Financial Integrations Lead to Enhanced Reporting and Operational Efficiency

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1 Financial Integrations Lead to Enhanced Reporting and Operational Efficiency Stacey McCreery Executive Director, Finance July 1, /11/2016 1

2 Background Previously, the IU Health Statewide hospitals and physician groups had maintained their own general ledger, with no correlation to the integrated general ledger. Financial data for these hospitals was loaded into Lawson at the company financial statement level only, which means only ending balances by period were available after the close of each period. The most significant challenge with this model was the lack of detailed data that was readily available for purposes of crucial analyses. Furthermore, the hospitals noted above were not utilizing IU Health s corporate electronic medical record ( EMR ) nor billing function. As a result, if a patient was seen in Bedford Hospital, for example, and was transferred to Methodist Hospital, that patient s medical record would not transfer seamlessly and from a billing perspective, the patient would receive a bill from Bedford and Methodist Hospitals as opposed to one IU Health bill. 7/11/2016 2

3 Consequences of Current Structure Inability to see data that would assist in being able to identify opportunities for process and financial improvement Inability to capitalize on efficiencies and economies of scale 7/11/2016 3

4 Statewide Systems Goshen, Morgan LaPorte Goshen White Bedford, Tipton LaPorte, Starke, Tipton LaPorte, Starke, Bedford Greenway Bloomington, Paoli LaPorte, Starke McKesson Morgan Goshen 7/11/2016 4

5 Resolution Phased Approach It was recommended that all of IU Health s statewide hospitals be fully integrated into all of IU Health s primary systems. This can be achieved effectively in the least costly manner by approaching this task through the following phases: Phase I: Phase II: Phase III: Phase IV: Map general ledger accounts down to the department level and upload Accounts Payable detail into Lawson to allow for flow to EPSi Financial Budgeting & Reporting (EPSi) Integration Business Systems Integration (Lawson, Kronos and ImageNow) Clinical and Billing Systems Integration (Cerner and SMS/IDX) 7/11/2016 5

6 Scope The following hospitals and associated physician and/or ambulatory operations are within the scope of the project IU Health Bedford Hospital IU Health Bloomington Hospital IU Health Morgan IU Health Paoli Hospital IU Health Tipton Hospital IU Health White Memorial Hospital Southern Indiana Physician Groups 7/11/2016 6

7 Phase I It is recommended that an accounting until structure is built in Lawson for each hospital in scope. It is also recommended that a more extensive mapping table be constructed for conversion of departments and accounts. Benefits of Phase I: The corporate office will have visibility to more detailed account information that is not available today Having this detail will serve as a platform for future business systems integration efforts Once data has been loaded into Lawson, data will feed to EPSi, where a host of reports will be available to the hospitals that are not available today Time Investment of Phase I: It will take approximately nine (9) months to complete this phase Financial Investment of Phase I: Virtually zero ($0) 7/11/2016 7

8 Phase II It is recommended that EPSi Budgeting be implemented at all nine statewide hospitals. IU Health has an Enterprise License for EPSi, which allows for an infinite number of IU Health users; as such, implementation of EPSi Budgeting at the statewide hospitals will be financially beneficial to the system since many of the hospitals in scope are currently paying licensing fees on their current budgeting system. Benefits of Phase II: Cost savings for statewide hospitals with respect to fees paid for licenses and maintenance of their current system Once budgeting occurs in EPSi the first year, hospitals will be able to take advantage of flex budgeting, which is not available to the hospitals today The system will be able to realize efficiencies and greater visibility to data to be able to better manage the budgeting process from the beginning of the cycle to the end 7/11/2016 8

9 Phase II, cont d Time Investment of Phase II: It will take approximately twelve (12) months to complete this phase Financial Investment of Phase II: Please see Appendix A 7/11/2016 9

