / Planning

Flex Variance Reporting/

Productivity


Key Product Capabilities for Cost Accounting Function

Basic

Industry Standard

Differentiator

Default RVUs using charge, even, or sum of other cost types as the RVU

Ability to load existing RVUs Fixed & variable classifications Job Code detail for labor Indirect allocation process Costs associated with chargeable activity

Unlimited sub categories for costing Flexibility to move dollars across cost centers or

accounts Automated integration of source system data, thus

eliminating the need for extracts Ability to define Other Operating Revenue as

contra-expenses and link to specific account(s) to offset

Process alerts to identify new cost centers, accounts, job codes

Automated update of product listing from the charge master with an alert that costing activities need to occur

Ability to use documented activities or supplies for costing purposes even if they are not charged to the patient

Time based standards built from clinical system data capture, e.g., average time per Radiology exam, Recovery Room hours per patient

Actual hours attributed to costing activities through the clinical system interface

Automated reconciliation between GL amounts, inventory, and charge based cost items, e.g., implants, pacemakers, etc.

Ability to link capital items to specific procedures and spread non-clinical items in a different way (e.g., evenly)

Predefined costing structures that can be easily customized but reduce implementation and maintenance efforts

Ability to cost labor data based on day of week Change RVU values mid-year for actual costs

Core Functions Designed with newer tools and capabilities

Advanced Functions

Hyperion Financial Decision Support Product will include all of the basic and industry standard capabilities seen in other products along with a series of key differentiators that will take the tool to the next level and provide hospitals with a competitive advantage

Cost Accounting Integration of cost accounting with patient

analytics, budgeting, and contract modeling ties clinical quality and performance management

Cost data is critical for planning , forecasting and monitoring function needed to be competitive


Basic

Industry Standard

Differentiator

Cost analysis by DRG, Payor and Physicians Reporting by clinical population groups,

demographic data and services provided Routine demographic, coding and billing data

fields User defined population groups based on all

data feeds Standard and user specific grouping tables for

all fields (i.e. MS DRG, Payor/Plan Codes, Age, Zip Codes, etc.

Drillable Service Line Profit and Loss, DRG/MDC, Payor and Physician Reports

Summarization of department cost routine function (i.e. Lab, Rad, OR) for cross facility comparisons and benchmarking

Readmission analysis and reporting Quality and outcomes reporting Integration of modeled/expected revenue, payment

experience and other sources of revenue (i.e. Medicare settlements) for net revenue throughout the revenue cycle

Integrated reconciliation reports between patient data, cost accounting and GL

Clinical grouping and event assignment based on routine billing and coding data

Extension to encounter record (user defined fields) with description and grouping

Highly flexible and easy to use reporting tools coupled with advanced BI tools

Integration of physician and other provider data including: charges, cost and outcomes

Physician contribution, ACO performance and care continuum quality and cost

Patient & Physician Level Activity Based P & L Geographic representations and visualizations

(service maps) Integration with clinical data warehouse, data

mining and automated data quality check (i.e. coding errors, lost charges, billing edits)

Automated reporting of clinical quality measures including data mining, manual data fields and tracking

System driven alerts to indicate unmapped data for standard and customized (user specific) grouping tables for all fields

Integrated coding and grouping tools


Advanced Functions

Patient Analytics Integrates cost accounting, finance,

contract modeling and planning Provides the core set of demographic,

coding, utilization, outcomes, billing and collection data

Key Product Capabilities for Patient Analytics


Basic

Industry Standard

Differentiator


Advanced Functions

Budgeting and Flexible Variance Analysis Integration of cost accounting with

patient analytics, and contract modeling enhances and informs the planning and budgeting process

Budgeting and Flexible Variance Analysis are critical parts of the planning and monitoring of performance and key initiatives

Comparison of budget to actual Flex based on budgeted time and actual

volumes Separate worked time from non-worked time

such as vacation, sick and holiday Flex variance by various breakdowns of

variable cost categories Service line variance against budget

Patient centered revenue, variable cost and chargeable volume projections integrated with GL and labor budgets

Multi-year planning with an ability to apply changes from a point going forward or only to a particular year

Flexed variable job codes and accounts based on projected activity levels

Integrated reporting that combines product level detail impact on accounts or job codes

Customizable rollup structures to support patient level forecasting

Automated direct care staffing requirements by day of week, skill level and activity projections

Smart modeling that creates scenarios to maximize revenue, cost and productivity

Automated modeling of cases based on best practice rather than average for all patients in that sector (e.g., service line)

Ability to generate pricing strategies to maximize net revenue and minimize overall price increases

Trend analyses that compares modeled scenarios to prior year actual

Models summarized to facilitate comparison to external benchmarks

Supply flex variance down to the account or product level

Labor flex variance at the job code level with breakdowns by day of week or shift

