There's no doubt it's an exciting time to be working in health information technology. In fact, the effort to create a nationwide network of interoperable electronic health records by 2014 has been compared to NASA's manned spaceflight mission to the moon in the 1960s.
As hospitals prepare to respond to proposed funding and regulatory changes, the focus is on demonstrating the meaningful use of clinical software. But that doesn't mean healthcare executives can neglect decisions regarding financial and administrative systems. The purchase of patient accounting systems has taken a back seat to upgrading clinical software for the past several years, but the push for system integration and looming regulatory changes may put additional pressure on hospitals to upgrade their financial systems. And with several large vendors rolling out new financial platforms, the degree to which they are embraced by early adopters will be key to long-term success.
With the pace of change in the industry accelerating, the “KLAS 2009 Mid-Term Performance Review: Software & Professional Services” report provides a fascinating snapshot of how providers see the vendor world. Specifically, the report lays out each vendor's product line and the performance score of each product and service in its offering. The overall score fluctuations reflect more than a particular product's feature set or a company's trajectory; they also signal the evolution in CIOs' and CFOs' mentality about how patient accounting, ERP (enterprise resource planning) and business intelligence tools interact with clinical information systems.
With customers increasingly interested in one-stop shopping, software providers are being pressed to demonstrate tighter integration between EMR and patient accounting systems. “It will be interesting to see how all the focus on clinical systems and the definition of meaningful use of health IT will impact the decisions on patient accounting systems,” says Mike Smith, general manager, financial and services research, KLAS (Orem, Utah).
What follows is a look at the Mid-Term Performance Review with an eye on trends in key financial system segments.
By average overall score, patient accounting and patient management ranked 20th out of 24 software market segments in the mid-term review. Clearly, customers are dissatisfied with at least some aspects of their implementation. “The systems in place are aging,” says Bruce Hallowell, partner and director for revenue cycle solutions at Falls Church, Va. consulting firm, CSC. “Hospitals are solving problems with bolt-ons, which is turning out to be a failed strategy.”
In terms of outliers, Epic's Resolute Hospital Billing application (see page 4) had the greatest positive distance between its score (86.69) and the product segment average (74.19). The largest upside change from its year-end score came from Eclipsys' Sunrise Patient Financials (see Figure 1), which rose 6 percent, to 75.55.
Some of the lower scores in the patient accounting segment reflect legacy products using older technology, says Paul Pitcher, KLAS' director of financial systems. Providers would like greater levels of sophistication in how the systems handle transactions, but the pace of change is slow, Pitcher says. “Once they have invested millions in a system, they don't make a change lightly,” he stresses.
CSC's Hallowell agrees: “You are dealing with people who are risk-adverse anyway,” so when they do make a switch, it is sometimes because they are being dragged along by changes in clinical systems. “When you look at the KLAS report, the No. 1 (patient accounting platform) in terms of quality is Epic, but McKesson and Siemens still own the marketplace,” he says.
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And although many of the other vendors are offering similar solutions, Epic's high scores reflect the fact that “people say that Epic is more nimble at turning around process improvements,” Pitcher says.
Ones to watch
Some of the vendors that have struggled with new offerings, such as Siemens and Cerner, are showing signs of a turnaround. “Some customers say they like the direction those products are going, and that they are starting to deliver,” Pitcher adds.
Susan Bresee, director of business development at Ingenix Consulting's healthcare solutions delivery group in Eden Prairie, Minn., says she believes GE (see page 4) is a company to watch in this space.
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Ingenix does quite a bit of consulting work with GE customers, and Bresee says she likes the company's long-term approach to the market. It doesn't roll out half-baked ideas or stress the importance of demos, she says. “The last few years haven't been the best for them. For people who were IDX customers, it (GE completed the acquisition of IDX in Jan. 2006) was a culture shock, but I think that they will find the acquisition benefits them. GE understands interoperability, and has remained committed to innovating around its financial systems.”
What features are hospital financial executives looking for in next-generation revenue management platforms? They want software to support the management of registration accuracy to reduce bill submission rejections, according to Jackie Francis, president, of Naples, Fla.-based consultancy Select Health Management Inc. “They want technology to estimate balances due from patients at the point of scheduling, and technology to assist patients with their co-payments, as well as to identify ‘lost’ charges,” she adds. “Valuable revenue is lost in a typical facility due to lack of concentration on the charge capture reconciliation between the key clinical departments and the patient accounting systems.”
Hospitals also are interested in the trend of consumerism, says Judy Hanover, research manager for IDC Health Industry Insights' healthcare provider IT strategies practice in Framingham, Mass. “They want more visibility into bills,” she says. “Consumers want to be able to pay online through a portal. Older systems don't allow you to accomplish that.”
Francis adds that recovery audit contractor (RAC) regulations will force hospitals to look for solutions to augment their existing systems. Many vendors are starting to offer tools to assist with RAC and Medicare audits. The implementation of ICD-10 codes also will require modifications to hospital systems and third-party payer systems, she says.
