HIM 301 Introduction to Health Informatics WK2-C1

Chapter 7 Applications for Managing Institutions Delivering Healthcare

Michael H. Kennedy

Kathy H. Wood

Gerald R. Ledlow

If a healthcare system cannot effectively track the total cost of all materials used to treat an individual patient and aggregate data to determine the cost of treating groups of patients, managing the cost of healthcare is not possible.

Objectives

At the completion of this chapter the reader will be prepared to:

1.Outline the evolution of financial information systems (FISs) in healthcare organizations

2.Discuss the basic FISs and their application in healthcare organizations

3.Compare and contrast practice management systems (PMSs) and integrated healthcare systems

4.Describe and explain the attributes of an efficient materials management (supply chain) system in a healthcare organization

5.Appraise how a quality supply chain system supports the operation and management of clinical systems

6.Describe the human resources management actions associated with the subsystems typically deployed with a human resources information system

7.Define business intelligence

8.Distinguish between enterprise-level and application-level business intelligence

Key Terms

Accounts payable, 108

Accounts receivable, 108

Assets 108

Business intelligence (BI), 121

Charge description master file, 116

Claims denial management, 109

Claims processing and management, 109

Financial information system (FIS), 107

Fixed asset management, 110

General ledger, 108

Incentive management, 120

Materials management, 115

Open shift management, 120

Patient accounting, 109

Payroll, 109

Practice management system (PMS), 114

Predictive scheduling, 120

Supply chain management (SCM), 110

Supply item master file, 116

Transaction history file, 116

Vendor master file, 116

Abstract

This chapter addresses the administrative applications within health information systems that are designed to facilitate the delivery of healthcare, such as financial, practice management, supply chain and materials management, human resources, and business intelligence systems.

Introduction

Health information systems are “complexes or systems of processing data, information and knowledge in health care environments.”1(p270) These environments comprise a variety of settings, including hospitals, ambulatory settings, long-term care facilities, and managed care organizations.

Typically, the applications within health information systems are categorized as clinical or administrative. This chapter focuses on the administrative applications within health information systems designed to facilitate the management of healthcare delivery. The chapter considers in turn financial, practice management, materials management, human resources, and business intelligence systems.

Vendor Resource Guides

The applications required to process information in healthcare settings are primarily provided by vendors. The vendor market for hospital information systems alone in 2011 had total revenues of $12 billion, with the top five vendors in terms of revenue being McKesson ($3.2 billion), Cerner ($2.2 billion), Siemens ($1.7 billion), Allscripts ($1.4 billion), and Epic Systems Corporation (nearly $1 billion). These revenue statistics exclude vendors that do not sell a comprehensive suite of applications designed to automate both the administrative and the clinical departments in a hospital.2

Vendors that deploy a comprehensive suite of applications are referred to as enterprise vendors. The Healthcare Information and Management Systems Society (HIMSS) (www.himss.org) publishes annually a white paper titled “Essentials of the U.S. Hospital IT Market,” which lists the top enterprise healthcare information technology (IT) vendors for the U.S. hospital market. Top niche vendors promoting specialized applications are listed separately. When specialty vendors and vendors targeting nonhospital markets are included, the health information system marketplace becomes a confusing morass of products whose capabilities are difficult to assess.

Fortunately, professional organizations like the HIMSS, hard copy and online content publishers like Health Data Management (www.healthdatamanagement.com), and trade and technology research companies like Gartner (www.gartner.com) and KLAS (www.klasresearch.com) help stakeholders to make more informed decisions.

HIMSS provides an online conference exhibitors guide (http://onlinebuyersguide.himss.org) in the form of a searchable database with an exhaustive list of healthcare IT companies, products, and services. Clicking on a product category results in the retrieval of vendor names, contact information, and brief descriptions of the products and services offered. HIMSS Analytics (www.himssanalytics.org) is a wholly owned not-for-profit subsidiary of HIMSS that offers services to providers and healthcare IT companies. Hospitals and other providers that participate in an annual study gain access to the HIMSS Analytics Database and a number of benefits free of charge, including an Electronic Medical Record Adoption Model Score, an American Recovery and Reinvestment Act Hospital Scorecard, benchmarking reports, up to four market overview reports, and the Annual Report of the U.S. Hospital IT Market. The HIMSS Analytics Database is available by subscription to healthcare IT companies, which may also purchase ad hoc data reports.

In addition to publishing a monthly magazine of the same name and maintaining an extensive website, Health Data Management maintains a resource guide (http://marketplace.healthdatamanagement.com) by subject category. Similar to the HIMSS online conference exhibitors guide, clicking on a subject category returns vendor names, contact information, and brief descriptions of the products and services offered.