Rolling twelve months analyses

Key Product Capabilities for Budgeting and Flexible Variance Analysis Function


Basic

Industry Standard

Differentiator


Advanced Functions

Productivity Management Integration of clinical activities, utilization,

cost and outcomes ties staffing decisions to clinical out comes and service cost

Standard cost and expected time services (RVUs) built for cost accounting can be leveraged to understand labor resource demands

Comparison of budget to actual Flex based on budgeted time and actual

volumes Separate worked time from non-worked time

such as vacation, sick and holiday

Productivity by subsets of direct patient care job code groupings (e.g., RN vs. Aide)

Charge-based productivity analyses Integration of external agency time Ability to exclude earning codes from productive

time, e.g., orientation Capability to monitor productivity for non-patient

care or chargeable areas, e.g., laundry, food service, etc.

Productivity by shift, day of week, resource level Actual time spent by resource accumulated from

clinical systems and integrated into decision support productivity tool

Activity based productivity not limited to chargeable items

Productivity statistics automatically imported from billing, clinical, departmental or any combination, not limited to what is used for costing

Key Product Capabilities for Productivity Management Function


Enterprise Performance Management

COMMON REPORTING AND INTERACTION

ORACLE BUSINESS INTELLIGENCE ENTERPRISE EDITIONData quality and consistent dimensions

Financial & Operational BI• Market Margin Analysis• Payer Margin Analysis• Labor Productivity

Profitability and Cost Management

• Service Level Margins• Patient Margins• Encounter Margins

Planning & Forecasting• Net Revenue• Operations and Administrative Expense

Management

Data Warehouse

Files/Excel/XMLPatient Accounting

Supply Chain

BusinessProcess

Strategy Management • Long Range Planning

PeopleSoft


Oracle’s Enterprise Performance ManagementSets a new bar in cost accounting, modeling & planning


Oracle Hyperion Profitability & Cost Mgmt What is HPCM?

HPCM enhances business performance by using drivers to create a better understanding of cost and profitability, empowers users with visibility and flexibility,

and improves decision making.


Oracle Healthcare Analytics & DSS OverviewSystem Architecture

Common Reference Data and Integration Services

Security

Exec

Clinician

Researcher

Data Marts

Extract

Admin

OLAP Cubes

Ad Hoc Query

OLAP

Data Mining

Reporting

PredictiveAnalytics

Optimization

Oracle HealthcareData Warehouse

Foundation

Clinical Systems

FinancialSystems

Administrative Systems

ResearchSystems

Clinical Systems (EMR 1)



Essbase Tools

Oracle Data Integrator Oracle Database and Essbase Server

Financial, Clinical Analytics & ReportingData IntegrationEnterprise Healthcare Data Warehouse Model

EPM Shared Services Oracle Business Intelligence Foundation

Smart View

Crystal Ball

Workspace

Patient CohortAnalytics

Enterprise Performance Management

PlanningCost AccountingProfitability

Operating RoomAnalytics

App Exchange

Partner Applications

Custom Applications

Oracle Healthcare Analytics

Data Integration

InterfaceTables


Potential Hospital Cost flowApplication of Services to Patient Episodes


Benefits of HPCMBusiness User-Driven Profitability Modeling Application


Company Overview

Case Study: University of Pittsburgh Medical Centers

Benefits & Value Achieved

UPMC is comprised of a network of 20 Hospitals, International Specialty Hospitals and an Insurance division with over $10B in revenue

They are the #1 employer in Western PA with headquarters in Pittsburgh

Need to perform analysis by hospital department and service and to drill down to individual patient cost detail

Additionally, analysis needed to support standardized hospital costing and provide underlying cost detail for other payer-provider initiatives

Improve assignment of costs based on the actual drivers of expenses

Determine a better understanding of the profitability of departments, patients and other relevant dimensions (hospital, physician, etc)

Automated generation of Customer and Product Profitability data collection and reports

Support of standardized hospital costing

Provided flexible model structure to allow for growth


REPORTING AND ANALYSIS


Start the Analysis - Financial Summaries


Reporting and Analysis on Encounter Margin Models

Encounter/Service

Profit Data

Patient Z

ip

CodePatient

Age Group

DRGFacility

•Volumes•Acuity

CPT Codes Service Lines

PayerPhysician

•Gross Revenue•Net Revenue•Direct Costs•Indirect Costs•Profit

Market Margin Analysis

Physician Margin Analysis


Balance Scorecard – KPI Alerts






Margin by DepartmentBy Encounter


Drill to Encounter


Metrics by Payer


Rev, Costs, and Patient Days by Physician


Encounter Revenue, Cost, & Margin by Payer


Patient P&L


Visibility and Traceability into Cost Sources


TONY [email protected] Work: 713.554.4021

WILLIAM [email protected] Cell: 404.353.6851

mailto:[email protected]

mailto:[email protected]