Merged clinical, financial e-systems in the works

By: Joseph Conn / HITS staff writer

Only about 14% of physician practices have adopted electronic health-record systems, according to a 2005 survey by the Medical Group Management Association, but upward of 90% have electronic practice management systems. The advent of EHRs in physician offices has caused practice leaders to take a second look at their mostly older practice management systems and realize that they are inadequate, says Cynthia Dunn, a practice management adviser with the MGMA’s Health Care Consulting Group.

“In most practices, their (practice management system) has difficulties,” Dunn says. “Maybe they want to report out on RVUs (relative value units) and their system won’t do it. They may want to report out payer mix by their orthopedic practices or, overall, what is the payer mix, and they find they can’t with their older systems. Or loading fee schedules—sometimes their systems are old and can’t do that. That’s usually what most of my clients are seeing because they are looking at EHRs, and say, ‘Look at this opportunity with practice management.’

“When they go through their wish list of what they want (in an EHR), they realize how important it is to pull data and report out what they want,” Dunn says. “Some of them realize, we need the (new) practice management system first, or we’re going to get this whole system. More than 50% are taking this as an opportunity to select a new practice management system to give them what they are seeking.”

Dunn says that good planning is the key determinant in a technology project, and the lack of planning is a frequent cause of failure. To help physician groups with the planning process, the MGMA offers a needs-assessment tool on its Web site.

“Looking at what you want, why do you want technology? That is key,” Dunn says. “What is the level of technology knowledge in your practice as you move forward? You have to really prepare your practice and know what you have and you don’t have and what knowledge your folks have, or if a piece of it doesn’t work for one person, and they pass the word and then you have four or five people not using the system because one person says, ‘It doesn’t work right.’ ”

At 18-hospital Intermountain Healthcare in Salt Lake City, physician informaticist Brent James has been conducting pioneering research for more than 20 years using data from both clinical and financial computerized healthcare record systems. Since 1990, James has served the integrated delivery network as executive director of its Institute for Health Care Delivery Research, where more than 1,200 healthcare informaticists from the U.S. and 14 foreign countries have been trained.

Today, Intermountain and technology partner GE Healthcare are embarked on a high-stakes development effort to redesign Intermountain’s clinical and financial computing systems. The aim, James says, is to cull the best ideas used in cutting-edge computerized-process and production-management systems developed by nonhealthcare companies such as Alcoa and Wal-Mart. Alcoa, in particular, became a model after Paul O’Neill, the former U.S. Treasury Secretary and Alcoa chief executive officer and a disciple of quality guru W. Edwards Deming, toured Intermountain and criticized its overall system, James says. O’Neill “had followed Deming and had systems (at Alcoa) that supported frontline management,” James says, giving Alcoa leaders “immediate data for managing your system.”

The Intermountain-GE project aims to produce “the next generation EMR,” James says. “It merges financial and clinical systems in one system. We’ll have full ownership of the system. I don’t know what the final cost is, but I estimate it’s $200 million to $300 million.”

James says what has been pioneered in Salt Lake City will one day be commonplace at healthcare facilities across the country.

“When I first came to Intermountain from Harvard way back in 1986, I did so because of a perception that Intermountain had the best electronic medical record in the world,” James says in an e-mail. “I thought that that would give me a real leg up in terms of access to good clinical data, leading to solid health services research.

“When I got here, I discovered that Steve Busboom (Intermountain’s former vice president of finance) and Greg Poulsen (now senior vice president) had developed and deployed one of the world’s first activity-based cost accounting systems,” James says. “More important, they had standardized it across all of Intermountain’s facilities. It turned out to be an absolutely foundational tool to understand healthcare delivery—of equal importance, for health system design and healthcare delivery, to the EMR.”

The reason, James says, was that healthcare delivery is all about processes. He notes that Deming theorized that all processes consistently produce three classes of outcomes in parallel. There is the physical outcome—in healthcare that would be the medical outcome. There also are the service outcome (in healthcare it would be the level of patient satisfaction); and the cost outcome—the bill.

“The three classes interact heavily,” James says. “More important, what a health administrator actually controls and can change is the process. Hence, any change applied to affect one outcome automatically affects the other two—every time, without fail. One of Deming’s most important scientific contributions was pointing out classes of activities where you could reduce the cost of operations by improving your physical outcomes.”

“We used Steve and Greg’s cost accounting system to scientifically demonstrate that Deming’s process theory, regarding cost vs. quality, applied in clinical medicine,” James says. “And we’ve been leveraging it ever since. The old saying ‘no money, no mission’ is fundamentally true. It’s just that the opposite—’no mission, no money’—is equally true at the same time. Having a means to accurately measure costs, and directly link those costs to clinical decisions with a high degree of granularity, was absolutely essential. In a very real sense, this means that clinical “quality” includes cost outcomes just as much as it includes medical outcomes.

“You’ll be hearing a lot more about this in the future, I think,” James says. “Some very prominent national healthcare leaders are talking about restructuring pay-for-performance around ‘value’—an equation with medical and service outcomes in the numerator and cost outcomes in the denominator.”

James says the huge investment in integrated clinical and financial systems isn’t a one-way cash flow.

“One of the things we discovered, when you take a standard condition, like a total hip replacement, and you measure the units of care that makes up a standard case, we found huge variation,” James says. “We found we were measuring individual units of care out of that transaction file, but the smallest range of (additive) variation was 160%.” In effect, James said, one physician was using 10 different inputs while another would use 16. For another procedure, James says, the range of additive variation was 460%. “There was huge variation.”

The next step, presenting the data to physicians to effect change in behavior, requires diplomacy. James says he avoids singling anyone out.

“When I asked you, I asked you as a group,” he says. “We very carefully balanced outcome, but it turned out, in general, the guys who were more efficient were having better outcomes. It wasn’t a matter of choosing the best physicians, but at a process level, everybody had someone to learn from and something to teach.”

Through the GE partnership, the new combined IT system will “superenhance” what Intermountain is doing already, James says. “It was designed around what we learned out of those initial variation studies. We plan to have our first trial modules up in the ER in the first quarter of next year,” he says. “The second phase is six months later, on six med-surg floors scattered around different sites in Intermountain.” The system should be complete, down to supply chain inventory control driven by clinical orders, a la Wal-Mart, “I would hope, in about four to five years,” James says.

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