Enterprise-wide Business Apps Show Popularity
THE EXPLOSION OF BUSINESS SOFTWAREapplications for multi-unit healthcare facilities has been a financial boon for a handful of non-healthcare specific companies that have entered the competitive IT market over the last four years.
Skyrocketing revenue and client growth for such companies as Lawson Software, PeopleSoft, SAP America and Ross Systems has left such market leaders in the healthcare information system industry as HBO & Company, Atlanta, and SMS, Malvern, Pa., to play catch-up in business application development, says Ron Johnson, president of R.L. Johnson & Associates in Tracy, Calif.
"The traditional systems are 20 years old and are not designed to meet the needs of integrated delivery systems," Johnson says. "The newer companies to the industry have systems that meet the needs of multiple sites, can distribute payroll and benefits to several settings and can provide reports far exceeding the old two-tiered systems."
One of the newer IT buzzwords, enterprise-wide application programs are designed to capture payroll, track employee benefits and manage inventory across multiple business units. For example, nurses may work at several facilities under common ownership but under different cost centers. Enterprise-wide applications allow payroll and benefits to accumulate in one central data processing storage bank.
PeopleSoft’s enterprise-wide business application has allowed the University of Wisconsin Hospital and Clinics in Madison to improve data retrieval and analysis, says Dennis Dassenko, vice president and CIO. "It was a plus that they (PeopleSoft) weren’t a healthcare vendor," he says. "We thought vendors successful in other industries could bring a fresh perspective to managing costs for us. We are pleased with the tool and think it will really help the hospital manage the business side, purchasing, hiring and expense management."
PeopleSoft has experienced remarkable growth the past several years, says John Brooke, director of healthcare solutions for the Pleasanton, Calif.-based IT company. With more than 150 healthcare clients, PeopleSoft’s healthcare revenue in 1996 was $63.4 million, a 667 percent increase from 1994 revenue of $9.5 million, Brooke says.
Like most of the newer IT players, Lawson Software, Minneapolis, has formed a dedicated healthcare division to market and develop business application products, says Tony Marzulli, a Lawson spokesman. Since 1994, healthcare revenue has grown from approximately $3 million to more than $50 million in 1997. Marzulli predicts that by the year 2000, the company will derive about 40 percent of its total revenue from healthcare. Currently, Lawson has about 180 healthcare clients: Forty percent are hospitals, 30 percent medical groups, 16 percent IDS and 6 percent managed care organizations.
Ross Systems healthcare business doubled from 1996 to 1997, increasing to $3.6 million sales from $1.8 million, says Anne Wyatt Browne, vice president of marketing. The Atlanta-based software vendor also provides business application software to manufacturers and public organizations, she says, but the healthcare business has been growing at a faster rate than other sectors, amounting to 12 percent of total revenue of $31 million in 1997 compared with 8 percent of $24 million total revenue in 1996.
At SAP America, Larry Sincular, product manager in Atlanta, says the company has been targeting healthcare the past two years. Even though healthcare software sales have been brisk, the German company grosses $3 billion in worldwide revenue and healthcare amounts to only 1 percent of SAP’s total business. "IDS are going to be focusing more on business applications," Sincular says. "We expect to triple our healthcare revenue over the next year."
Paying Claims in Real Time
REALMED CORP. CONTENDS THAT SMART CARDS,which contain admission and health plan coverage and eligibility data, can save providers and patients time while reducing annual claims processing costs by 30 percent.
The Indianapolis-based claims processing company has signed partnership agreements with MCI Telecommunications, Digital Equipment Corp., Gemplus and Microsoft to create an electronic network for claims verification, processing and payment that links providers to insurance companies and HMOs. "We will completely eliminate paper to process health claims," says RealMed spokesman James Woelburn. "When you go to the doctor’s office, you carry a smart card with health plan information encoded on it."
Under the agreement, MCI will provide the secure private data network, Digital will provide personal computers and maintenance, Gemplus will supply the smart cards and smart card readers and Microsoft will install the office productivity software on the computers. RealMed is in contract negotiations with several HMOs to pilot the project, Woelburn says.
Unlike electronic data interchange companies, the RealMed system operates in real time. Patients can be informed before a procedure is performed how much it will cost. Physicians benefit by being paid immediately through a fund transfer instead of waiting up to 60 days through paper claims or electronic data interchange processing.
The result is reduced claims processing costs, says Woelburn. An electronic data interchange claims processing transaction that costs providers between $5 and $20 will cost $1 with the RealMed system. Providers will lease the computer equipment for about $250 a month. However, each processed claim accrues a $1 credit back to the provider, thus reducing or eliminating the monthly fee, he says.
But at least one critic says healthcare claims processing using Web technology and smart cards is still two to three years away from becoming practical for insurers and providers. "Insurers don’t want to pay claims in five minutes," says James Lout, president and chief executive officer of Precis Smart Card Systems, Oklahoma City. A real time claims processing system will disrupt administrative processes as they are now, he says.
Look Out EIS Here Comes DSS
MANAGING COSTS IS A PREMIER ISSUE AMONG healthcare executives. Over the years the software tools such as executive information systems (EIS) and decision support systems (DSS) have offered decision-makers a host of creative ways to crunch data. The two are similar in providing views to financial analysis, but in many situations DSS are replacing EIS.
Don Macksood, director of financial systems information at DeKalb Medical Center outside Atlanta, sees a DSS as having a greater flexibility than an EIS with greater data-sharing ability. The modeling features, moreover, allow medical centers to see how a managed care contract will affect their operations and support detailed reports on product line costs.
Marty Grey, vice president of JJO Enterprises, a DSS cost accounting and case analysis vendor, says DSS now provide many of the same functions as EIS. "DSS and EIS are melding together," he says. "They’re both Windows-based tools, but I believe DSS is easier to use."
EIS provides tabular and graphical real time representations of revenues, the patient registry, medical discharge data, average charges per procedure, costs receivable, daily cash flow and the profitability of various product lines. DSS, on the other hand, models procedure costs in operating rooms, patient treatment at clinics and department budgeting.
Yet the two systems have much in common by providing data on various computer platforms in a graphics package allowing users to see how money gets spent in a healthcare environment. "It’s a fine line in terms of what is EIS and what is DSS," says Jim Stewart, vice president of marketing for HBOC, a vendor of both systems.
EIS’ strength is the "electronic dashboard" feature offering real time data with a historical perspective, assembled in one work space, Stewart says. It helps to keep the executive team on the same page because they’re all viewing the same data. An EIS system can "red flag" patients who have exceeded their length of stay and give a glimpse of the operations’ cash flow.
Meanwhile, DSS does modeling and "works on aggregate sets of information but in a less real time mode," he says. DSS works especially well in analyzing "care pathways" and modeling future revenue streams. Depending on which issues they identify as critical, Stewart says, HBOC’s larger clients will purchase both software systems to manage costs at a price tag reaching $100,000 to $500,000 for a DSS and $100,000 to $200,000 for an EIS program layered over the DSS components.
DSS’ other asset is the ability to survey data repositories and, unlike EIS, create new information culled from what an institution has collected. This capacity, Grey argues, works especially well in budgeting, cost accounting, cost of procedures and other relevant data that can be used to make changes leading to increased profits. And DSS software, once used only by financial analysts, now gets road-tested by executives, department heads and managers.
Overall, Grey believes DSS have the advantage, by creating the kind of data that models cost patterns and gives healthcare managers an opportunity to see what the future looks like from their desktop computer.