Shared Services for HealthcareBoosting the ROI of EHR

Paul M. Roemer

An Example—Hospital Overview

Hospital Overview– Assume we are looking at a large pediatric hospital– Over 8,000 employees– Provides inpatient and ambulatory care services– Several physician practices support patient care, including:

• Children’s Healthcare Associates • Children’s Oncology Associates• Children’s Radiology Associates • Children’s Anesthesiology Associates• Children’s Surgical Associates

– The hospital is in the process of implementing EHR across the enterprise including several satellite locations

2

Hospital Overview(Con’t)

Cultural Overview– Enjoyed lucrative environment – Enjoyed healthy relationships and contracts with payers– Academic medical model– Strong philanthropic support– Financial strength has provided funding for many clinical and supportive programs and

systems Current Economic Forecast

– Payers contracts may be cancelled or altered– State and Federal funding at risk – Increase in Charity Care and unreimbursed care– Investments have been negatively impacted– Management looking to reduce costs and improve efficiencies throughout the enterprise

3

4

Current State

Current StateHospital

IT-EHRHRBillingFinanceSchedulingRegistration

Healthcare Associates

ITHRBillingFinanceSchedulingRegistration

Surgical Associates

IT-EHRHRBillingFinanceSchedulingRegistration

RadiologyAssociates

IT-EHRHRBillingFinanceSchedulingRegistration

OncologyAssociates

ITHRBillingFinanceSchedulingRegistration

The Hospital has duplicated departments, processes and technologyoperating in each of the major organizations. IT applications vary.

5

Future State with Shared Services

Potential Future StateHospital Healthcare

AssociatesSurgical

AssociatesRadiologyAssociates

OncologyAssociates

Shared ServicesIT-EHR (1 or more)

HRBilling

FinanceSchedulingRegistration

The future state should consolidate departments, workflowsand technology into a single organization

6

Challenges

The hospital faces numerous challenges

Limited ability to manage an effective shared services initiative

Limited ability to structure an effective shared services business case

Limited ability to realize executive buy in

Ineffective processes and tools to measure performance

Limited experience in defining best practice business processes in a to shared services environment

Limited experience in managing enterprse transformation

7

Two Approaches to Shared Services—which is best for you?

• Structured Methodology• Program Management• Risk Management• Project Management• Partner Team• Staff to “do the work”• Accountable for delivery

• Structured Methodology• Program Management• Risk Management• Project Management• Partner Team• Staff to “do the work”• Accountable for delivery

Structured ApproachStructured Approach OR

• Retainer based coaching• Meet regularly with

Project Sponsor • Advise and coach • Partner team• Hospital does the work• Less accountable for

delivery

• Retainer based coaching• Meet regularly with

Project Sponsor • Advise and coach • Partner team• Hospital does the work• Less accountable for

delivery

Advisory / Executive Coach Advisory / Executive Coach

Health Care/Commercial Enterprise Transformation Expertise Health Care/Commercial Enterprise Transformation Expertise

PLUS

8

Key Phases of Structured ApproachA structured approach with five key phases

places great emphasis on Workflow & Change Management

Align & EngageLeadership

Develop the Strategy& Vision

Transition theOrganization & Implement

Prepare & Equip the Workforce

Communicate withStakeholders &

Measure and Monitor

Build a coalition of leaders with a common vision and understanding that leads to united action

Define organizational vision, change strategies & plans required to enable the intended business results

Assess organizational change impact driven by the solution and implement change plans

Move the workforce from current assignments and competencies to new assignments/competencies

Provide clear, timely messages to foster understanding, involvement and feedback; monitor & measure

9

Typical Shared Services Timeline

Develop Strategy/Vision

Transition / Implement

Prepare Workforce

3 months 4-9 months 10-18 months

Communicate Measure Comply

Align and EngageLeadership

10

Typical Structured Approach Tasks

Design

- Process

- Organization

- Technology

Define Service Level Agreements (SLA)

Align business units on SLAs

Pilot

Baseline

Set up infrastructure

Develop HR processes

- Competency identification

- Recruitment

- Training

- Retention…

Redeployment of people arising from set-up of the SSC

Training to enable new roles

Contracting and legal support

Initial transition management (managing additional loads in the initial phase)

Risk management

Structure shared services model

- Single or multi-location

- Decide on ownership model and level of control

Develop phase planning

Structure legal entity

MIS reporting / dashboards

Run shared services as independent business, monitor financial and operational performance

Ongoing controls improvement (including SOX compliance)

Secure executive sponsorship

Establish scope of services – processes and business units

Develop initial business case with both quantified (ROI) and qualitative benefits

Align and EngageLeadership

Develop Strategy Vision Prepare Workforce Transition and Implement Communicate

Measure

11

Key Components of Advisory, Coach Approach

Partner Team of Health Care, Shared Services

and Commercial Transformation Experts

Meet Regularly to Understand Challenges and

Coach the Executive Sponsor

Why a Shared Services Center?Shared Services combine the benefits of both centralized and decentralized operations