Gartner and KLAS provide fee-based ratings services. Gartner states, “We deliver the technology-related insight necessary for our clients to make the right decisions, every day.”3 KLAS declares that its mission is “to improve healthcare technology delivery by honestly, accurately, and impartially measuring vendor performance for our provider partners.”4 This is done by monitoring vendor performance based on feedback from healthcare providers and by conducting independent analyses of products and services. KLAS publishes a Best in KLAS Awards report annually for software, professional services, and medical equipment. KLAS's reports should be used with some caution, as the vendors cited by KLAS represent the rankings of just one ratings service, but they do serve as a resource. Additional information about these services is included in Chapter 16.

Major Types of Applications

Financial Systems

A financial information system (FIS) is a system that stores and records fiscal (financial) operations within an organization that are then used for reporting and decision making. There are various “financial” types of functions that healthcare organizations, like any other business, must perform to remain viable. These involve the following components:

•A customer (patient) purchasing the product (receiving the service)

•Salespeople (healthcare personnel) providing the service or product

•A facility to receive the service or product (healthcare facility)

•Supplies needed for a procedure (materials management)

•Payment received by the healthcare organization for the product (service) received (receivables)

•Monies received to be deposited in accounts (accounting)

•Payment made to healthcare personnel and support staff for services performed (payroll)

•Expenses paid (payables) to external constituents that made it possible to perform a procedure (mortgage, utilities, etc.)

The architecture of a typical FIS is illustrated in Figure 7-1. As Rogoski noted, FISs can no longer be regarded as “back-office” systems.5 Although it is true that financial functions are usually not a matter of life or death for the patient, an ill-fitted FIS can be life or death for the fiscal viability of the organization. Therefore one must choose wisely and update the FIS often to keep up with the ever-changing regulations and variations that affect the revenue and profitability of the organization.

Evolution of Healthcare FISs

Automated FISs were the first type of systems to be used in many healthcare facilities. The main purpose of these initial FISs was basic bookkeeping and payroll. Basic accounting systems were then put into place to help with the billing function. As Latham quotes: “Cash is king, so cash flow is the lifeblood of the kingdom.”6(p1) To get cash flow, charges must be captured and collected from the patient or the patient's third-party payment system. Entering charges and creating claims to send to insurance companies and patients were some of the first, and easiest, functions for an FIS. Payroll was also a very simple function for an FIS to perform. There was no need for analytics or importing to spreadsheets and reporting functions were limited.6 Healthcare organizations embraced the basic financial functions to remain financially viable. Figure 7-1 shows how financial transactions fit within the FISs.

Some of the basic financial systems required by healthcare organizations and other businesses are general ledger, payroll, patient accounting, claims processing, claims denial management, contracts management, and fixed asset management.

General Ledger.

The general ledger consists of all financial transactions made by the healthcare organization. This is similar to a personal checking ledger where any checks written or deposits made are recorded in the account. Numerous financial areas need to be tracked and as a result a healthcare organization will also maintain various subsidiary ledgers. Each of these ledgers tracks customer and vendor names,

FIG 7-1 Financial information system architecture.

(Healthcare Financial Management Association Certification Professional Practicum PowerPoint.)

dates of transactions, types of transactions, and balances remaining. The FIS managing the general ledger must be able to track and report information in a variety of ways to meet the needs of the decision makers. Types of financial data that need to be tracked include the following:

•Assets: Assets are property items that can be converted easily into cash. Assets are classified as tangible and intangible. Tangible assets include current and fixed assets such as inventory or buildings and equipment. Intangible assets include nonphysical resources such as copyrights or computer systems.

•Accounts payable: Accounts payable are the monies that are owed to vendors and suppliers for items purchased on credit (very similar to using a personal credit card and then paying back the amount on a monthly basis). These usually occur in the form of invoices or statements. This would fall under the category of disbursements in many systems. Since many vendors offer discounts when paid by a certain date, the FIS needs to be able to track the dates that payments need to be made in order to receive the discount or avoid the penalties that may be applied for late payments.

•Accounts receivable: The opposite of accounts payable, accounts receivable are monies that are owed to the institution. The vast majority of the dollars owed to the healthcare organization come in the form of patient-generated revenues. Once claims have been submitted to insurance companies (if the patient is covered by insurance), the remaining balance is sent to the patient for payment. The FIS has to be able to track the amount owed by the insurance, minus any negotiated rate such as managed care contracting, and the remaining balance owed by the patient. Ideally, the system estimates the amounts owed up front so the collection process can begin at the time of the visit.

Payroll Application.

The application that handles compensation payments to employees is the payroll system. This is also referred to as a disbursement system. The FIS application must be able to deduct taxes, benefits, possibly savings amounts, and other deductions. At the onset of FISs for payroll, the minimal functions could be performed. In today's more advanced systems, automatic payroll deposits and much more can be performed. In addition, overtime pay, pay rates, and payroll histories must be tracked and reported. At the end of the calendar year the system must be able to generate W2 forms for the employee to use in income tax preparation.

