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One-on-One with Daughters of Charity VP and CIO Dick Hutsell

February 26, 2009
by root
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IT outsourcing agreements are more about flexibility and delivery of service, and less about cost, says Hutsell.

Dick Hutsell is vice president and CIO at Daughters of Charity Health System, a regional healthcare system of six hospitals and medical centers spanning the California coast from the Bay Area to Los Angeles. The 1,662-bed system has been serving Northern California for 152 years and is based in Los Altos Hills, Calif. Recently, HCI Associate Editor Kate Huvane Gamble spoke with Hutsell about the organization’s decision to continue outsourcing several of its IT functions.

KG: How long have you been in your current position?

DH: I have been CIO at Daughters since they were re-formed in January of 2002. Just to give you a brief history on the organization, Daughters of Charity Health System existed as part of a national health system from 1985 to 1995. And it 1995, we merged with Catholic Healthcare West. Then in 2002, we left Catholic Healthcare West and formed the Daughters of Charity Health System.

I’ve been associated with the Daughters of Charity really since 1986, in various capacities.

KG: I wanted to talk about your outsourcing agreement with Perot Systems. This is a topic that our readers are very interested in right now. I saw that you recently signed at extension — when did you first starting using them?

DH: It dates back from the summer of 2002 when we signed the initial agreement. When we left Catholic Healthcare West, we actually bought ourselves out and reestablished the health system. We went through an evaluation of in-house IT versus outsourcing, looked at who were, at that time, the leading outsource vendors and selected Perot. We signed an agreement with them in June or July of 2002, and we just extended that agreement last month (in December 2008). We extended the term of the agreement another seven years from June/July of this year for another seven years.

KG: So you decided that going with an outside party to handle IT was the best way option at that time?

DH: When we separated, we basically did not have rights to IT staff. So we had to find some way to deliver IT and outsourcing was the easiest way for a brand new organization to kind of bring in an IT staff that had some knowledge of our particular environments and could do it quickly.

KG: When you made the original agreement, was the deal that Perot would handle all IT functions?

DH: At that time, yes, it was all of the IT functions. It was project management, application support, infrastructure and operations — basically everything.

KG: How has the arrangement changed or evolved over the years?

DH: That has changed a little bit. I have, on my staff reporting to me, the key strategy people and kind of an in-house contracts function. And then, where it’s made sense from an availability standpoint, I have certain other application systems that are outside of Perot Systems. For instance, PACS is outside of it, the HR/payroll environment is outside of Perot, and that’s basically as much of the resources that we apply to those projects that we did not want to move from being Daughters Hospital employees to Perot employees. So we established an IT function that allowed that to happen.

We have always kept telecommunications strategy as something that we deliver outside of Perot and the other things that are outside of Perot are medical device strategy and implementation — so MRIs, CAT scans, etc. We do that under IT and that’s independent of Perot.

|KG: Is this something that was established in the agreement?

DH: Yes, it’s built into the agreement. We have the option to either do it internally or outsource it to Perot. We also have the ability to — on a new project — use any staff, whether it’s in-house, Perot, or any other consulting firm.

KG: I would imagine that you’re constantly evaluating the situation to make sure that it meets your needs at a given time.

DH: Right, we look for what makes the most sense, from a cost standpoint, from a service standpoint, and really what we call an employee’s associates standpoint. So if they’re more comfortable working within or as an employee of the Daughter’s organization, then we’ll do that.

But we never entered into an outsourcing agreement with the expectation to reduce costs. It was the availability of qualified resources and it was the ability of the outsource firm to offer the career expectations in the IT world that a hospital IT organization can’t. We can’t really offer the career growth and the training that a more professional firm can offer. That has always been one of the drivers for outsourcing and it continues to be.

KG: As CIO, how closely engaged are you with Perot’s staff? Are there designated meeting times or does it depend on what types of projects are in the works?