• No BU Control of Central Overhead

• Inflexible to BU Needs

• Remote from Business

• Unresponsive

• Higher Costs

• Different Control Environments

• Duplication of Effort

• Variable Standards

Shared• Independent of

Business

• Synergies

• Lean, Flat Organization

• Dissemination of Forward Looking Practices

• Responsive to Client Needs

Decentralized Centralized

• Bus Maintain Control of Decisions • Consistent

Standards & Controls

• Economies of Scale

• Common Systems & Support

The Rationale for Shared Services Reduce and/or control costs by eliminating workflow duplication Reduce head-count Free key resources to focus on strategic and analytical functions Standardize processes across business units

- Consistent reporting and control across business units- New / stricter regulatory framework(s)

Reduce / eliminate non value add activities, improve efficiencies Align processes / functions with business strategy Leverage the emergence of enabling technologies Free up capital for core business operations Leverage Purchasing Power Leverage Utility/Energy Spend

REGIONALGLOBAL

Specialised TransactionalStrategic

Corporate Centres of Excellence Service Centre/Call Centre

• Strategic activities remain at Corporate Centre including

• Overall direction & strategy• Policy & corporate

standards• Portfolio management

• Common specialist value added activities that require teams possessing deep knowledge and expertise and that leverage regional or global advantage

• Efficient processing of high volume, standard activities that provide scaling opportunities

• Consolidation of information and transaction based activities

• Require one point of contact

Business Unit/Divisions

• Core business activities including

• Customer facing/locally specific activities

• Local planning & decision support

Business

Eliminate non value-added services and processes

Physical Models

Functional

Function 1

Function 3

Function 2

Geographic

Function 1,2,3

Function 1,2,3

Function 1,2,3

Hub & Spoke Virtual

Hub

Centres are organised by function.Centres are geographically dispersed.

Parallel centres exist.Organised by Geography.

For each centre, there is a single hub, supported by local spokes.

There is no physical centre, with all activities performed remotely using web enabled Technology.

Different Models for Shared Services

Key Design Issues & Considerations Shared Services vs. Outsourcing?

– Between shared services and outsourcing is a continuum of options that allow varying degrees of control and ownership – and it is important to analyze and arrive at the right model.

Single location vs. multiple locations?– The decision on whether to set up one or more centers depends on

important considerations including• The number of business unites from where processes will be

consolidated and the resultant complexities within processes• Regional, location or business unit specific unique

requirements (driven by market, regulatory or technology constraints)

• Regulatory and language requirements• Tax• Need to manage risk• Current locations and resources; the ability to leverage, for

example, a current location as a staging post

Key Design Issues & Considerations Where do we locate our center(s)?

– The decision on location for the shared services center(s) must be taken after analyzing important considerations, including,

• Cost and tax structures, including set-up costs • Resource availability – current and future• Tax and regulatory requirements• Assessment of the location’s overall local environment –

public services & infrastructure, political climate, regulatory & compliance issues…

• Tax, treasury and legal issues with regards to entity set-up, information flow, confidentiality and data protection, intellectual property protection…

Designing a Pilot– Structuring a pilot program that ensures coverage (unique

activities are covered as far as possible) as well as depth and helps resolve issues pre go-live.

Key Design Issues & Considerations Operating Structure and Range of Services

– Migration of services to the Shared Services Center on the basis of business units or processes, or both?

• Selecting the range of services offered by the center. Should there be a big bang or phased migration of processes?

• Should the phasing be based on process clusters or location, or a mix of both?

– Migrate processes in ‘as-is’ state or migrate post process improvement?

– Change or enhance supporting technology or applications?

Designing the post shared services operating model

– Decisions with respect to

• Governance and reporting structures

• Resources to retain, redeployment of retained resources

• Changes to support and staff functions organizations (IT, Legal, HR, etc.)

Key Design Issues & ConsiderationsFundamental to the business case is the assessment of the various operating model options and

implementation approaches

NEW OPERATINGMODEL

S

P

O

R

T

S

EXISTINGOPERATING MODEL

Implementationsequencing andplanning

Key changes

Risk assessment

Business Case ‘blue print’

Time

Cash flow

Site/Location

Integrated ProcessModel

Organization &People

Regulatory & Legal

Technology

Service Management Relationship

S

P

O

The above is based on Shared Service Methodology

Trends and Good Practices for Shared Services Companies are placing more emphasis on “service” rather than “shared”.

Current trends are towards simplification, consolidation and centralization.

Successful centralization is being driven by technology and new IT architectures initiatives such as Service Orientated Architectures and renewed enthusiasm about application service providers.

Clear understanding is required about consolidation economics. Lots of small initiatives and SLA’s are likely to be more successful than large ones.

Competition within the organization is a good thing around individual applications and services. Who provides the best service?

Managing strategic change and changes in the business agenda while maintaining an efficient outsource relationship.

Good Practices in Shared Services Set-up and Management We list a few of the design principles and good practices for

setting up and managing a financial shared services center - Run shared services like a business, and be customer focused

- Wherever possible recruit new staff - no “bad habits”, reduced hierarchy

- Flat organization reflecting minimal management layers

- Organized around teams evolving to self-direction

- General management leadership skills rather than functional

- One leader for all shared services

- Special reward and recognition programs to drive behaviors

- Service Level Agreement (SLAs) maintained between provider and customer

Source: Published Research commissioned by The Association of Chartered Certified Accountants

SSC Structuring

By Country

14%

By Process

79%

Other7%