Patient Accounting Application.

A patient accounting application tracks the accounting transactions related to patient services. All charges that are incurred as a result of the patient visit need to be tracked and added to the patient's financial record. This can include inpatient fees if the patient is hospitalized; healthcare provider (physicians, nurse practitioners, etc.) and medication fees associated with the treatment; and procedure costs, including surgeries, radiology, and whatever else is necessary for the care of the patient. The procedural and diagnostic codes also become part of the patient billing record in order to complete the information necessary for the insurance payer to submit payment for the claim. Without critical information such as charges and coding, the claim process is delayed, resulting in reduced cash flow for the healthcare organization.

The collection process can begin at the time of the visit. This statement implies that the patient can receive services without paying anything up front. This is the reality in emergency situations. Because of the Emergency Medical Treatment and Active Labor Act (EMTALA), patients must be treated in the case of emergency regardless of their ability to pay. This can lead to hundreds of thousands of dollars outstanding that the healthcare facility will try to collect after the service has been performed. Therefore the collection process in healthcare is much different than the process in a traditional business that requires payment before the product or service is provided. Hence the FIS also needs to be able to track outstanding balances and assist in tracking these for the patient accounts personnel who will be attempting to collect the balances. The older the balances are, the more difficult they are to collect. The FIS needs to be able to differentiate the balances based on several factors, including, but not limited to, amount, payer, age of the account, and so forth. The features needed in today's FISs are much more complex than in the past. For example, today managers may need to track the revenue generated by staff as a measure of productivity.

Claims Processing and Management System.

As patients present for registration and admission, a single healthcare facility must be prepared to bill numerous insurance companies (third-party payers) representing hundreds of coverage and payment plans across government and private insurance. Some patients have primary coverage and supplemental coverage (e.g., Medicare as primary insurer and another insurer for supplemental coverage). Other patients receiving charity care or those with no insurance are categorized as private pay patients.

Claims processing and management is the submission of the insurance claim or bill to the third-party payer, either manually or electronically, and the follow-up on the payment from the payer. The application must be able to keep each of the payer types separate and know the requirements of how to bill the claims, who to bill for the balances, or if the balances need to be written off and not billed to anyone. Collections can be very challenging for the healthcare facility. Many new standards have been adopted for claims processing but there are still numerous different standards and requirements that must be followed for the various insurance companies and plans.

Sending “clean” claims is the key to getting payment quickly. Clean claims are those claims that contain all critical information such as patient demographics, charges and procedures performed, procedural and diagnostic coding, and other information required by the insurance company in order to remit prompt payment. Timely claims processing and collection are key to the fiscal health of institutions so they can meet the financial obligations in their disbursements and accounts payable functions. The claims processing application must review the claim before it is submitted to ensure that all necessary data fields are complete and accurate. If the claim is not clean, it will be denied, creating a delay and generating increased labor costs to correct errors before payment can be received for the service provided.

Claims Denial Management Application.

Denials from insurance companies are tracked and require follow-up. The claims denial management application can prevent denials imposed by the insurance carrier in a variety of ways. For example, the application can issue an alert on a request by clinical personnel for a patient to stay an additional day in his or her current patient status (i.e., observation, inpatient) if that request is likely to be denied by the insurer. The submitted insurance claim for a patient's stay may also be denied for improper coding or missing information. When the denial occurs, the application needs to be able to track the update and the progress on having the denial reversed. Because a claim or request was denied initially does not mean that the decision cannot be reversed. Persistence and proper documentation can be the deciding factors leading to reversal. Documentation must be detailed and included with the denial reversal request in order to be effective.7 In addition, the communications that took place between each area of patient care must be documented, collected, and stored in an orderly manner for the proof to be shown. This is just one example of why the FIS must be carefully integrated with the clinical systems.

Contract Management Application.

Healthcare organizations have a variety of contracts they must track, including those for supply chain management (SCM) and managed care. These types of contracts affect the bottom line of the organization, so the contracts must be tracked and managed in order for the organization to obtain maximum financial gain. SCM contracts include group purchasing, where healthcare systems negotiate a price for using a standard vendor. Vendor price comparisons and usage need to be tracked and the system must ensure that employees are adhering to the purchasing policies. Additional SCM functions can include providing incentives for healthcare providers to reduce the cost of their preferred supplies. For example, some surgeons may have particular instruments or supplies they prefer for surgical procedures. These supplies may be much more expensive than an alternative brand. The FIS could help the organization track the supply costs and the costs for procedures and provide reports for physicians to accompany requests for their assistance in reducing those costs.

Managed care contracting can be very challenging and complex. The contracts can be numerous and each contract can have different terms. The FIS needs to be able to track these contracts and manage the terms and results of each contract individually. For example, when a patient is covered by a nongovernmental insurance plan, the insurance company may have negotiated an agreed-upon amount for reimbursement per service or per patient. The insurance and patients need to be billed according to that contract's terms and any negotiated discount should not be billed.

