Healthcare executives ranked patient accounting and patient management software fourth lowest and financial/ERP systems eighth lowest among all 24 software market segments, according to the 2008 Top 20 Best in KLAS Awards: Software & Professional Services report. Additionally, financial implementation ranked second lowest among 10 service market segments, beating out only IT outsourcing.
Analysts and consultants say that purchasing administrative and patient accounting systems has taken a back seat to upgrading clinical software for the past five to seven years. Now, as many hospital executives turn to upgrading financial systems that may be more than a decade old, they are placing greater value on integration of the financial and clinical systems, and are looking at business intelligence software to help with analytical efforts. But relatively few so far have been able to bridge those islands of clinical and financial data to allow for enterprise analyses of pay-for-performance programs or Centers for Medicare & Medicaid Services outcome measures.
What follows is a breakdown of the four main financial/administrative segments in the KLAS report, with comments from CIOs, analysts and consultants about their experiences.
Customer satisfaction has traditionally been quite low with enterprise resource planning (ERP) solutions in healthcare, and this still holds true today.
“There is a general feeling that the mainstream ERP vendors don't put as much energy into support as do the other healthcare-specific software vendors hospitals deal with,” says John Salcedo, research director for financial systems at KLAS, based in Orem, Utah. For ERP vendors, healthcare is really a different beast than the other vertical industries they deal with. For those industries, the ERP system is the core IT system. In healthcare, the clinical software is the main system, he adds.
That is one explanation why CIOs tend to feel more comfortable with McKesson (San Francisco) in this space, Salcedo says. They know the company is focused on healthcare, and they may have had a good experience with its other offerings, such as PACS systems. Its Pathways ERP software is integrated with other McKesson solutions. “CIOs tell us they appreciate that McKesson can leverage its existing relationship with hospitals,” Salcedo notes. “Vendors such as Oracle (Redwood Shores, Calif.) and SAP (Newtown Square, Pa.) don't have that luxury.”
Besides McKesson, which won a 2008 Best in KLAS award in the Financial/ERP category, and Oracle's PeopleSoft Enterprise Financial Management, a leading player in ERP is Lawson Software (St. Paul, Minn.)
Marc Holland, research director for Health Industry Insights in Framingham, Mass., describes Lawson as a dominant player in the market because it's perceived as being priced more reasonably and easier to implement. “But none of the vendors are seen as sufficiently robust in professional services,” he adds. “These systems are complex. It doesn't help if a vendor comes in and sets up the files and says lots of luck.”
The hospitals are wrestling with getting the most value out of these applications, he notes, yet they are reluctant to engage consulting firms because of the cost that adds to the implementation.
Tight project funding does contribute to the implementation woes, agrees John-David Lovelock, a research vice president in Stamford, Conn.-based Gartner's Technology and Service Provider Research group. “You get the amount of service you contract for, and hospitals are facing many budgetary challenges,” he says, “so they request the lowest possible price and take a lot of the work of integration on themselves.”
Lovelock sees hospitals continuing to lean toward vendors that focus on healthcare, such as Lawson, Meditech (Westwood, Mass.) and McKesson. “The strength of SAP and Oracle/PeopleSoft in other industries just hasn't translated to healthcare yet,” he adds.
Thomas Pacek, the CIO of South Jersey Healthcare in Bridgeton, N.J., recently participated in an ERP product selection committee and is now heading up a Lawson implementation for the two-hospital system.
The health system had been using an antiquated payroll and accounting system that was no longer supported, and Lawson for materials management. “We looked at Lawson, McKesson, and PeopleSoft. We ruled out SAP right away because of cost,” Pacek says. “Our committee felt McKesson and Lawson both had good products, and we began negotiations with both. However, the materials management department's familiarity with Lawson won the committee over. Plus the business intelligence suite was fully integrated across the platform.”
Pacek says his staff had heard “horror stories” from other hospitals in its region about organizations trying to do Lawson implementations on their own, so part of the contract included Lawson staffers working on the implementation directly. Nevertheless, the transition has been difficult.
So far, the users are satisfied with the applications. South Jersey is still in the process of adding self-service requisitioning modules and self-service and e-recruitment tools in human resources. “It's too early to definitively say we are getting efficiencies, but we have high hopes,” Pacek says. “We see a lot of potential benefits, but it's early. We are still crawling.”
Although among larger healthcare systems the market is largely saturated, some smaller and mid-sized hospitals don't have enterprise solutions. They might have Lawson general ledger, McKesson for materials management, and Oracle for human resources. “In the current economy, those CIOs and CFOs may want to re-evaluate and decide they have too many maintenance agreements and unify with one vendor,” Salcedo says.
As noted above, implementation challenges have created a market for third-party consulting firms such as Ciber Inc. (Greenwood Village, Colo.) and ACS Healthcare Solutions (Dallas) to help with ERP implementations. ACS won a 2008 Best in KLAS award in the Financial ERP Implementation category.
But KLAS is starting to see more healthcare providers capable of handling the upgrades themselves, Salcedo says, “so that consulting market may be shrinking a little.”
Patient accounting and management
Analysts and consultants agree that patient accounting systems have recently been neglected in favor of EMR implementations.
“Many hospitals have been focused on clinicals over the past few years and are coming out of that to take a look at accounting systems that they may have left off with 10 years ago,” says Paul Pitcher, KLAS research director.
As hospital executives turn back to financial systems, the impact of the clinical system on the choice of patient accounting system is huge. In a 2008 KLAS survey, 55 percent of respondents stated that their core clinical information system vendor has a strong impact on their accounting solution decision. As the report points out, hospitals “like the idea of only having one vendor if that vendor provides both solutions.”
