When it comes to information systems, too often the blind lead the blind

New survey highlights need to benchmark outside industry

A new survey of health care executives finds that most do not have the information technology tools they need to gather accurate data about costs in their facilities, and worse, they may be looking in the wrong places for answers.

A full 60% of the 200 senior health care executives polled said they could not determine if they were locked into unprofitable managed care contracts, and only about a third said they were confident about the quality of the cost data they do gather.

Sponsored by Lawson Software in Minneapolis and Arthur Andersen in New York City, the February study found that 70% of the organizations represented by the respondents benchmark information technology (IT) across the health care industry, but only 8% look for IT innovations outside the health care field.

And that, say several top information managers and benchmarking experts, is the crux of their problems. "It’s very dangerous to only benchmark within your industry," says C.J. Kirk, a senior health care account manager with the International Benchmarking Clearinghouse (IBC) in Houston, "and in an insular industry such as health care, that is even more dangerous."

You will not have a competitive information system if you are benchmarking strictly within the confines of the health care field, agrees Chuck Podesta, interim chief information officer for Baystate Health System in Springfield, MA. Baystate was selected as 1997’s Most Computer Advanced Health Care Organization in March by Healthcare Informatics, a leading magazine covering health care information technology.

Benefiting from technology transfers

Baystate is an integrated delivery system consisting of three medical centers, nine other facilities that accommodate 400,000 outpatient visits annually, 48 physician offices, a visiting nurse association, a home health agency, and a health maintenance organization (HMO).

Podestra has several innovative systems at Baystate that are not found elsewhere in the health care field, most notably Xerox work flow technology in his system’s access call center. He found that technology while on a site visit in Dayton, OH, at Lexis/Nexis. "There’s no way you’ll find a regulating or scheduling system to support this call center inside the industry," he says.

A big reason that such innovations are slow to make their way into health care IT is a lack of talent in key management information system positions, says Harlan Goodrich, vice president and chief information officer (CIO) at MidMichigan Regional Health System in Midland. MidMichigan is a regional health system of three medical centers, two nursing homes, an urgent care center, and an ambulatory care center.

"There’s a real scarcity of talent in the new areas," Goodrich says, "in such things as wide area networks [WANs], local area networks [LANs], and other network technologies. Traditional hospital systems have not developed these jobs, while manufacturing companies have had them for a decade."

Legacy systems pose problems

Goodrich alludes to what may be the biggest stumbling block many health care organizations must overcome in applying network technologies: They have a hodgepodge of legacy systems that may very well be gathering the financial and other data needed. But, they have neither a way to make these different systems communicate nor a single system into which to flow the necessary data.

Unfortunately, this is a problem health care executives are not likely to solve any time soon. While manufacturers spend an average of 10% to 12% of total revenues on information technology, the health care industry averages 2% to 4%. With consolidation now taking place in the industry, many systems will find it hard to increase spending even though they cannot make progress without it, notes David Swan, CIO at Group Health Cooperative of Puget Sound in Seattle. Group Health consists of two hospitals, 40 ambulatory care clinics, and an HMO that covers 450,000 lives.

"We’ve got to understand that information technology is not going to be cheaper," says Swan. "Too many health care executives make the big mistake of saying you can invest in technology as long as you don’t change the budget.’"

And time may be running out, says Ann Claridge, director of health care marketing at Lawson, a supplier of management information systems that cosponsored the survey. Managed care companies have made measuring cost across an episode of care a priority, but few health care systems are in a position to do that, she says.

Inability to measure costs

"Overall, they [integrated health care systems] lack true cost accounting," she notes. "They have systems that do costing in detail, usually within the hospital, but they don’t have systems that go across the whole organization . . . . Now they are being asked to bid on managed care contracts based on an episode of care, and they cannot."

Where do you look for the IT needed to make your system competitive in the managed care environment? Service industries with like processes offer the best benchmarking opportunities, these experts say.

Although he sees little activity by hospital systems outside health care, those that do go outside the industry frequently benchmark the hotel, airline, and car rental businesses, says IBC’s Kirk. IBC helps health care organizations find companies to benchmark. Avis Rental Cars, the Ritz-Carlton Hotels, and Southwest Airlines are companies frequently targeted.

Find answers outside industry

A good place to start looking for outside industry benchmarks is the American Society for Quality Control (ASQC) in Milwaukee, of which IBC is a part. This group administers the Baldrige National Quality Award, the winners of which have all previously agreed to be benchmarked. That is why many health care organizations that want to look at the hospitality industry benchmark the Ritz-Carlton in Atlanta, a Baldrige award winner. ASQC’s Web site (www.asqc.org) lists Baldrige winners and links to IBC.

Organizations that specialize in the management and communication of large databases, such as TRW, a leading credit bureau, also can provide benchmarks, Swan says. Claridge also thinks the hospitality and hotel industries have similar demand management processes that could teach health care information managers about processing large numbers of people quickly and keeping them happy.

[Editor’s note: For more information, contact: The International Benchmarking Clearinghouse, Telephone: (800) 776-9676. Or visit the ASQC Web site: www.asqc.com.

Chuck Podesta, Baystate Health Systems, Springfield, MA. Telephone: (413) 784-8100.

David Swan, Group Health Cooperative of Puget Sound, Seattle. Telephone: (206) 326-4510.

Harlan Goodrich, MidMichigan Regional Health System, Midland, MI. Telephone: (517) 839-3000.

Ann Claridge, Lawson Software, Minneapolis. Telephone: (800) 477-1357.]