HealthSouth, Oracle hoping deal brings spark to `digital' hospital - Brief Article

Health Industry Today, May, 2001 by John Dalton

Plans for the construction of the health care industry's first "digital" hospital, a facility designed to take advantage of the efficiency potential of e-commerce and the electronic transfer of patient information, were announced by HealthSouth and Oracle.

The companies said the strategic partnership "will raise hospital care to an unprecedented level." HealthSouth said the hospital is scheduled to open in 2003 and will be the first of 10 such facilities built around the country.

The hospitals, said the companies, will bring together the latest generation of electronically capable medical devices and med-surg product contracting, supply chain delivery and Internet communication tools.

HealthSouth president chairman and CEO Richard Scrushy said nine vendors have already been signed to the project. Another half dozen or so are expected to come on board shortly.

Reaction to the announcement was enthusiastic, if cautious. A number of vendors, including a couple selected by the companies to bring the hospital up to electronic speed, have adopted a wait-and-see attitude.

"This isn't the first time something like this has been proposed, but maybe now's the time for it," said a representative of one of the first suppliers signed to product and service agreements. "The technology is finally there. If they pull it off, it could be big for (device and med-surg product vendors) and for the provider side as a whole."

Nearly everyone agreed the premise remains filled with promise. At least in theory, said conventional wisdom, the project is sound. And at best it could be revolutionary.

As usual, the bottom line probably lies some where between unguarded optimism and it's-doomed-to-failure pessimism.

"My initial sense upon hearing about the proposal was that you could draw a comparison to the early use of the Internet," said Jack Nally, vice president of Corporate Consultants Inc., Erie, Pa. "When it was first introduced people didn't understand either its true capabilities or its boundaries.

"This is probably similar. Initially there is more sizzle associated with it, but the true wealth remains to be mined."

Truth, or consequences

HealthSouth, Birmingham, Ala., says it is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative health care services with more than 2,000 locations in all 50 states, the United Kingdom, Australia, Puerto Rico, Saudi Arabia and Canada.

Oracle Corp., Redwood Shores, Calif., is the giant provider of databases and e-business and Internet-enabling software.

HealthSouth's Scrushy and Oracle chairman and chief executive Larry Ellison announced jointly that their companies were planning the 219-bed hospital that would combine the companies' areas of expertise.

The pair asserted that the "groundbreaking" hospital will use the latest in communication and device technology to cut costs, reduce and streamline paperwork and reduce medical errors.

"This will be the hospital model for the world," said Scrushy. "By creating the first automated hospital, we are taking an idea that many have talked about and making it a reality.

"We will demonstrate how technology can lower health care costs, greatly reduce human errors and provide patients with the best medical care available."

HealthSouth expects to spend $100 million to $125 million over 24 to 32 months to construct and equip the hospital.

Pending construction and regulatory approvals, building of the 500,000-sq.-ft. facility is scheduled to begin in the first quarter of 2002. Construction should be completed by mid- to late-2003.

Oracle's e-business software will be used as the basis for the hospital's communications and management systems, and the company will work with HealthSouth to develop new health care applications.

"The Oracle E-Business Suite provides a foundation for fundamental improvement in the health care industry's administrative and business processes," declared Ellison.

John Wookey, an Oracle senior vice president in charge of developing health care business, said the company has worked for the past year to adapt its electronic-business systems for health care uses.

The new hospital platform will support beds with Internet-linked computer screens, electronic medical record systems, digital instead of X-ray film imaging, and wireless communication networks that will allow physicians to get real-time information about patients--such as vital signs--from centers off-site.

Scrushy also said that Internet links will allow patients to be admitted electronically from doctors' offices. Supply chain and materials management functions will be handled electronically within a system intended to reduce the cost inefficiencies said to run rampant within health care.

Because it will be built from scratch, HealthSouth says it will bypass significant system changeover costs when building the hospital.

It will also avoid reinventing the wheel.

"The beauty part is that all these systems currently exist," said Scrushy.

That means the project won't significantly increase HealthSouth's projected capital expenditures, welcome news to a company that seems to be making a revenue comeback following a year of less than sterling financial returns.