financial solutions prioritization and cost …financial solutions - prioritization and cost...
TRANSCRIPT
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, [email protected]
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