Fixed Asset Management Application.

Fixed asset management applications manage the fixed assets in a healthcare facility that cannot be converted to cash easily, sold, or used for the care of a patient, such as land, buildings, equipment, fixtures and fittings, motor vehicles, office equipment, computers, software, and so forth. Each fixed asset needs to be tracked by location, person, age, and other factors. In a healthcare organization, the assets can be issued to a person, a procedure room, a department, and others. The FIS therefore needs to be able to handle the vast number of assets and the various areas in which the assets can be located. This system tracks depreciation, maintenance agreements, warranties related to the assets, and when the asset needs to be replaced.

Even though healthcare FISs during the first decade of the twenty-first century supported a number of improvements in the business processes, including patient scheduling, laboratory and ancillary reporting, medical record keeping and reporting, and billing and accounting, many opportunities still remain to improve efficiency, productivity, and quality, such as fiscal decision support.8

Financial Reporting

One of the primary functions of an FIS is providing the reports that demonstrate the financial condition of the organization. The most common reports for healthcare organizations are summarized in Table 7-1. Note that the titles may vary depending on whether the organization is for profit or not for profit.

TABLE 7-1 Financial Statements

FOR PROFIT NOT FOR PROFIT

Balance Sheet Statement of Financial Position

Income Statement Statement of Operations

Statement of Cash Flows Statement of Cash Flows

TABLE 7-2 Income Statement

From Healthcare Financial Management Association Certification Professional Practicum PowerPoint.

The income statement or statement of operations is a good representation of the bottom line, or money left over (net income or loss), of the organization (Table 7-2). This report lists all revenues (monies coming in) and expenses (monies going out) and these are often compared to prior years and to the budget plan.

The balance sheet or statement of financial position shows a glimpse of the organization's financial condition at any given point in time (Table 7-3). The FIS needs to pull the financial data from assets, liabilities, and equity to present the report so the organization can determine whether the numbers in the categories are balanced. Balance sheet data are based on a fundamental accounting equation (Assets = Liabilities + Owner's equity), so each side must “balance” to show the financial condition of the organization.

The cash flow statements show whether the organization will be successful in paying its bills (have more money than it owes). Table 7-4 provides an example of a cash flow statement. Figure 7-2 illustrates how the cash flow statement reconciles with the income statement.

A healthcare organization keeps track of certain financial ratios to help it evaluate its financial condition; these can be important when borrowing for future capital investments. The FIS must be able to calculate and report ratios on demand so that at any given time the organization can assess its financial condition. Ratios are classified into several categories, such as solvency, debt, management or turnover, profitability, and market value. Several ratios are unique to the healthcare industry (Table 7-5), such as length of stay and bed occupancy. Average length of stay in the U.S. for most procedures is 4.8 days. Decision makers can analyze the length of stay for their hospitals to determine whether they are on track for most procedures. Keep in mind, however, that a shorter length of stay does not necessarily mean lower costs. Bed occupancy provides a quick glance at how many inpatient beds are being used. The occupancy is typically higher during flu season and other epidemics. The other ratios reported in Table 7-5 are typical of financial ratios for any organization. Accounts receivable days in a healthcare organization are generally higher than in other organizations since the services are provided before payment is made by the patient or insurance company.

TABLE 7-3 Balance Sheet

From Healthcare Financial Management Association Certification Professional Practicum PowerPoint.

TABLE 7-4 Statement of Cash Flows

Cash Flow from Operations $1,800.00

Net Income $259.00

Adjustments $1,541.00

Depreciation Expense $(100.00)

Accounts Payable $130.00

Credit Card Account $50.00

Patient Credits $0.00

Sales Tax Payable $1.23

Accounts Receivable $986.77

Inventory Asset $473.00

Cash Flow from Investing $(1,000.00)

Equipment $(1,000.00)

Cash Flow from Financing $1,500.00

Opening Balance Equity $2,000.00

Owner's Equity $(500.00)

Draw $(500.00)

Investment $0.00

Net Change in Cash $2,300.00

From Healthcare Financial Management Association Certification Professional Practicum PowerPoint.

Challenges with FISs

One of the challenges that large healthcare organizations face with the implementation of FISs is ensuring that the various systems in place at numerous locations are integrated. Larger healthcare organizations can include 20 or more facilities. Within each of these facilities can be numerous subfacilities. The different financial systems, applications, and SCM systems can become very complicated when they are merged and the information systems do not interface well.5

The purpose of healthcare organizations is to provide quality patient care. While generating maximum revenue is not its defining purpose, an organization must generate income to stay in business and advance new programs and services. What this means is that patient care systems can be seen by some as a higher priority than FISs. Decision makers may have a more challenging time realizing the return on investment or understanding the importance of the investment in FISs since IT software applications such as patient accounting or revenue are considered an intangible asset. The key is to ensure the integration of the various applications.9 If an information system meets the requirements needed for patient care and it includes integrated applications such as patient accounting, the organization will have the best of both worlds. True integration supports the effective transfer of captured data across all applications. This leads to improved efficiency and enhanced cash flow, and the total cost of ownership is lower.

