case study ( The Hill-Rom Transformation Journey)

CASE STUDY an in-depth description of a firm’s approach to an IT management issue (intended for MBA and executive education)

Hill-Rom Holdings started producing wooden furniture for hospitals in 1929. By 2017, the company was a diversified medical technology and ser- vices company. To leverage digital technologies, Hill-Rom was transforming from its traditional lines of business to a company that was leveraging data to ensure patient safety and satisfaction. The transformation required new approaches to innovation and sales. It also demanded new talent. This case describes the company’s transformation journey.

IT-BASED BUSINESS TRANSFORMATION

DIGITAL INNOVATION

OPERATING MODEL

© 2017 Massachusetts Institute of Technology. All rights reserved.

THE HILL-ROM TRANSFORMATION JOURNEY: FROM SELLING HOSPITAL BEDS TO PROTECTING PATIENTS Kate Moloney, Jeanne W. Ross, and Cynthia M. Beath

SEPTEMBER 2017 | CISR WP NO. 422 | 9 PAGES

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 2

CONTENTS

Rethinking the Value Proposition .................................................................................... 4

Bringing the Vision to Life ......................................................................................................... 5

A New Approach to Innovation .......................................................................................... 6

Redesigning Go-to-Market ....................................................................................................... 7

Redesigning the Operating Model .................................................................................. 8

Appendix ...................................................................................................................................................... 9

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 3

THE HILL-ROM TRANSFORMATION JOURNEY: FROM SELLING HOSPITAL BEDS TO PROTECTING PATIENTS

Hill-Rom Holdings, Inc. (Hill-Rom) was in 2017 a leading worldwide manufacturer and provider of medical technologies and related services for the healthcare industry, including patient support systems, safe mobility and handling solutions, non-invasive therapeutic products for a variety of acute and chronic medical conditions, medical equipment rentals, and surgical products. The core of its traditional business had been hospital beds and nurse call systems.1

In the years preceding 2017, the company significantly broadened its portfolio through acquisitions. Welch Allyn provided patient monitoring and diagnostic products related to blood pressure, physical assessment, vital signs monitoring, cardiopulmonary diagnosis, diabetic retinopathy screening, and thermometry. Mortara Instrument, Inc. provided products for resting electrocardiography (ECG), cardiac stress exercise, Holter mon- itoring, ambulatory blood pressure monitoring, cardiac and pulmonary rehabilitation, and multi-parameter patient monitoring.

The company was organized into three business units. The largest was Pa- tient Support Systems (PSS), which included the bed, mattress, and lift busi- nesses, as well as Clinical Workflow Solutions (CWS), home of the nurse call business. A second business unit, Front Line Care, included respiratory solutions and patient sensing devices—anything a general practitioner would use to examine a patient’s ears, eyes, and throat, or to monitor their vital signs. The third unit was Surgical Solutions, which produced every- thing from scalpels to surgical tables. Each unit had a president.

Hill-Rom had a long history of innovation in its traditional lines of business; it was the first to offer an all-electric bed, for example. From 2012–2017, the company expanded its R&D capacity through acquisitions, most nota- bly with Welch Allyn, which produced sensing devices for the doctor’s of-

1 At its inception, nurse call consisted of a button near a patient bed that allowed the patient to signal the nurses station for help. At the nurses station these calls were queued for nurse visits to patient rooms.

This case study was prepared by Kate Moloney and Jeanne W. Ross of the MIT Sloan Center for Information Systems Research (CISR) and Cynthia M. Beath of the University of Texas at Austin. The case was written for the purposes of class discussion, rather than to illustrate either effective or ineffective handling of a managerial situation. The authors would like to acknowledge and thank the executives at Hill-Rom Holdings, Inc. for their participation in the case study. © 2017 MIT Sloan Center for Information Systems Research. All rights reserved to the authors.

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 4

fice; Trumpf Medical Systems, Inc., manufacturer of operating room equipment and devices; Aspen Surgical, which provided blades and operating room supplies; and Aspen Medical, delivering ophthalmic and wound care.

