Introduction & EHR Benefits Realization

Introduction & EHR Benefits RealizationDavid ShiplePractice Leader, Advisory Services

1© 2012 Divurgent. All rights reserved.

November 27, 2012

Prepared for:

• Offices: Virginia Beach, Virginia / Dallas, Texas• Clients include:

– Integrated Delivery Networks– Critical Access Hospitals– Physician Offices– Community Hospitals– Group Purchasing Organizations – Healthcare Vendors

• Industry leading advisory board• 100% Referenceable • Clinical Resources (RN, PT, RPh, MD, NP)• Operational Roles (CFO, COO, CMIO, CIO, CNO)• Proven Methodology

– Vendor Selection– Project Management– Meaningful Use Gap Analysis– Clinical Transformation– Change Management– Systems Implementation

• Practices: Advisory, Project Management, Activation Management, Revenue Cycle, Clinical Transformation

© 2012 Divurgent. All rights reserved.2

Company at a Glance

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Divurgent leverages an industry leading advisory board who provides consulting services and guidance on projects

© 2011 DIVURGENT. All rights reserved.

Advisory Board

Member Title Organization

Bert Reese Sr. Vice President and Chief Information Officer Sentara HealthCare

Robert Blades Independent Consultant Independent

Ann Chinnis, MD Chief Executive Officer Matrix Executive Coaching

Eugene D’Amore Vice President and Chief Information Officer Shriner’s Hospital for Children

Cynthia Davis Technology Adoption Strategist Independent

Andy Downing Chief Executive Officer Pinpoint IT Services

Travis Gathright Chief Information Officer Magee Rehabilitation Hospital

John Gomez Chief Executive Officer JGo Labs

Richard Howe, PhD Independent Consultant Independent

Beth Lindsay-Wood Sr. Vice President and Chief Information Officer Tampa General Hospital

Braxton McKee Attorney Kaufman & Canoles

Stephanie Reel Chief Information Officer Johns Hopkins Health System

Albert Sinisi Principal Sinisi Consulting Services

Rick Skinner Vice President and Chief Information Officer Cancer Care Ontario

Bill Spooner Chief Information Officer Sharp HealthCare

Laishy Williams-Carlson Chief Information Officer Bon Secours Health System

Eric Yablonka Vice President and Chief Information Officer University of Chicago Medical Center


• Our Advisory Services team is comprised of seasoned HIT consultants with a proud history of being trusted advisors to CIOs

• Includes former CIOs, career consultants, subject-matter experts, researchers, and clinicians

• Experts in IT strategy, Meaningful Use, Benefits Realization, Infrastructure Optimization, and other challenges/ opportunities facing the CIO

• Practice credentials include Lean Sigma, Baldrige, Studer, ITIL, and advanced degrees (MHA, MBA, MEd, etc.)

Advisory Team

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• IT Strategy• Benefits Realization• IT Assessments• Meaningful Use

– Gap Analysis/ Planning– Program Management

• Clinical Integration– Virtual Integration– HIE Planning/ Design

• Analytics/ Business Intelligence

• Interim Leadership• Vendor Selection• Benchmarking/ Best Practices

Studies• Total Cost of Ownership• Shared Services• mHealth• Retail Strategy• Consumerism


Service OfferingsDivurgent’s Advisory Services practice provides a broad range of strategic services to health system executives across the U.S. and Canada. Each service domain is backed by a proven methodology and best practices research.

6© 2011 DIVURGENT. All rights reserved.

Benefits Realization

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• Hard dollar ROI on EHRs is very real, however, takes planning and diligence to evidence the savings

• Health systems engage in benefits realization exercise for many reasons – it is very imperative to understand the true intent of your health system

• The number of EHR benefits are almost limitless – focus on a manageable number that are of high value and easy to evidence

• There are several types of benefits that should be documented: Hard ROI, Soft ROI, Intangible Benefits, and Strategic Benefits

• Benefits realization exercises can become overly political, complex, and time-consuming – using a systematic approach is required

• Operational accountability is absolutely necessary to realizing and sharing benefits

• Expected benefits can be hardwired to organizational operations and should be leveraged into overall organizational strategic plan

Executive Summary

© 2012 Divurgent. All rights reserved.