FIG 7-2 Statement of cash flows and reconciliation with income statement.

(Healthcare Financial Management Association Certification Professional Practicum PowerPoint.)

FIS Integration

Financial systems matured much faster than clinical systems.10 Integration within the FIS and across clinical systems eliminates duplication of effort, which also reduces the number of potential errors. Williams points out the following benefits from integration:

•A transition is provided between front-end and back-end operations.

•Information required for billing such as demographics and insurance can be gathered and verified at the point of service or admission and the information is immediately available for patient care and financial personnel.

•Eligibility checking for insurance can be done online; automated charging is supported, eliminating the need for charge entry.

•Availability of clinical records with detailed charges that has been secured through proper access allows staff to respond to questions from patients, payers, or others without having to pull paper charts.10

All of these features of integration result in an improvement to the bottom line, which is what healthcare finance is about. In addition to the basic accounting systems such as general ledger, accounts payable, and accounts receivable, FISs handle more complex functions such as activity or project management. Advanced revenue cycle IT, or new generation, is often referred to as integrated “bolt-ons.”9 TechTarget describes a bolt-on as a product or system similar to an add-on but one that can be attached securely to an existing system (http://whatis.techtarget.com). Besides integrated bolt-ons, there are workflow rules engines, advanced executive scorecards, and single database clinical and revenue cycle systems.9 Workflow rules engines help to manage workflow. For example, documents can be stored in a document management system and email or event reminders can be automatically sent to the people involved with the tasks. Advanced executive scorecards are strategic management tools that aggregate data from electronic health records

FIG 7-3 Revenue cycle function.

(Healthcare Financial Management Association Certification Professional Practicum PowerPoint.)

(EHRs) in concert with an FIS, thereby providing a snapshot of how the company is performing in certain areas. These “scores” can be compared to other companies in the same line of work.

A single database clinical and revenue cycle system is a system used to ensure accuracy, availability, and data integrity for patient care and billing for the healthcare organization. When changes are made to information contained within the database, those changes are managed throughout the system. In other words, the user does not need to make the change in multiple locations; the database management system will do that for the user to ensure that all necessary changes have been made. This is particularly important when dealing with procedures, documentation for those procedures, and the charges that accompany those procedures. In line with the original accounting systems, these advanced systems are designed to improve billing by reducing billing errors, improve the timeliness of billing to cash collected and the cost to collect, provide real-time eligibility, and provide improvements to current operational efficiencies via other functions.9

Improvement in cash flow has remained a constant goal since the onset of FIS. Adaptability and flexibility in healthcare are the key to successful patient care and quality and the same applies to FIS choices. An example of the revenue cycle is provided in Figure 7-3.

One of the more recent IT tools used to positively affect the revenue cycle is a communication management system. The variety of communications (e.g., patient care, insurance coverage, patient admission), the method of communication (e.g., face to face, phone, fax, Internet), and the number of people engaged in communications make organizing and tracking communications a complex process. As Cruze points out, communications surrounding care of the patient and payment can be very difficult to track and retrieve.7 A centralized management tracking system could assist in this area. An audit trail needs to be very detailed and include all communications that capture and travel with the patient as well as the authorizations associated with each step. In other words, these communications need to be captured, indexed, and archived for future retrieval.7

Efficiency Tools

Decision makers need tools to capture productivity for various activities within the financial services area of the organization. For example, collecting balances from the patient may fall within the responsibilities of a handful of employees. At the front end, patients who have been preregistered can be asked for payment on the estimated amount owed. At the back end, patients who have a remaining balance after insurance has paid will need to pay that balance. How does an organization know which employees are having success at collecting payments? The reporting tools need to provide a snapshot of the data so the decision makers can immediately analyze financial events within a particular area.