Investment in innovative products and service solutions was a major priority for Hill-Rom. In 2016 the company launched a number of innovative products, including Integrated Table Motion for the da Vinci Xi Surgical System, Welch Allyn RetinaVue 100 Imager (diabetic retinopathy screening connected to the cloud), Welch Allyn Connex Spot Monitor (patient monitoring devices with EMR connectivity), and the VisiVest Airway Clearance System (a connected therapeutic solution for patients with lung disease).2 These products all aimed to improve care and protect patients through connectivity. [See the appendix for more information on selected innovations.]

RETHINKING THE VALUE PROPOSITION The healthcare industry was undergoing dramatic changes in 2017 due to changing government regulations, im- proved technology, and increased competition. Healthcare providers were under pressure to reduce costs and to improve patient outcomes. In the US, providers were anxious to enhance the availability and use of patient data. Electronic medical records, which had a shaky introduction in the early 2000s, were becoming a critical resource, allowing for more integrated approaches to patient care. Meanwhile, hospitals and medical groups were consoli- dating. For suppliers such as Hill-Rom, consolidation meant fewer opportunities to sell, which increased the need to collaborate with powerful customers, especially large healthcare organizations.

These changes in the industry led Hill-Rom to rethink its value proposition. Company business leaders recog- nized that the evolution of its NaviCare nurse call system in the CWS business, previously seen as an offering in the bedside alarm system, was transforming the company. Consistent with its mission to enhance outcomes for patients and their caregivers, Hill-Rom started to move beyond the sale of products to positioning itself to offer information, solutions, and connectivity.

We saw ourselves as a nurse call competitor, and in competing with other nurse call competitors we started adding a lot more functionality to the system. What we started to understand was some of those features that we were adding to the system had tremendous value for our customers but weren’t necessarily “nurse call” per se.

COLLIN DAVIDSON, PRINCIPAL ENGINEER – SOFTWARE

Even before CWS became more focused on patient safety and patient satisfaction, other parts of PSS were putting sensors on the company’s beds and other equipment for patient rooms. Hill-Rom leaders believed they could integrate more of the sensor data into CWS’s workflow solutions. The company could then differentiate it- self by collecting data from its hospital infrastructure products and equipment (e.g., beds, lifts, vitals monitoring equipment, staff location sensors, hand hygiene devices), integrating that data with other data from the patient to better serve that patient, and then accumulating data across patients to provide insights to caregivers.

When we’re successful, CWS is a much bigger business. Given the value provided to customers, it’s not hard to imagine it’s doubled or even tripled in size. Interconnectivity has created a great deal of value to the rest of our business and increased our relevance to our customers. Today and in the future we will be thinking more about information than we are about metal and plastic.

TREY COOK, VICE PRESIDENT AND GENERAL MANAGER, CLINICAL WORKFLOW SOLUTIONS

Recognizing the opportunities CWS presented, PSS adopted the goal of “protecting patients by anticipating care.” This goal focused on solutions to three problems that were of particular concern to hospitals: fall prevention, reduction of hospital-acquired infections, and patient satisfaction.

2 Hill-Rom Holdings, Inc., “Annual Report 2016,” January 2017, http://files.shareholder.com/downloads/HBI/ 4171506461x0x925604/B53AB- 9CD-8249-4027-A0C2-F6E0989420B5/2016_Annual_Report.pdf.

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 5

BRINGING THE VISION TO LIFE Although in 2017 new technologies offered enormous opportunities to improve healthcare, the choices—and the changes—those technologies brought to healthcare settings could overwhelm healthcare providers. Hill-Rom saw this as an opportunity to provide valuable services.

Hospitals really want physicians to take care of the patients. They don’t want their care professionals to worry about how the hospital equipment and how the facilities and devices should be interconnected.

SUE-JEAN LIN, CHIEF INFORMATION OFFICER

But as Hill-Rom pushed solutions to customers, it had to deal with three realities. First, while providers wanted better insights, they were often overwhelmed with data.

In the ICU, in the highest acuity levels in the hospital, the number one thing that doctors, clinicians, and caregivers are concerned about is information fatigue. There’s lots of complicated equipment in those environments, there are lots of alarms happening. The workflow tends to be very chaotic and interrupt[ion]-driven. How you do bring order to that chaos, and then how do you reduce length of stay and reduce complications?