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EHR Benefits are Real• 91 minute wait time reduction in the ED• 50% improvement in ED to inpatient bed arrival• $4.9 million savings due to adverse drug event reduction• $7 million/ year reduction in unreimbursed cost for MRIs and other imaging • Saved 296 hours per month by replacing manual pre-approval phone calls

• Transcription costs have decreased $170,000 or 34% since go-live• Avg. nursing premium pay has decreased by 38%• Measured $42.6 million in benefit in first two years after going live• Estimated “break even” in 4-5 years• Improved staff efficiency and reduced variation in practice• Reduction of 65 FTEs• Nearly $1 million in savings related to reduced length of stay in 6 months • Now preventing 200+ infections/ year, saving $5.1 million annually

• Reduction of 47 FTEs ($2.5M)• Administrative expense Reductions ($.6M)• Pharmacy medication waste reductions ($2.0M)

Examples of EHR benefits – when totaled for a given health system, can add up to real money


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The Sentara Story• Senior management

commitment from day one

• Long-time tradition of being focused on financial outcomes

• Process owners engaged as soon as software purchased

• Initial metric signup based on industry best practices

• Bonuses built into realizing benefits

• Redesigned 18 major processes covering entire continuum of care using lean six sigma

• Bi-weekly meetings to ensure benefits were achieved

Sentara seems to have “cracked the code” of EHR ROI – carefully orchestrating a well-known ROI realization story


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Ask, and You Shall Receive

An EHR is only a tool, albeit an expensive one – however, implemented correctly the payoff of the tool should be substantial

• Asking operational owners for capturing benefits is important for several reasons

– An culture of ownership begins with owning enterprise investments – and extracting the value of those investments

– Some benefits may be difficult to attain, but if not called expected by senior management, benefits are guaranteed not to materialize

– Will be difficult to ask operational owners for support (e.g. nursing time) if they have not truly bought into value proposition

• A benefits realization exercise forces operational leaders to ask– Why are we making this investment?

– What benefits do we expect to achieve? How will we measure them?

– How can we be good stewards of our health system’s investment?

• If the answer to the question “what is going to change with a new EHR?” is “don’t know” – or “ask IT, they’re driving it”

– There’s a bigger problem at hand

– Points to a need to shift to a culture of “IT ownership”


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• Prior to EHR implementation a rigorous plan is required – including process redesign – to get full benefits realization

• Evidence hard ROI offsets to the costs of the EHR

• Establish ownership and accountability necessary to realize value from the EHR

• Demonstrate to stakeholders they achieved benefit from investing in the EHR

• Demonstrate the broader value of the EHR (e.g. the EHR positioning the organization for healthcare reform)

• Make the business case to a wavering stakeholder group evidencing that a new EHR is the right thing to do

Drivers of Benefits Realization

It’s important to be clear on the intent of a Benefits Realization endeavor – the drivers (or combination of drivers) are many


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Improved clinical outcomes Decreased cost of record storage Improved patient flow

Reduced process variation Reduced costs of data collection Reduced drug use and costs

Reduced order turnaround time Reduced redundant testing Reduced use of other resources

Increased use of preventative care Reduced payment denials Reduced lengths of stay

Improved documentation quality Improved quality of coding Nursing staff time savings

Increased direct patient care time Improved charge capture HIM workload, staff reductions

Improved Information availability Increased net revenues Pharmacist time savings

Increased patient safety Increased reimbursement Decreased cost of paper forms

Reduced ADE incidence Increased performance payments Decreased transcription costs

Reduced med error incidence Improved regulatory compliance Increased patient satisfaction

Reduced complications of care Increased patient volumes Improved physician satisfaction

Increase patient chart legibility Increased efficiency Improved staff satisfaction


Typical Areas of BenefitSource: HFM

Areas of potential EHR benefit are almost limitless – the “art” is selecting the right metrics to measure


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A Systematic Approach

One possible approach is to focus on the Benefits that can be most readily evidenced in Peer Reviewed Literature

[1] Thompson DI, Classen DC, Haug PJ EMRs in the Fourth Stage: The Future of Electronic Medical Records Based on the Experience at Intermountain Health Care, JHIM, Summer 2007.