In addition to reporting tools, the application needs to be able to assist end-users with the questions that need to be asked, and when. For example, if a patient has an outstanding balance from a previous visit, the patient access personnel may need to know whether they should request payment. Information needed should be readily available and easy to access. When adaptable and flexible designs between clinical and financial systems are combined, powerful analytics are deployed via the web to every desktop; many activities are self-service, freeing up valuable time and resources for the healthcare organization.9

Operations have become more complex. For example, charge capture has increased in complexity just as medical care has.9 As a result, there needs to be a more seamless flow of charges as a natural by-product of the care process to help reduce lost, late, or duplicate charges. These new functions require an investment in a new system to handle revenue cycle management.11 A dashboard provides a visual analysis of specific data points so an organization can gauge how it is performing in certain areas (it is called a dashboard since it resembles the visual data points provided on an automobile dashboard). In addition, Moore points out features needed in an FIS to increase efficiency, including integrated compliance (i.e., coding edits), flexibility to override default values when the decision maker deems it necessary, ease of use (which increases employee efficiency), and executive dashboard capabilities.11

Practice Management Systems

Practice management systems (PMSs) are very similar to the information systems supporting integrated healthcare systems, only on a smaller scale. These applications focus on the services provided in a healthcare provider's office compared to the services provided in a large healthcare system or hospital. Similar to the hospital revenue cycle management system, the PMS is designed to collect patient demographic information, insurance information, appointment scheduling, the reason for the visit, patient care procedures performed for the patient, charging information for the billing process, and collection and follow-up. As with inpatient or acute care systems, PMSs require integration. The primary differences between PMSs and information systems supporting hospitals are specific provider scheduling templates and types of visits, transaction or line-item provider billing compared to account-driven hospital billing, and provider-based medical record content (orders, referrals, provider documentation, problem lists) that differs from the typical comprehensive hospital medical record.12 The charges from a medical practice office are connected to codes used for practice management billing and include Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT). Therefore the information system must be able to generate claims using this type of coding, usually through an electronic submission. Electronic medical records (EMRs) have become much more common modules within a PMS as the U.S. government has implemented incentives supporting EHRs (discussed in Chapter 6). An explanation of the difference between an EMR and an EHR can be found at www.healthit.gov/buzz-blog/electronic-health-and-medical-records/emr-vs-ehr-difference/. Information on the episodes of care maintained in the EMR can be passed along to the hospital or health center should the patient need to be admitted. Sharing this information helps to ensure that the information in the EMR becomes part of the EHR. However, this is often not a “plug and play” environment. Creating a successful interface to share data between the EMR of a practice and a hospital or health center information system is a complex process. Chapter 12 includes additional information on health information exchanges (HIEs) and health information organizations (HIOs) and the issues involved with these.

In outpatient settings healthcare providers can spend much of their time documenting the details of the patient visit. There are a variety of ways to accomplish this, including documenting and recording what is being said and done while the patient is in the examination room, dictating and transcribing based on written notes, or using voice recognition software during or after the visit. Traditionally, visit notes were often transcribed by a third party, leaving room for error through misreading of handwriting or mishearing of dictation. There is also a time delay until the documentation becomes part of the patient record because of the multiple processes required. As well, the healthcare provider is required to review and sign off on the final documentation but time constraints can encourage the provider to rush and perhaps overlook some details.

A method using more enhanced technology and providing quicker turnaround is voice recognition. These software capabilities have greatly improved over the last few years. Voice recognition eliminates the need for a third party and allows healthcare providers to input information themselves, saving steps, time, and money. The application allows text to be viewed in real time and providers can edit and approve it immediately. The time savings can result in much more timely billing and improved cash flow versus waiting for dictated notes to be approved after being transcribed.

Box 7-1 Benefits of Implementing an Online Payment Tool

For Patients and Provider Offices

• Self-management of their open accounts

• Ability to pay outstanding balances

• Secure communication on a 24/7 basis with the business office (the practice will determine the turnaround time of communications to the patient)

• Ability to update address or demographic changes

• Ability to update changes to insurance coverage (which often occur annually)

• Preregister for services or appointments

• Enhanced customer service capabilities

• Ability for staff to accept payments in person or over the phone

• Ability for staff to view the patient statement exactly as submitted to the patient, which helps to improve communications and efficiencies for payment collection

Data from Conley C. Improve patient satisfaction and collections with efficient payment processes. Healthcare Financial Management Association. http://www.hfma.org/Publications/E-Bulletins/Patient-Friendly-Billing/Archives/2009/January/Improve-Patient-Satisfaction-and-Collections-with-Efficient-Payment-Processes/. January 1, 2009. Accessed December 18, 2011.

Patient Outreach System

Some practices specialize in providing preventive care to manage patients with chronic illnesses. In these practices an electronic registry of the clinic's entire patient population can be used in a patient outreach system. The registry includes the demographic and medical record information needed to notify patients and an automated reminder capability.13 Patient outreach systems should incorporate evidence-based, specialty-specific protocols—or recommended care guidelines—for chronic and preventive care. Then, once the outreach system identifies patients due for preventive screenings and follow-up care for chronic diseases, the patients are contacted via an automated phone messaging system or another computerized method.

Online Billing and Payment Tool

Collections in a practice can be just as challenging as collections in a hospital except that few emergency cases occur in a provider practice setting, allowing office staff to determine the acceptability of denying services to a patient until a payment plan has been established. In addition to routine collection practices, implementing an online billing and payment tool (e.g., using a credit card to pay online) can help to improve the management and collection of fees owed by patients.14 Conley states that the healthcare facility can realize increased patient satisfaction and improved staff efficiencies by implementing an online payment tool.14 Benefits for the patient and the provider's office are outlined in Box 7-1.