ERP and implementation
Providers continue to rank financial/ERP (enterprise resource planning) systems and implementations low. Financial/ERP ranked 18th out of 24 market segments in the mid-term review of software products, and ERP implementation ranked dead last out of 10 service market segments.
Lawson Software has the biggest share of the hospital ERP market, followed by Oracle/Peoplesoft. SAP hasn't made many inroads in the U.S. healthcare market, KLAS' Smith says. Analysts agree that Lawson and Oracle are dominant and the market is fairly settled.
Seventy percent of ERP consulting work involves upgrades, not new implementations, according to a KLAS report entitled, “Staying on Target with ERP Implementations: A Report on Healthcare Consulting Firms.”
“We see people switching when there are mergers and acquisitions, but not usually otherwise,” IDC's Hanover says.
In terms of product development, KLAS analysts say there's been a focus on improvements in applications on the human resources side, such as in human capital management.
“We also see improvements in quality in terms of EDI (electronic data interchange) transactions,” KLAS' Pitcher says, “but the core vendors are lagging and there is not a lot of market shift. Someone could come along with a new product that could take market share, but we don't see that on the horizon.”
One product that has shown score improvements is McKesson's (see Figure 2) Pathways Financial/Materials/HR Manager (76.47), up 3 percent from six months ago. Lawson continues to hold market share with its Healthcare Solutions Suite, while its score lingers below the 75.46 average at 71.40.
KLAS' Smith notes that approximately 80 percent of recent ERP implementation consulting work has involved Lawson (see Figure 3) systems. “Many customers were moving to Release 9, so there was a lot of action switching to a new platform,” he says.
Interestingly, Lawson itself scored lowest among implementation consultants at 61.9 percent, down 2 percent from six months ago. ACS scored 81.5, down 3 percent from six months ago. CSC showed the widest distance between its score (89.1) and the segment average (72.57). “We notice that large IT vendors like CSC that have focused healthcare units tend to score better,” Smith says.
Most healthcare executives continue to be frustrated with the effort it takes to sift through mountains of transactional data to get meaningful business intelligence.
Several years ago many enterprise data warehouse projects failed because they didn't have the right organizational structure or had difficulty normalizing data. So with providers thinking that enterprise data warehouses were unachievable, vendors focused on departmental systems or analytical tools geared for their specific applications, with different reporting tools for different audiences, Bresee says. Now with pay for performance, comparative effectiveness, more automated clinical systems, and regulatory changes, hospital executives are starting to see integrated financial and clinical data as a matter of survival. That's simply because hospitals will not get paid by Medicare unless they do it. She says the pendulum has swung back the other way, and the vendors have some retooling to do to match those needs. As such, horizontal players like Microsoft, Oracle and Hitachi have experience and offerings that Bresee says may prove valuable to healthcare providers.
As former CIO at Saint Clare's Health System (Denville, N.J.), Rich Temple had several success stories about his organization's adoption of Cerner's PowerInsight BI tool as the hospital system installed the Cerner Millennium clinical information system. He says he pushed to make business intelligence central to St. Clare's operations.
When Temple left Saint Clare to join long-term-care provider AristaCare Health Services (South Plainfield, N.J.) in 2008, he surveyed the BI vendor landscape. After considering offerings from Oracle and SAP, he recently chose a BI tool called Metrics3D from ABS Systems Consultants to marry clinical and financial data. “When you look at products from vendors like Oracle or SAP, they are powerful tools, but when you bring them into healthcare it's a blank slate,” he says. “We felt it was better to stay with a vendor focused on the healthcare niche.”
So it appears there isn't a clear consensus at the moment. Some CIOs turn to large, horizontal BI players such as Oracle; others are using niche products targeting the healthcare market, and still others are making due with tools provided by their core system vendor. Two of those products earning strong scores in business intelligence/reporting tools are McKesson Business Insight (83.74) and Eclipsys Sunrise EPSi Decision Support (88.61). IDC's Hanover says that some hospitals that don't even use Eclipsys as their core system are using its BI tools.
Enterprise scheduling market
CIOs and CFOs continue to push for the efficiencies that enterprise scheduling systems can bring. For one, centralizing and automating scheduling can reduce the number of staff required to manage the process. Some hospitals continue to seek out smaller niche vendors such as SCI Solutions' Schedule Maximizer (89.98) and Unibased Systems Architicture's RMS (92.36) because they want deeper levels of functionality.
Others find the scheduling module offered by core vendors meets their needs. Many of those saw score improvements: Cerner's Scheduling Management rose 3 percent to 80.15; while Siemens Soarian Scheduling rose 3 percent to 80.23.
With several new financial systems such as Siemens Soarian Financials and McKesson's Horizon Enterprise Revenue Management still in the early stages of deployment and others due for updates, Pitcher says, it will be important for healthcare execs to keep an eye on how customers make the transition and evaluate these new platforms.
The vendors that come out on top may be the ones that can convince customers they have done the best job of integrating clinical and financial offerings. “There is definitely a strong trend toward single-vendor strategies,” says IDC's Hanover. “We rarely see hospitals with different vendors for financials and clinical systems, because the cost of doing integration work is usually prohibitive.”