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Follow the MoneyDivurgent often recommends focusing on the high returns (and most readily evidenced) first:

• Reducing Average Length of Stay

• Reducing Transcription Costs

• Better Documentation – Better Reimbursement

• FTE Reduction

• Reducing Readmissions


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Types of Benefits

A good Benefits Realization story after an EHR implementation includes hard and soft ROI, and intangible and strategic benefits

Type Example Implication

Hard ROI Decrease in transcription cost

Direct cost off-set to EHR costs; can be tied directly to budgets; usually endorsed by CFO

Soft ROI Most time available for nursing at the bedside

Measurable, but does directly affect bottom line

Intangible Benefits

Chart available to everyone, anywhere, anytime

Very important, but can be elusive to measure – observe closely and benefits can be articulated; also includes benefits not even yet understood during EHR 1.0 rollout

Strategic Benefits

Ability to manage patients across continuum of care

Possibly the most important – enabling the next generation business model (ACOs, “Systemness”, vertical integration, etc.) and other health system strategic goals


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Linkage to HC Reform

The linkage to the Healthcare Reform/ reimbursement challenges and EHR Benefits Realization cannot be underestimated

EHR’s have a direct, measurable effect on a health system’s ability to react to HC reform and the relentless drive for higher quality/ lower costs

• Ability to manage patients/populations longitudinally (enabling ACO’s, risk-based arrangement, bundled payments, etc.)

• Ability to reduce readmissions

• Enabler for increasing VBP and HEDIS quality scores

• Enabler decrease hospital acquired conditions

• Driver to decrease utilization costs thru ordersets and supply chain management


Benefits Realization Continuum

Challenge

Reward

Benefits built into operational bonuses

Benefits defined w. process transformation required

High-level benefits defined - w. ownership

Rigorous baselining

True cost offset realized - validated by CFO

Presentation: We are positioned for the future (intangibles)

Presentation: We were successful

Presentation: Our hard and soft ROI calculations

EHR’s are simply the cost of doing business

Health systems are approaching benefits realization of EHR investments in a variety of ways

© 2012 Divurgent. All rights reserved. 17

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EHR BR Methodology

End-game Intent

Starter-set Metrics

Process Redesign Needs

Educ

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Clinical

Operational

Financial

Alignment to Existing Scorecards

HC Reform Enablers

Com

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ay

Realization Rules/ Bonuses

Financial Model

Accountability

Realism -Setting Benefit Goals Benefits Realized

Analytics Capabilities

Poin

t in

EHR

Jour

ney

Senior Mgt Commitment

Hard Soft


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

ns L

earn

ed

Clinical

Operational

Financial


HC Reform Enablers

Com

mitm

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ay


Financial Model

Accountability



Poin

t in

EHR

Jour

ney


Hard Soft

• Where is your health system in this EHR journey?• Contract just signed• Design build underway• Rollout begun• EHR is live• EHR 1.0 is live; EHR 2.0 being planned

• Point in EHR journey has major affect on your EHR strategy

• Senior management sets the cultural tone - how are EHRs viewed?• A necessary evil?• Just a tool with no inherent value?• An investment which should have benefits and ROI?

• Does senior management have a vision for the organization with an EHR?

• Has senior management articulated what is expected from the EHR and how the organization will change with it’s EHR?

• Have bonuses been tied to EHR benefits realization?• Has accountability for ROI been established?


