Digitize Your Hospital: It Is a Quality and Efficiency Imperative
Hospital chief executives are no longer wondering whether or not to embark on a major IT initiative. CIOs are acutely aware of their health care IT investment needs over the next few years. Many health systems have had an active partnership with a legacy HIS provider over the last 20 years. Hospital boards have animated conversations around some tough issues: How can we best manage our integration and support costs? Can we expect to lower errors and improve quality without raising costs? Can we expect to receive higher reimbursement based on the emerging quality indicators?
The market trends are clear. At a recent Healthcare Congress, HHS Secretary Tommy Thompson commented that adopting IT can save hospital systems $100 billion annually. We are clearly beyond the vision of digitizing just the internal enterprise we are moving rapidly toward creating a real-time health care enterprise. Business and clinical processes need to evolve to meet the needs of the RTE. Technology can transform these processes to make health care delivery easier for providers: more seamless, more efficient, and with better patient outcomes.
Evolving Processes
Supply Chain Visibility
Hospital systems invest substantially in their supply chain. According to Broadlane, one of the leading supply chain companies, 18 percent of a hospitals total spending is focused on supplies. Supplies are operating expenses, some of which are fixed costs and some of which are variable. This is an important distinction to remember, especially when trying to quantify the marginal costs of handling a patient case. As volume increases, fixed costs tend to decrease on a per-case basis, while variable costs do not. It is pretty simple at one level: The more patients a hospital sees, the more money it makes. At another level, accounting accurately for both fixed and variable costs and allocating them to an episode of care, both directly and indirectly, are systemic problems in the industry.
Supply chain visibility may be new in many industries but is probably in its second generation in health care. Pharmacists have been using Pyxis drug cabinets for years now, even using pharmacy robots to eliminate labor costs from the medication management process. One reason that supply chains have been targeted by health care is that the industry uses so many drugs and supplies with significant costs, such as coated stents in a cardiac catheterization laboratory, complex chemotherapy drugs in oncology clinics, or even injectable radioisotopes with half-lives less than 30 minutes. These require all kinds of intelligent inventory management techniques. In fact, most bar coding initiatives have been driven by supply chain issues, with improvements in patient care a fortunate byproduct.
With the costs of RFID tags dropping, suppliers and hospitals are excited about the possibilities for increasing supply chain visibility. There is clear value to instant visibility at the pallet and case level, which enables hospital procurement departments to better align invoice receipts from suppliers to physical delivery of goods and post payments more effectively. Traditional four-point checking (quote, order, delivery note, invoice) can be significantly automated and payments can be tied to superior performance from suppliers. Reductions in inventory costs and inventory carrying costs should help pay off the necessary capital investments. In the near future, we can expect to see active RFID tags used more and more, even though their costs are considerably higher than passive RFID tags (whose prices are rapidly reaching prices comparable to that of plain old bar codes).
Visibility at the carton, packet, and unit level directly drives inventory management accuracy, which in turn impacts order quantity, inventory buffers, and automatic order creation. While visibility is critical, it is the pervasiveness of the visibility that will raise tracking costs, driving us to consider hybrid options like using passive RFIDs or bar codes as the most cost-effective tool at a carton level or lower (see Figure 1). This approach also acknowledges that we will probably derive close to 80 percent of the digitization value from the pallet- and case-level visibility. The costs necessary to obtain the remaining 20 percent of potential value may not be easy to justify.
Figure 1. Passive RFIDs or bar codes are the most cost-effective tool at the carton level and below.
The hospital supply chain, as we know it, will be transformed as a business and quasi-clinical process in the next few years. Supply chain visibility will drive procurement centralization so that dedicated local inventory management systems in radiology, cardiology, operating rooms, and pharmacy areas are no longer necessary. Physicians will be better educated about safer alternatives, so they support the process and use the appropriate supply channels. Suppliers to the hospital systems will develop closer relationships with the systems themselves, so that GPOs will have to find better ways to differentiate their services beyond simply aggregating buyers and negotiating volume discounts.
Physician Scheduling
Over the next few years, the process of scheduling patient appointments in various departments will be dramatically transformed. Trying to locate key care providers has been an ongoing problem, and we have seen many different systems and technologies used to automate it. Dedicated scheduling becomes paramount in surgery, radiology, cardiology, and even in the physicians office. Staff dedicated to scheduling is necessary for the smooth operations of most departments.
