FINANCIAL SOLUTIONS PRIORITIZATION AND COST CONTAINMENT IN THE IT WORLD
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1 FINANCIAL SOLUTIONS PRIORITIZATION AND COST CONTAINMENT IN THE IT WORLD Jackie Lucas, FACHE CIO Consultant Associate Faculty University of Phoenix Online
2 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 2
3 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 3
4 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 4
5 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 5
6 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
7 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 7
8 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 8
9 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
10 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 10
11 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 11
12 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) 12
13 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 13
14 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 14
15 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!
16 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! 16
17 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!
18 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 18
19 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? 19
20 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 20
21 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 21
22 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
23 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 23
24 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. 24
25 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 25
26 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 26
27 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 27
28 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 28
29 Best Practice and Processes Here are the policies and procedures for the paperless medical record! 29
30 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
31 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!
32 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 32
33 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 33
34 Program/Project Management Models 34
35 Program/Project Management Models Vendor
36 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 36
37 Cost Containment Tips Take-Aways A cynic is a man who knows the price of everything and the value of nothing. Oscar Wilde 37
38 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/Functionality 38
39 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 Relationship 39
40 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/projects 40
41 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 41
42 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 42
43 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 43
44 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 Own 44
45 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 45
46 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 46
47 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 47
48 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 48
49 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
50 Financial Solutions - Prioritization and Cost Containment in the IT World Questions? Thank You! Jackie Lucas, FACHE jlucasjl@aol.com 50
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