TOM GILLIS, VICE PRESIDENT, RESEARCH AND DEVELOPMENT

Second, useful insights relied on integration of data that came from more than just Hill-Rom equipment. Data from multiple sources could be aggregated for additional insights—yet none of the data belonged to Hill-Rom. Without access to this data, Hill-Rom would be hard pressed to develop the insights needed to improve patient outcomes. The company believed that the data its equipment generated put it in a great position to innovate to create value for the providers.

Our products generate a lot of data. That data, depending on whom you ask, is either the patient’s data or the hospital’s data. So our goal is to work with our customers to gain access to that data in ways that allow us to apply some intelligence via artificial intelligence and machine learning to gen- erate better insights into what may be happening to the patient, or better insights into ways to drive efficiency in clinical workflow. Gaining access to this valuable data is a privilege, one we earn by ensur- ing we scrub patient identification information and by securing the data via an appropriate risk man- agement framework. However, insights by themselves only represent a part of the value. Insights and understanding that drive action through care plans and ultimately improved outcomes is where the true value of the data is realized. Our customers ultimately pay for better outcomes for their patients and enhanced efficiency in their hospital.

BRIAN LAWRENCE, CHIEF TECHNOLOGY OFFICER

The last reality was that cost-cutting pressures limited customers’ appetite for new solutions—even useful solutions:

If I’m trying to do anything that increases the cost of a Hill-Rom product by $10, I better have a really good reason with solid proof around the clinical and economic value to the hospital, because at the end of the day the customers don’t want to pay more. They want to pay less. They have a shrinking budget.

TOM GILLIS

Recognizing these challenges, Hill-Rom began a transformation that would change both its approach to innova- tion and how the company went to market.

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 6

A NEW APPROACH TO INNOVATION To design and deliver integrated solutions, Hill-Rom had to first change its thinking about how to best serve cus- tomers. Hill-Rom had traditionally acceded to the preferences of customers who wanted customized solutions.

Going forward, Hill-Rom intended to offer less product customization and to rely on a more standardized set of products to address patients’ needs.

The source of the desire to simplify and bring some order to the chaos is that we’ve got so many dif- ferent versions of everything that it becomes almost unsustainable and it slows down the innovation engine of the company.

TOM GILLIS, VICE PRESIDENT, RESEARCH AND DEVELOPMENT

A more standardized set of products would allow the company to focus on solving common problems across hospitals. To understand on which solutions to focus, Hill-Rom developed a more intimate understanding of how customers work.

The starting point is the patient. We have a goal to drive breakthrough enhancements in patient outcomes.

SUE-JEAN LIN, CHIEF INFORMATION OFFICER

To engage with customers, Hill-Rom embedded the company’s innovators in customer environments.

We created what I’ll call an immersion program where we take small teams of engineers and market- ing people and we embed them in—pick your clinical environment—in the OR, in the ER, in the ambu- latory environment, in urgent care centers. We even go into peoples’ homes, and we sit and observe for days at a time, so we’re not just there for an hour. We’re there for a week.

BRIAN LAWRENCE, CHIEF TECHNOLOGY OFFICER

Those efforts were supplemented with a Clinical Informatics team working with R&D to discover what data points would yield the most meaningful insights about how to protect patients by anticipating care. Teresa Bra- sac, Vice President of Clinical Informatics and a former nurse, found that collecting data from Hill-Rom equip- ment was relatively easy. Identifying what data would really be useful, however, was more difficult.

I challenge my entire organization to ask, “So what?” When I have R&D saying, “We can pull sixty elements from the bed,” my answer is, “So what? Do you need sixty? Or do you need five? What is that going to give the caregiver?”

TERESA BRASAC, VICE PRESIDENT OF CLINICAL INFORMATICS

Hill-Rom was focused on developing solutions that clearly supported caregivers to improve patient outcomes. The falls prevention solution, for example, could alert a caregiver to a problem (e.g., bed rails down, respiratory patient bed angle too low) while reducing work. This solution supported “purposeful rounding” by nurses—using evidence to anticipate patient needs and prioritize visits to patient rooms, as opposed to simply making rounds at fixed intervals or responding to patient calls in the order they were queued.