In the near future, schedulers will be able to instantly identify and reserve the nearest available equipment in the best condition as well as identify and reserve the first available slot with the preferred surgeon and the qualified nurses. This will allow patients to know that they can manage their own tradeoffs or have the departmental scheduler provide them with scheduling options.
We can expect punctuality to be a competitive advantage for a hospital system, manifesting in its patient satisfaction rating. When patients dont have to spend long hours in waiting rooms, they feel cared for and respected. Some of the systems that support this kind of scheduling exist now, such as the interconnected scheduling software that links to credentialing systems, asset management systems, and resource lists. In the future, expect RFID and infrared technologies to tag doctors and nurses as they move around the hospitals, so that they can be instantly found for emergency patient care situations.
Image Management
The process of image management has become a critical part of diagnosis and the rise in diagnostic imaging centers is a clear sign that consumers are now driving up demand for images.
Cancer patients are choosing hospitals that have IMRT radiotherapy systems with multileaf collimators so that they can reduce the X-ray dosage they get.
Radiologists continue to play a pivotal and growing role in diagnosing diseases. Radiology has evolved from the threedimensional visualization of tissue and bones to the visualization of metabolic activity, to now even pinpointing at a molecular level the absence or presence of a disease. Today, the number of physicians and clinicians who are interested in pathology images is beginning to grow as the microscope still delivers the higher resolution at a spatial level. The diagnosis of tomorrows images may still be the domain of the traditional players, but it is possible that chemists and molecular biologists will start to get pulled into the diagnosis process.
As more people get involved, image management must focus more on sharing images. Archiving and storage may become commoditized. The value may be shifting to portability and display, not just at the radiologists reading station, but also for the cardiologist, oncologist, biochemist, pathologist, primary physician, and patient. Proteomics can be expected to fundamentally redefine our notion of what we can see inside the human body.
Point-of-Care Clinical Documentation
One specific clinical process that will be redefined is the documentation of drugs and intravenous drips administered to a patient (the medication administration record).
The ability of active RFID to drive supply chain visibility for operational effectiveness is very different from using the same technologies to raise the quality of care and improve patient safety. As depicted in Figure 2, pallet- and case-level visibility will have no impact on reducing errors. But we dramatically increase our ability to monitor the right dose at the unit-dose level the area where most errors occur. Combined with clinical information systems that are linked to patient tracking, we can create electronic documentation about whether a patient has received a drug as prescribed.
Figure 2. Unit-dose level visibility has significant impact on reducing errors.
This process is great for prescription drugs, but IV bags still rely on the precision and the training of the pharmacist to verify the dose. This leaves the physical location of the bag to be tracked either using a bar code label or a label with a passive RFID tag.
In summary, point-of-care documentation will become less about documentation and more about verifying the readings from the clinical acquisition and care devices, documenting the drugs and drips administered, and recording the nurses observations.
Clinical Decision Support
The excitement around clinical decision support is growing, as software becomes smarter and more proactive within the cycle of care. More systems will offer greater front-end value based on the quality of clinical documentation and rich content, which is needed to garner universal appeal across different medical subspecialties. The current reality that no two institutions share a common taxonomy of care underlies the debate that the practice of medicine is still part art and still part science. Evidence-based medicine is the best and least intrusive way for a clinical information system (CIS) to raise the quality of care; however, this approach presumes that most of the information is well documented, researched, and published in journals.
Outcome management is a critical management tool for fighting chronic disease states such as diabetes mellitus and obesity. The focus of managing chronic disease will shift to physician offices and patient homes, which are in the best position to manage chronic ailments.
Quality Compliance and Reporting
The drive for quality and the quest for patient safety require that we train clinical staff to focus on compliance as well as look for clear indicators of quality. Quality indicators, such as those recommended by organizations like the Agency of Healthcare Research and Quality, will train us to find more tangible ways to ensure that we deliver high quality care despite increased complexity in the practice of medicine. In terms of patient safety, other indicators consider errors or mortalities/complications like sepsis and hematoma during low-acuity diagnosis-related groups. Quality is measured from these indicators.
No hospital system enjoys being audited by external bodies like JCAHO, but most realize that this is becoming inevitable as patients ask for more transparency. A big shift will occur when patients learn that errors are mostly faults of the system and not necessarily the fault of an individual. This understanding will help us contain frivolous lawsuits and punitive damages that are endangering the very fabric of our health care system.
Reporting of these quality indicators and an overall quality scorecard weighted by acuity level will help patients decide whether or not to take their business to a particular health system. The winners will be those who embrace a discipline and culture of quality, offering incentives to nurses and clinical staff that are tied to documented quality indicators.