Hospital–Healthcare Provider Connection

PMSs integrated with the hospital information system can be more efficient for healthcare providers in a clinic or private practice. According to Cash, physicians, nurse practitioners, physician assistants, and others with staff privileges who participate in the hospital network have certain expectations about the IT, including that it should:

•Provide a single sign-on to an integrated information system from all key system entry points

•Automate the provider's day as much as possible using mobile access (automation means that access is available wherever the clinician is and that the information is in a useful format)

•Have 24/7 support for any device, anywhere

•Provide a dashboard to view critical clinical and financial information with the ability to act on it immediately15

Healthcare provider dissatisfaction can occur if the information system:

•Slows him or her down in the task at hand

•Reduces the ability to bill insurance or the patient

•Adds more administrative duties to already maxed-out schedules (remember that providers want to practice medicine and leave administrative tasks to office personnel)

A Matter of Perspective

All healthcare providers have patient care as a top priority. While the provider's focus may be on care of the patient, office personnel must focus on receiving maximum payment for the care of that patient. The records stored at the practitioner level must be accessible and transferable to the hospital in the case of an admission or referral. Health information exchanges are making this possible for referrals, consultations, admissions, discharges, and transfers. IT solutions such as EMRs, digital storage of patient data, voice recognition software, and emailing of correspondence can offer efficiency, cost savings, and improved patient care, which should be the priorities of practice management.16

Materials Management

Materials management in healthcare is the storage, inventory control, quality control, and operational management of supplies, pharmaceuticals, equipment, and other items used in the delivery of patient care or the management of the patient care system. It is a subset of the larger function of SCM; the supply chain also includes the acquisition of materials of care and the logistics or movement of those materials to caregiving facilities and organizations. Routinely, health systems deploy information system solutions to support SCM.

Healthcare Supply Chain and Informatics

The acquisition, logistics, and management of materials in healthcare are complex and require a sophisticated information system to provide effective, efficient, and efficacious materials as needed. Typically materials management, also known as central supply in the hospital, bears the burden of having the right item at the right place at the right time. The healthcare supply chain is complex, with requirements that go across, for example, the equipment for operating suites, pharmaceuticals, and medical and surgical supplies for all settings. In any health system with hospitals, clinics, and

FIG 7-4 Extract sample of a supply item master file.

(Dr. Jerry Ledlow, personal files.)

employees ordering from the supply chain, thousands of transactions occur daily across hundreds of vendors.

The sophistication in automating this process has increased tremendously in the past 2 decades. Applications now include electronic catalogs; information systems such as enterprise resource planning (ERP) systems from vendors such as Lawson (www.lawson.com) or McKesson (www.mckesson.com); warehousing and inventory control systems from vendors such as TECSYS (www.tecsys.com) and Manhattan (www.manh.com); exchanges from vendors such as Global Health Exchange (GHX) (www.ghx.com); and integration with other systems from vendors such as clinical, revenue management, and finance. An innovative technology in this area is radio frequency identification (RFID); more information can be found at www.advantech-inc.com/index.html.

These systems have improved supply chain performance and management in healthcare, with more innovations expected in the future. The healthcare supply chain is an untapped resource of financial savings and revenue enhancement opportunities.17 Recognizing these opportunities, HIMSS advocated for more improvements in a white paper titled Healthcare ERP and SCM Information Systems: Strategies and Solutions. HIMSS indicated that ERP systems will be tools for quality and safety because they integrate capabilities such as procure-to-pay, order-to-cash, and financial reporting cycles. These functions should help institutions match needed materials with care in a more timely and cost-effective manner.

Integrated Applications in Supply Chain Management

The importance of these ERP and SCM systems should be apparent, including the technology associated with them, such as bar code scanners and electronic medication cabinets (e.g., Omnicell, www.omnicell.com; Pyxis, www.carefusion.com/medical-products/medication-management/medication-technologies/pyxis-medstation-system.aspx). The basic components of an integrated healthcare supply chain system include the following:

•Supply item master file: A list (hard copy or electronic) of all items used in the delivery of care for a healthcare organization that can be requested by healthcare service providers and managers. This file typically contains between 30,000 and 100,000 items. Figure 7-4 shows a supply item master file.

•Charge description master file: A list of all prices for services (e.g., Diagnosis-Related Groups [DRGs], HCPCS, and CPT) or goods provided to patients that serves as the basis for billing.

•Vendor master file: A list of all manufacturers or distributors (vendors) that provide the materials needed for the healthcare organization along with the associated contract terms and prices for specific items. This file typically contains 200 to 500 different vendors or suppliers.