That may play into the hands of vendors such as Epic Systems (Verona, Wis.), whose Epic Resolute Hospital Billing won a 2008 Best in KLAS award in the Patient Accounting & Patient Management category. One hundred percent of those surveyed said they would buy it again.
“The success of Epic has really changed the dynamics in the marketplace because people are recognizing that you can have it all in one package,” says Daniel Lodes, director of health and education consulting for the Huron Consulting Group in Chicago.
Hospitals are placing value on true integration of the accounting and clinical systems, with a shared database. Vendors such as Epic, Siemens (Malvern, Pa.) and Cerner (Kansas City, Mo.) are all trying to meet those needs, with varying degrees of success, adds Lodes, who says he has helped several hospitals with patient accounting system vendor selection and implementation. “Siemens and Cerner are both making strides but they don't yet have the same level of market acceptance in the large organizations that Epic has been able to achieve,” he adds.
In the mid-sized hospital market, Meditech has had tremendous success. “It hasn't been flashy, but it meets the needs of customers,” Lodes says. “If I were the CIO of a midsize community hospital, I would see Meditech as tried and true and the safe bet.”
Or as Health Industry Insights' Holland put it: “Epic has become the Meditech for the larger, more sophisticated hospitals with bigger budgets.”
But what features are hospital financial executives looking for in next-generation accounting systems?
There's been talk for more than 10 years of moving more of the revenue cycle management to the front end, but many hospitals are still struggling with the basic blocking and tackling, Lodes notes. “While much of this is process driven, they want features that support pre-registration and insurance verification upfront, and integration with scheduling systems.”
Because hospitals are operating on razor-thin margins, the thought of changing accounting systems can keep CIOs and CFOs up at night. “A small increase in days in accounts receivable or delays in getting bills out the door can have profound effects,” Lodes says.
Perhaps surprisingly, the software segment that users expressed the most satisfaction with is enterprise scheduling software. This niche has grown steadily in adoption over the past few years, yet its use is not widespread, says KLAS' Pitcher.
The benefits include being able to acquire all necessary information at the first point of contact with the patient, such as compliance with Medicare and other insurers. Another benefit, Pitcher says, is that by centralizing and automating scheduling, hospitals can reduce staff required to manage the process. Often, automated scheduling systems begin in a single department such as radiology and then gradually spread to become enterprise-wide.
CIOs have to decide between scheduling modules of large integrated health software systems from vendors such as Epic, QuadraMed (Reston, Va.) or Cerner and smaller niche vendors focused on scheduling applications, such as Los Gatos, Calif.-based SCI Solutions' Schedule Maximizer or Chesterfield, Mo.-based Unibased Systems Architecture Inc.'s Resource Management System (USA RMS), which won a 2008 Best in KLAS award in the Enterprise Scheduling category. The niche vendors' offerings may require more integration work, but also may offer more features.
“CIOs have to do their due diligence and understand their own needs, as to whether the vendor offering is sufficient or whether they want increased functionality,” Pitcher says.
Ten-hospital BayCare Health System has installed USA RMS at its 147-bed South Florida Baptist Hospital in Plant City, Fla., and is working on installations at its 527-bed St. Joseph's Hospital and 164-bed St. Joseph's Children's Hospital of Tampa.
“It was chosen because it's extremely user friendly,” says James Schwamb, vice president of patient financial services for BayCare. “People who had experience with other scheduling systems and then saw what USA does have been impressed. Because this is their main focus, they make sure it's feature-rich.”
From an organizational standpoint, enterprise scheduling has huge potential, Schwamb says. Hospitals have people in registration spending their whole day trying to get authorizations and do pre-registrations over the phone.
Going into five or six different departmental scheduling systems is inefficient, he says. Also, it's very difficult to compile data from departmental systems to look at trends.
Schwamb says that when he introduced enterprise scheduling at another hospital before joining BayCare, outpatient revenue jumped. “When departments don't control the scheduling every day, they can't block out times for birthday parties or because a certain physician likes to come in late,” he says. “That all goes away.”
Decision support and business
There's nothing new about healthcare financial analysts using decision support tools to analyze costs and do financial modeling. What is new is the idea of mapping clinical data to the financial side to get true performance management, and respond to CMS outcome and P4P initiatives.
“Hospitals want to figure out what level of patient service they are providing and at what cost,” KLAS' Salcedo says. “They are used to analyzing budgets and profitability, but most have not been able to marry data from clinical and financial systems. They are now starting to pull that data out of EMRs.”
CIOs want to offer flexible business analysis tools that make it easy to create reports which get at what's most important to them. Some of the products specific to healthcare may not be built to allow for that level of customization, Salcedo adds.
The decision support tools in use today are largely offshoots of the transaction processing systems hospitals already have, such as McKesson Horizon Performance Manager or Atlanta-based Eclipsys' Sunrise EPSi Decision Support, which won a 2008 Best in KLAS award in the Decision Support - Business category.
KLAS researchers stress that although hospital executives understand the need to implement enterprise-wide solutions, the market is still immature and there isn't really a set of best practices developed yet to guide them. A recent spate of acquisitions in the marketplace also has slowed acceptance, as purchasers wait for the market to settle.
The few healthcare organizations that are starting to build enterprise data warehouses are likely to turn to BI vendors such as Oracle, SAP/BusinessObjects, IBM/Cognos (Armonk, N.Y.) and SAS (Cary, N.C.), says Health Industry Insights' Holland. Salcedo notes that those products are very expensive to customize and usually require bringing in third-party help.
Salcedo recalls a recent conference of hospital CIOs and chief operating officers. They were asked how many wanted to use a business intelligence tool to look at clinical and financial data together. “Almost everybody raised their hands,” he recalls. But then they were asked how many actually know how to do it and have a strategy to get there. “Very few hands went up,” he adds. “I appreciated their honesty.”