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

ns L

earn

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Clinical

Operational

Financial


HC Reform Enablers

Com

mitm

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ay


Financial Model

Accountability



Poin

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EHR

Jour

ney


Hard Soft

• What is the “end-game” of your benefits realization endeavor? Is it to… • Evidence hard ROI offsets to the costs of the EHR?• Establish ownership and accountability necessary to realize value

from the EHR?• Demonstrate to stakeholders they achieved benefit from EHR

(post-live)?• Demonstrate the broader value of the EHR (e.g. the EHR role in

healthcare reform)?• Make the business case to a stakeholders group evidencing that a

new EHR is the right thing to do?

• Is there a starter set of metrics that can be used? e.g.• Benefits documented from similar implementations• Benefits documented from the vendors or user group• Metrics already used in monthly performance scorecards• Metrics documented in original business case• Success metrics used by vendor (e.g. Epic KPI workbook)• Metrics from other facility go-lives• Literature references


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

ns L

earn

ed

Clinical

Operational

Financial


HC Reform Enablers

Com

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Financial Model

Accountability



Poin

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EHR

Jour

ney


Hard Soft

• Inventory current analytics capabilities:• Legacy EHR reporting• Future EHR reporting• Cost accounting• Custom data warehouses• Population data warehouses

• What is the strength of your analytics group?• Where does current monthly operations objectives reporting come

from?• Manually• Electronically• 3rd Parties


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

ns L

earn

ed

Clinical

Operational

Financial


HC Reform Enablers

Com

mitm

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ay


Financial Model

Accountability



Poin

t in

EHR

Jour

ney


Hard Soft

• Can a process redesign régime (e.g. Lean Six Sigma) be employed to build benefits directly into software design?

• Where will review/ redesign of key processes have the most impact? • Where has significant re-engineering already taken place? How are the

benefits of the redesign been measured?• Where do targeted processes align with vendor/ business case

strengths?• How do targeted processes align with business owners?• Arrival Management• MD Processes• Bed Management• Medical Records• Case Management• Meds Management• Charge Capture• Monitoring/Recording• Claims Processing • Order Sets• Clinical Communications• Patient Care Transformation• Disease Management• Patient/Member Satisfaction• Emergency Department• Physician Practice• Home Health


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

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earn

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Clinical

Operational

Financial


HC Reform Enablers

Com

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ay


Financial Model

Accountability



Poin

t in

EHR

Jour

ney


Hard Soft

• Gets everyone on the same page on BR endeavor• Overview of methodology• Part momentum building – possibly invite a speaker from

an EHR ROI success story (e.g. Bert Reese, Sentara)• Case studies from other health systems – how they did it• Intent of this health system

• Definitions : hard, soft , intangible , future enabler• Lessons learned

• Focus on a small number of “big ticket” items• Focus on what can be measured• Part “Art”, part “Science”• Many benefits do not translate directly into money• Expect push back – “If we acknowledge benefits , you’ll

want to reduce our staff”• Splitting hairs between benefits of process changes and

benefits of EHR


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

ns L

earn

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Clinical

Operational

Financial


HC Reform Enablers

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mitm

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ay


Financial Model

Accountability



Poin

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EHR

Jour

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Hard Soft

• What is the expected change from a clinical standpoint?

• How will these changes be measured/ baselined?

• How are they measured currently? E.g.,• Who owns these metrics?• Less variation in care• Fewer adverse drug events• Improvement in quality

scores• Fewer infections• Increase in preventative

care

• What is the expected change from an operational standpoint?

• How will these changes be measured/ baselined?

• How are they measured currently? E.g.,• Who owns these metrics?• Decrease length of stay• Decrease in transcription

costs• Decrease in readmission

rate• Decrease in cycle times• Decrease in nursing hours

• What is the expected change from a financial standpoint?

