Leading IDSs heed the call to invest in IT - Integrated Delivery Systems

Healthcare Financial Management, Feb, 2002 by Dean C. Coddington, Keith D. Moore

Case studies of 11 leading integrated delivery systems (IDSs) found all of these organizations are committed to investing in the development of sophisticated IT systems. The case-study IDSs' primary concerns regarding IT investments were related to achieving adequate financial and patient care returns, accessing capital, finding qualified IT staff, finding reliable IT vendors, achieving physician acceptance, and sharing software and IT solutions with other IDSs. Among the competitive advantages these IDSs have gained from advanced IT capabilities are improved patient satisfaction due to superior service outcomes and the IDS's ability to access clinical information from any point within its delivery system, reduced prescription errors and adverse drug reactions, enhanced quality-improvement efforts, reduced costs associated with telephone calls and paper processing, and enhanced ability to recruit clinical personnel.

The findings of the highly publicized Institute of Medicine (IOM) report Crossing the Quality Chasm: A New Health System for the 21st Century support the notion that integrated delivery systems (IDSs) need to invest more in information technology (IT) to be effective from a quality standpoint. (a) Without an electronic medical record (EMR) and the databases that can be built from an EMR, for example, an IDS cannot hope to realize the massive improvements in quality called for by the IOM report. Moreover, IDSs that do not realize such improvements cannot expect to preserve the reputation for excellence that is essential for maintaining a strong market share and, thus, financial well-being.

Yet IDSs face significant obstacles to achieving such objectives. The large size and complexity of IDSs generally require these organizations to spend substantially more than standalone hospitals on major IT initiatives. In addition, initiatives that a small, standalone hospital might accomplish in a relatively short time may involve years of intensive development efforts for an IDS because of the considerably larger number of constituents (eg, physicians, hospitals, health plans, and patients) that must be involved in the needs-assessment process.

Results of a recent ongoing study sponsored by the Medical Group Management Association (MGMA) provide insight into the primary IT-related concerns of 11 leading IDSs and show how these IDSs are addressing such concerns. (b) Exhibit 1 shows these systems and their locations.

In addition to an EMR, areas in which the case-study IDSs have concentrated their IT development efforts include:

* Core clinical systems (master patient index, central data repository registration, and scheduling);

* Expanded use of the Internet and intranet development (all the 11 case-study IDSs have intranets that are used to communicate a wide variety of internal administrative and management information); and

* Decision support (benchmarking, clinical guidelines, and outcomes measurement).

Case-Study IDSs' IT Concerns

Exhibit 2 shows the annual investment levels and staff involvement in IT for the 11 case-study organizations. The case-study IDSs' primary concerns with respect to the continuing investment in IT were:

* Achieving enhanced financial returns and improved patient care;

* Accessing capital;

* Finding qualified IT staff;

* Finding reliable IT vendors;

* Achieving physician acceptance; and

* Sharing software and IT solutions with other IDSs.

Achieving enhanced financial returns and improved patient care. Ensuring that IT investments contribute to enhancing financial performance and patient care was identified by the case-study IDSs as the most important IT-related issue. The IDSs' board members, in particular, held that IT investments must produce tangible benefits that translate into economic returns or better patient care. In addition, many physicians expressed impatience with the apparent slow pace of progress in IT development, inadequate financial returns from IT initiatives, and inadequate impact of such initiatives on quality of care and physician practice patterns.

The case-study IDSs anticipate that much of the payoff from IT investments will be realized through improvements in quality of service and patient satisfaction. The EMR and related databases should facilitate studies of how to improve care processes, thereby also improving quality. With better clinical information, outcomes measurement also should improve dramatically. All of these improvements would help IDSs meet the recommendations of the IOM report.

Furthermore, the case-study IDSs believe that once patients have experience with an IDS that has an EMR, their satisfaction with the organization will rise substantially because of the ease of accessing medical information and the confidence that such information is readily available and well organized. The case-study IDSs also recognize that as the use of EMRs grows, IDSs that have not implemented an EMR will be at a substantial competitive disadvantage.

Accessing capital. For many of the case-study organizations, investment in IT consumes at least half of their budget for facilities improvement and expansion, new medical technology, physician integration, and other traditional capital needs. Aurora Health Care, Milwaukee, Wisconsin, and Carle Clinic Association, Urbana, Illinois, believe they lack adequate funding to subsidize major IT initiatives. Park Nicollet Health Services, Minneapolis, Minnesota, brought in a capital partner for IT development. Henry Ford Health System, Detroit, Michigan, similarly is interested in finding financial partners for IT investment.