1© HCA, 2009

HCA IT Sourcing Strategy

NTC Virtual Trade MissionMay 7, 2008

Mary Silva DoctorFormer VP, IT&S Strategy & Planning

2© HCA, 2009

• Overview of HCA IT&S

• IT&S Sourcing History

• Current Sourcing Strategy – Flexible Sourcing

• Critical Success Factors

HCA IT&S Sourcing Case Study

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HCA IT&S By the NumbersEmployees – Corporate & Field 3,021

Regional Data Centers 4

Storage 736 terabytes

Servers 1,160

MEDITECH servers 146

Software applications 305

Enterprise-wide email boxes 98,162

Internet email received 37M/month

Active projects 195

Projects in Portfolio (incl. on hold) 271

IT Service Centers 14

Clinical interfaces to build 25

Clinical interfaces to install 461

HCA, 167

HCA

CHS

LifePoint

Capella

Total: 308

Hospitals Supported

Physician Practices

Ambulatory Surgery Ctrs

Imaging Ctrs

Total: 602

Other Facilities Supported

OtherOutpatient

Ranked 162 on Information Week’s Top 500

4

HCA Background: Systems Context

General Ledger

Billing & A/RAccounts Payable

Materials Management

Payroll (Lawson)

Human Resources (Lawson)

Laboratory

Physician Portal (PatientKeeper)

Pharmacy

Physician Practice (eCW)

Critical Care

Radiology

Cli

nic

al

Sy

ste

ms

Fin

an

cia

l &

Ad

min

Sy

ste

ms

MEDITECH

• GE QS

• GE MUSE

• GE ImageCast

RIS

• AGFA

HeartSuite

• Perinatal – GE

• Perinatal –

Phillips

• GIM Pulmonary

• HPF

• RAD PACS

• CV PACS

• T-Systems

• Empiric

• Neodata

• Oncology

Warehouse Management(Infor)

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For the hospital segment, IT spend is predicted to be about 4.4% of overall revenue

Source: Values are based on Everest research and multiple industry surveys and reports

Note: Survey taken in Q1 of 2008 of 1700 respondents. 10% of respondents were in the healthcare industry, 46% of those were from hospitals

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BackgroundHistorically, IT&S has provided IT services to non-HCA businesses. The strategy has been effective in offsetting costs through two streams of revenue - software as a service and professional services.

HCA IT&S is also a Sourcing Provider

Customers• Community Health (former Triad)• LifePoint • Capella • Signature • Additional non-affiliated/divested

facilities

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IT Outsourcers’ Market Share by Hospitals

Competition in IT outsourcing in hospitals is also dominated by Perot Systems which operates in 160 of 300 outsourced hospitals.

Perot SystemsHCA

Number of Outsourced North American Hospitals

Nu

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of

Ou

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ed

No

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an

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tio

ns

Source: KLAS “Extensive Outsourcing Study”, September 2008

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Strategic Sourcing

• Positioning to better meet and manage the delivery of IT products and services in the context of increased demand.

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IT&S Sourcing Past and Future

2000

2010

Today

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HCA IT&S Current Sourcing Strategy• Need to respond to the challenge of

providing new capabilities while tightly managing costs

• More focused, contingent approach• Look at specific functions/skills in

IT&S versus broad functions• Objectives may vary – cost,

scarce skills, technology transfer, time to market

• Frequent benchmark/comparison• Maintain flexibility• Balance demand and supply• Gain access to broader

R&D/innovation in IT

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IT Project Staffing Challenge (2008)

~1,200k hrs.

Resource GAP

Full Staffing

Embedded Base Management (40-40-20)

Incremental Staffing

Strategic Partner Sourcing

Capacity Strategies

~100 - 200k

Time to Effectiveness

~50k

800k hrs.

TBD

TBD

Leverage Existing Staff Introduce New Staff

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IT&S Sourcing Decision Framework

• Capacity• Strategic Importance• Risk• Scarce/New Skills/Technology• Commodity• Time to Market• Cost

• In-source• Staff Augmentation• Co-source*• Managed Service/ Outsourced*

* May be on- or off-shore

What Kind of Work/Project is It?

What Sourcing Options do We Have?

Work/Project

Sourcing Decision

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ProjectManagers

BusinessAnalysts

DevelopersApplicationArchitects

DBAsData

Modelers

HCA / IT&S

IBM

Wipro

Syntel

Staffing / Delivery Suppliers & Role Capabilities

Full Capability Unproven or Limited by Capability or Location

IT&S AD Sourcing Partners

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Critical Success Factors

• External advice/support/validation• Partnership perspective• Dedicated resources• Solid portfolio and resource

management process and information

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Summary

• Flexible, Strategic Sourcing Seeks to Leverage the ‘Right’ Resources for Given Work

• Supports Employee Engagement while Providing Access to Best Resources Available

• Supports the inevitable Cycles in IT Investment