Looking ahead, Hill-Rom recognized the need to “think outside the room,” offering solutions that could track, for example, adherence to post-op orders. Hill-Rom was constantly exploring potential solutions.

Right now, I’m in the process of trying to educate myself. What does this mean? What are the scores that we want? What do the caregivers need? Are we monitoring the right things? It’s not enough to

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 7

have a bunch of smart programmers banging out code. You need the insight to know what it is that you’re observing.

COLLIN DAVIDSON, PRINCIPAL ENGINEER – SOFTWARE

As Hill-Rom searched for valuable integrated solutions for the caregivers, R&D was also thinking about how to architect connectivity between Hill-Rom products and its workflow solutions. IT was defining the technical environment to both bring together data (input stream) and enable solution development (output stream) to support R&D innovation.

In the device industry, everybody wants to protect their interface, so there are no standards. A lot of the hospitals that have spent large amounts of money in electronic medical record systems haven’t seen any significant gain in productivity because they’re not integrating all the devices. There’s a repos- itory for the information that can produce reports electronically, but it’s not really managing the work well. The biggest challenge is really how do you get all these different devices to communicate in some meaningful way?

TOM GILLIS, VICE PRESIDENT, RESEARCH AND DEVELOPMENT

These multi-pronged innovation efforts were complemented by efforts in other parts of the company to take new solutions to market.

REDESIGNING GO-TO-MARKET Hill-Rom salespeople enjoyed good relationships with their customers, but that didn’t mean those customers would readily see Hill-Rom as a provider of integrated solutions. Caregivers had to believe that a given solution would be better for both patients and caregivers. Some solutions that were intended to support nurse stations, for example, might have instead appeared to simply create a “big brother is watching” feeling. Other proposed changes might disrupt the status quo that hospital personnel had grown comfortable with.

We did over five hundred hours of observational work in various hospitals just trying to understand what we could do to really change the game in hospital beds. That’s how we surface those critical things that people aren’t going to tell you about, because they’ve figured out a workaround, and for them, it’s no longer an issue.

BRIAN LAWRENCE, CHIEF TECHNOLOGY OFFICER

Thus, it fell to the sales representative to convince hospital personnel of the value of the new solutions. The com- pany found that the best salespeople lead with CWS (workflow). Traditionally, most salespeople at Hill-Rom had specialized in one product line, but increasingly they would need to be able to sell a full range of products in an integrated way—for example, beds connected to workflow software.

Hill-Rom’s customers had changed. Salespeople were no longer selling to people in facilities or purchasing, who were responsible for the purchase of Hill-Rom furniture and equipment in a hospital. To sell solutions, salespeople had to interact more with people who managed workflow, such as medical staff; and support technology, like CIOs.

After a sale of a workflow solution, Hill-Rom’s operations staff had to work with technical people at customer sites to establish the necessary connectivity between the individual products and Hill-Rom’s workflow systems. If this coordination did not go well, operational issues would be a deterrent to solution sales.

Operational issues would become even more critical as Hill-Rom attempted to integrate its systems with other systems in hospitals.

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 8

REDESIGNING THE OPERATING MODEL To facilitate development of standardized global product platforms and software systems and to support devel- opment and sales of integrated solutions, Hill-Rom consolidated and centralized parts of the business.

The company also developed a new leadership team to support its efforts toward integration. In 2016, the com- pany brought in Sue-Jean Lin as global chief information officer to effectively use technology to drive operational efficiency and lead digital transformation for its business operation. Chief Technology Officer Brian Lawrence oversaw enterprise R&D to ensure effective use of technology and embed innovative solutions in its products for patients. A new informatics team reported to Lawrence, reflecting the company’s emphasis on developing software solutions to accompany physical products.

These leaders brought in new types of talent. Lawrence, for example, hired a consumer products expert as head of global design.

I went out and hired a head of my global design team who has no medical device background whatso- ever, but who is a consumer products expert. What I wanted was somebody who understood how you go out and figure out what it is that patients need, because it’s not just by asking them.