10 Phase III It is recommended that all nine hospitals be fully integrated with key IU Health Business Systems to include Lawson, Kronos and ImageNow. If this is achieved, the system will realize an increase in operational efficiency and cost savings while also providing increased quality and patient and employee satisfaction. Integration of the Business Systems would align the following services: Accounting & Reporting, Accounts Receivable, Accounts Payable, Capital Accounting, Tax Accounting, Payroll, Human Resources and certain Information Services duties. Benefits of Phase III: Shared services departments will be able to provide full support to the hospitals within the system Hospital data will be fully visible down to the transaction level, which will further enhance the benefits realized in Phase I Cost savings through the elimination of maintenance on hospitals current system contracts/licenses, elimination of secondary auditor, elimination of tax services provided by a third party, etc 7/11/

11 Phase III, cont d Time Investment of Phase III: It will take approximately nine (9) to fifteen (15) months to complete this phase Financial Investment of Phase III: Please see Appendix A 7/11/

12 Phase IV It is recommended that the hospitals in scope integrate into IU Health s Cerner and billing functions through SMS and IDX. If this is achieved, patients would be able to move very seamlessly throughout IU Health. Benefits of Phase IV: The corporate office will have visibility to more detailed account information that is not available today Having this detail will serve as a platform for future business systems integration efforts Once data has been loaded into Lawson, data will feed to EPSi, where a host of reports will be available to the hospitals that are not available today Time Investment of Phase IV: It will take approximately twelve (12) to eighteen (18) months to complete this phase Financial Investment of Phase IV: Please see Appendix A 7/11/

13 Benefits of Further Integration Financial Position and Opportunity Quality Metrics and Improvement Technology - Streamlined Models of Care Market Share Consumer Perception Physician Engagement Cost Efficiency Leveraging Enterprise Licensing Data Analytics Supply Chain Vendor Pressure/Negotiations 7/11/

14 Integration Timing 7/11/

15 Integration Timing Activity Small Hospital Large Hospital Map Chart of Accounts One month One month Business Systems Integration (including EPSi) EMR and Patient Accounting Integration Months (Multiple hospitals can run concurrently) Months (Multiple hospitals can run concurrently) Months (Multiple hospitals can run concurrently) Months (Multiple hospitals can run concurrently) 7/11/

16 Supply Chain Operations 7/11/

17 Supply Chain Operations Savings Inventory Costs The Supply Chain Operations team was also working to implement the following Value Analysis Teams: Receiving Supplies & Distribution O.R./SIMS Linen The goal of these teams is to develop metrics to monitor and implement at each facility. These metrics will include inventory turns, fill rates, supply costs per adjusted patient day, etc. In order to accurately track progress and ensure efforts are being fully enforced, the Supply Chain Operations team is forced to rely upon reports from the facilities; Lawson integration will make implementation and ongoing monitor much more efficient. 7/11/

18 Supply Chain Operations, cont d Other Benefits Data Warehouse Hospitals data will be integrated into IU Health s Data Warehouse which will allow for historical trending analyses, clinical data integration and a more granular look at spending detail Lawson Business Intelligence (LBI) As hospitals data will be integrated into Lawson, users will be able to take advantage of LBI, which allows for real-time data monitoring, proactive data corrections and visibility to opportunities for improvement 7/11/

19 Supply Chain Operations, cont d Lawson Smart Office As hospitals data will be integrated into Lawson, users will be able to monitor data at the transactional level real time on one screen vs. needing to toggle among several screens to appropriately monitor and maintain information 7/11/

20 Appendix 7/11/

21 Matters to Consider Cost/Benefit analysis for integration of critical access hospitals Site visits with management and staff Integrated software packages currently in place Effects of integrating billing systems after business systems Availability of resources 7/11/

22 Next Steps Refine timeline Engage stakeholders Evaluate matters that should be considered Compile high-level milestones project plan 7/11/

23 Assumptions: Costs of Full Integration Ongoing Operations Cost Impact Additional staff will be required to support operations Local staff Software maintenance and upgrade costs will need to be determined Data archiving costs will need to be determined for legacy systems Data migration costs and process will need to be determined 23

24 Assumptions: Cost Savings of Full Integration Ongoing Operations Cost Savings Reductions in cost with condensed staffing models Elimination of maintenance contracts/license (i.e. Lawson, Insights, Cerner, Kronos) Elimination of secondary auditor Elimination of tax services provided by third party Elimination of cost reporting provided by third party Elimination of managing multiple unique systems 24