Risk Management
The costs of medical malpractice insurance will be linked to the quality indicators discussed above and the scorecards that institutions will have to publish for their patients to see. Many health care systems have had no choice but to self-insure based on their risk profiles. There is also a strong need for hospital systems to become more profitable so that their debt service coverage ratio positively impacts their borrowing rates. Both of these require hospitals to digitize as much of their processes as possible.
There is a growing belief in the industry that soon a conscientious medical malpractice insurance company will offer a 10 percent discount on its insurance costs for hospital systems that use less paper and more digital quality control systems. Perhaps they will offer more discounts for specific CIS systems that are documented to have the most quality improvement and for hospitals that consistently deliver high scores on externally measured quality indicators. Will there be a strong correlation between the hospitals that deliver higher quality of care and those which are digitized? That is the holy grail of a digital hospital vision.
Clinical Trials Management
The growth of the electronic medical record for the patient is going to play a pivotal role in the transformation of the electronic data capture (EDC) process. There is growing impatience from patients and consumers with the long, drawn-out process to get FDA approval, which typically takes 10 years or more. With the EDC process, we can harness patient demand and build a cross-organizational coalition of information flowing among the pharmaceutical company, the research center, and/or hospital system, as well as any intermediaries using EMR system multiple tests, their results, and the progress of each patient.
Revenue Cycle Management
One of the oldest systems of a hospital may get a huge shock with the new thrust toward digitization. The hospital information system (HIS) has historically been the system that manages the admit, discharge, and transfer functions for all patients. It is also the main system responsible for EDI transactions with Medicare, Medicaid, and private payers. The HIS, therefore, has been the main accounts receivable system of hospitals in the United States; in many institutions, it even aspired to become the general ledger system.
There is a growing demand for us to start linking clinical documentation and outcome data to financial systems such as the HIS. With more digitized scheduling, we can expect patients to get admitted before they even arrive. Imagine a patient being transferred after 24 hours from the ER bed to an ICU bed; as the patient is wheeled into the new bed in a new ward, the monitor announces the identity of the patient and updates the network, asking the HIS to initiate a transfer function.
With CPOE now becoming the clinical layer that drives orders across the enterprise, the order communication function of the HIS is no longer the primary decision maker. Instead, it becomes the intelligent switch that manages order flow across various systems as it receives order sets from the CPOE system.
The increased transparency of the HIPAA transaction sets over the next few years in the United States will bring a new pressure on the HIS to evolve to a new role. Its role as the main AR system is still unquestioned, and it probably will continue to thrive in that role.
Cost Accounting
The role of cost accounting functions is going to grow in hospitals over the next few years. As we discussed with supply chain visibility, the more patients a hospital has, the more money a hospital system makes. We need to raise our level of commitment to improving our focus on direct and indirect costs so that we have more specificity to the costs we incur.
For example, today airlines can manage their load factor daily on a per-flight basis and actually analyze the profit impact of one incremental passenger for each specific flight, even helping them decide to add routes or drop them altogether. It makes a big difference if the passenger is flying first class, business class, or coach. The same thing is true for the hotel industry call it occupancy rates. Do we, as hospital systems, know what an incremental patient will bring in as revenues? Not an average patient, but one specific patient, with his own acuity level and insurer, with all the specific reimbursement levels involved.
The reality of the not-for-profit paradigm is that we have been apathetic about costs and focused on charges to a fault. Today, we book reimbursements based on charges filed as net patient revenues. There is a growing trend to reimburse more based on better quality and outcomes, and that cannot be an absolute. We know that it is driven by case mix and acuity levels of patients. If we are not able to document acuity levels well, we risk lower reimbursements and lower quality. Can we pinpoint which specific episode of care and which specific activities incurred the higher costs for specific patients?
Activity-based costing will gradually replace average costing when we calculate most functions. The ERP will help the notfor- profits get better control of costs and profit (operating income/net patient revenues) as well as solvency (total fund balance/total liabilities).
Conclusion
More health care systems are adopting information technologies and using consultants to transform key business and clinical processes, cut costs, and divert scarce resources to attract and retain nurses and key clinical staff. The challenge of competing for patients business is getting tougher. Delivering quality care is no longer just a clinical motivation, but one that attracts hard dollars through a demonstration of patient safety and a track record of reducing errors. The 10 processes or areas described above represent excellent targets to guide hospital systems into becoming digital hospitals.