BRIAN LAWRENCE, CHIEF TECHNOLOGY OFFICER

As the company brought in technical people who could help with some of the challenges of connecting the var- ious Hill-Rom products into workflow systems, leaders found these talents needed to be managed in new ways. To foster creativity, the company saw the need to motivate people through patient outcome creation and not just by telling people what to do.

Leaders attempted to clarify the company vision and expectations so that employees could better focus on fulfill- ing the company’s value proposition.

Hill-Rom found that credible value proposition work, starting with unmet needs, offered many new opportuni- ties. Everyone at the company assessed innovative ideas by first asking, “Does this protect patients by anticipat- ing care?” If the answer was yes, it went on the list. If it didn’t, it wasn’t on the list.

Even as the leadership team evangelized its vision, members recognized that currently the majority of Hill-Rom revenues were generated by traditional Hill-Rom products. The company couldn’t afford to abandon those cus- tomers or their salespeople.

We just can’t afford to get rid of the old and we cannot just jump 100% into the new. How we keep that balance is challenging.

SUE-JEAN LIN, CHIEF INFORMATION OFFICER

The transformation had started at Hill-Rom. The company’s 2016 financial results reflected that solution sales and the new product portfolio were becoming bigger pieces of the pie. But Hill-Rom leaders believed that, at the speed the healthcare industry was changing, there was enormous pressure to transform more quickly into a more digital business.

A year is a lot in our world. Can we afford not to change at all for another year? I don’t think so. But that’s the battle, right?

SUE-JEAN LIN

Moloney, Ross, and Beath | CISR Working Paper No. 422 | 9

In its front-line care business unit, RetinaVue is a complete turnkey solution that consists of a portfolio of partner camera technologies, the newly introduced RetinaVue 100 Imager, the HIPAA compliant RetinaVue Network, and a nationwide team of board certified retinal specialists that review the fundus images in the cloud and return a diagnostic report and refer- ral/screening plan the same day—usually in 90 minutes.4 This is part of the Welch Allyn VISION FOR ALL™ initiative that is committed to deliver- ing simple and affordable screening solutions in primary care settings to help eradicate some of the leading causes of preventable blindness.

4 Welch Allyn. 2017. “RetinaVue™ Network.” https://www. welchallyn.com/content/welchallyn/americas/en/products/ categories/population-health-management-technologies/ diabetic-retinopathy-screening/retinavue-network.html.

Hill-Rom’s Integrated Table Motion delivers sur- gical teams the real-time ability to reposition the operating table with the surgical robotic arms docked. This surgical advancement address- es the need for operating room efficiency by maximizing access, exposure, and reach during a robotic-assisted surgical procedure. It combines the da Vinci Xi, Intuitive Surgical’s latest robot- ic-assisted surgical system, and Trumpf Medi- cal’s advanced operating table, the TruSystem® 7000dV, to allow surgeons and anesthesiologists the ability to make a comprehensive range of table adjustments easily and efficiently during a surgical procedure. The da Vinci Surgical System and TruSystem® 7000dV table are synchronized in movement—the table’s positioning is relayed to the da Vinci Surgical System and is met with an intuitive adjustment of its instrument arms, boom, and endoscope to maintain consistent orientation to the patient’s anatomy.3

3 Trumpf Medical Systems, Inc. 2017. “TruSystem™ 7000dV OR Table.” https://www.trumpfmedical.com/en/solutions/ robotic-or/trusystem-7000dv/.

APPENDIX: A CONSTANT FLOW OF HEALTHCARE INNOVATIONS As this case went to press, Hill-Rom was in the midst of releasing a steady flow of innovations integrating infor- mation with products to provide healthcare solutions. Recently released products such as Hill-Rom’s Integrated Table Motion and RetinaVue were representative of the kinds of innovations that Hill-Rom expected would trans- form the company “From Selling Hospital Beds to Protecting Patients.” The following descriptions draw from 2017 public domain material.

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Team | Kristine Dery, Christine G. Foglia Associate Director, Nils O. Fonstad, Amber Franey, Dorothea Gray-Papastathis, Cheryl A. Miller, Kate Moloney, Leslie Owens Executive Director, Jeanne W. Ross, Ina M. Sebastian, Nick van der Meulen, Peter Weill Chairman, Barbara H. Wixom, Stephanie L. Woerner

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