• How will these changes be measured/ baselined?• How are they measured currently?• Who owns these metrics? E.g.,

• Reduced costs of data collection• Reduced redundant testing• Reduced payment denials• Improved quality of coding• Improved charge capture• Increased net revenues• Increased reimbursement


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

ns L

earn

ed

Clinical

Operational

Financial


HC Reform Enablers

Com

mitm

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ay


Financial Model

Accountability



Poin

t in

EHR

Jour

ney


Hard Soft

• Where can EHR success metrics be aligned with existing scorecards:• Strategic Goals• Baldrige Award Criteria• Departmental Objectives• Epic KPIs (or other

vendor equivalent) • Monthly Operating

Reviews• Meaningful Use/ VBP

quality measures• HEDIS Scores• Etc.

• How will the EHR enable healthcare reform and other long-term strategic goals of the organization?

• Longitudinal management of patient care

• Patient engagement• HIE connectivity • Population health• Ability to participate in

risk-sharing with payers


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

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esso

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Clinical

Operational

Financial


HC Reform Enablers C

omm

itmen

t Day Realization Rules/

Bonuses

Financial Model

Accountability



Poin

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EHR

Jour

ney


Hard Soft

• Opportunity short description• Owner• Classification: Cost reduction, revenue

enhancer, etc.• Opportunity long description• Unit of measure• Metric calculation• Current baseline• Post-live goal (% increase/ decrease)• Dollar value in year one• Dollar value in year over life of EHR• Frequency of measurement• Total expected return (hard and soft)

• Workshop setting to ensure everyone buys into Benefits Realization plan

• Does everyone believe in the fundamental business case of the EHR?

• Surface possible concerns about an operational owner’s ability/ control over BR metrics

• Address concerns that some expenses/ metrics will actually degrade in the short-term

• Are business leaders committed to being good stewards of EHR investment dollars and drive out as much benefit as possible?


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EHR BR Methodology

End-game Intent

Starter-set Metrics


Educ

ation

/ L

esso

ns L

earn

ed

Clinical

Operational

Financial


HC Reform Enablers

Com

mitm

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ay


Financial Model

Accountability



Poin

t in

EHR

Jour

ney


Hard Soft

• How are operational improvements separated from EHR-related improvements?

• From some, if the benefits were incurred on the “the watch” of the EHR go-live, it counts toward EHR ROI

• How are benefits being tied to bonuses?• How/ when are bonuses paid out?

• Bi-weekly meetings: goals, continued model refinements; measurement reporting

• Coaching as necessary• Project sponsor drives meetings• BR Scorecards are published


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• Being unclear on true intent of the Benefits Realization exercise

• Waiting until after the EHR is deployed

– Operational owners may claim their process initiatives were at core of savings

– No baselining in place from before EHR deployed – harder to attribute saving to the EHR

• Making metrics overly ambitious, e.g.– Metrics that require data difficult to evidence (e.g. true cost of a capitated patient)

– Metrics that require multiple data points to calculate savings (e.g. an improvement in HEDIS scores)

• Lack of clear senior management commitment, ownership, or incentives for realizing benefits

• An “IT is just the cost of doing business” mentality

• Operational owners worried that endorsing EHR benefits is an invitation to getting their FTEs reduced


Avoiding the Pitfalls

Practicing the “art of the possible” is the way to overcome common pitfalls of BR projects

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• It is imperative to establish baseline and target metrics prior to EHR implementation recognizing that paper-based data may not be reliable.

• It can be difficult to determine the precise benefits realization amounts. Today’s ROI efforts lack a common basis for comparison.

• Avoid using fixed costs in financial savings analysis. Only variable costs would be saved, under most operational situations.

• Claim staff time savings only if it results in fewer full-time equivalents per unit of service. In many situations, time savings do not result in a financial benefit.

• Although the prevention of adverse events and unnecessary procedures may result in savings, the actual cost of a prevented event is difficult to estimate.

• In some instances, the revenue reduction from reduced clinical utilization may be greater than the expected cost savings, depending on the hospital’s payer mix and contract terms.

Other Lessons Learned


Introduction & EHR Benefits Realization

Health & Medicine

Transcript of Introduction & EHR Benefits Realization