•Transaction history file: A running log of all material transactions of the healthcare organization. In a computerized system, it is a running list of all supplies and materials being used to deliver care or manage the operations of the institution.

These four files must be integrated to support the operations and management of the supply chain. The integration necessary in the modern healthcare organization is illustrated in Figure 7-5 as a diagram of interfaces across supply chain, clinical, and financial systems.18

Supply Cost Capture

“In all industries, not just healthcare, three out of four chief executive officers consider their supply chains to be essential to gaining competitive advantage within their markets.”19(p2),20 According to Moore, if the trend in the cost of the healthcare supply chain continues to grow at the current rate, supply chain could equal labor cost in annual operating expenses for hospitals and health systems between 2020 and 2025.21 Clearly, maximizing efficiency of the healthcare supply chain is an increasing concern.

Consider supply charge capture events in which patient-specific supplies are ordered for the care of that patient and the items are then billed separately to the patient. “Every year, hospitals lose millions of dollars when items used in the course of a patient's care somehow slip through the system without ever being charged or reimbursed.”22(p1) Point-of-use technology, or capturing charges when supplies or materials

FIG 7-5 Wire diagram of healthcare supply chain information systems.

(Dr. Jerry Ledlow, personal files.)

are used, allows healthcare institutions to increase productivity, increase accountability, and reduce downtime through improvements in their internal supply chain. Automated dispensing machines for medications or supplies can be used to decentralize store operations, capture charges, and bring supplies and materials to employees without compromising security and accountability.23 These systems, if integrated with a solid business process, can enhance efficiency and effectiveness of the healthcare supply chain.

Strategic factors associated with supply success and enhancement are important as well. These include the following:

•Information system usefulness, electronic purchasing, and integration

•Leadership supply chain expertise

•Supply chain expenditures

•Provider level of collaboration

Box 7-2 Process Standardization

Process Standardization in Conjunction with Utilization of an Information System

•Develop standard (or more standardized) processes for:

•Item Master and CDM maintenance and synchronization

•Supply stock selection, reduction, compression and management

•Supply charge item capture (accurate and timely)

•Accountability measures for Central Supply and clinical units

•Standardize clinical/floor stocked supplies replenishment processes

•Daily reconciliation of pharmaceuticals and medical/surgical supply items, especially supply charge capture items

○Taking into consideration:

▪Clinical unit needs

▪Physical layout variations may require modification to an accepted standard

▪The business process must be efficient before a technological solution can be integrated into the process

▪“One size” solution will not fit all

Process Standardization in Process Improvement: Balancing Trade-Offs

•Competing goals exist between various stakeholder groups; trade-offs will be required to find the proper balance that best meets all needs.

•Clinician Goals

○Does not impede caregivers or patient care delivery

○Minimize rework

○Right supplies, right place, right time

•Supply Chain Managers/Central Supply Goals

○Improve accuracy for supplies consumed

○Improve timeliness for supply consumption

○Efficient use of labor

•Revenue and Cost Avoidance Goals

○Procure and acquire material wisely with contracted compliance goals

○Efficient management of materials considering utilization rates, preferences, expiration dates and Food and Drug Administration requirements

○Reduce number of supply charge capture items

○Improve accuracy for charge capture

○Improve timeliness for charge capture

○Improve charge capture rate

CDM, Charge description master.

From Ledlow JR, Stephens JH, Fowler HH. Sticker shock: an exploration of supply charge capture outcomes. Hospital Topics. 2011;89(1):9. Reprinted by permission of the publisher (Taylor & Francis Ltd, http://www.tandf.co.uk/journals).

•Nurse and clinical staff level of collaboration

•Leadership team's political and social capital

•Capital funds availability19

This section has provided a high-level overview of technology in materials management. Box 7-2 details specific considerations for automating SCM and materials management.24

Human Resources Information Systems

Human resources information systems (HRISs) leverage the power of IT to manage human resources. They integrate “software, hardware, support functions and system policies and procedures into an automated process designed to support the strategic and operational activities of the human resources department and managers throughout the organization.”25(p58) The authors distinguish between operational, tactical, and strategic HRISs. Operational HRISs collect and report data about employees and the personnel infrastructure to support routine and repetitive decision making while meeting the requirements of government regulations. Tactical HRISs support the design of the personnel infrastructure and decisions about the recruitment, training, and compensation of persons filling jobs in the organization. Strategic HRISs support activities with a longer horizon such as workforce planning and labor negotiations. In contrast, Targowski and Deshpande state that generic HRISs typically include the following subsystems defined by function: recruitment and selection; personnel administration; time, labor, and knowledge management; training and development; pension administration; compensation and benefits administration; payroll interface; performance evaluation; outplacement; labor relations; organization management; and health and safety.26

Human Resources Information Systems as a Competitive Advantage

Khatri argues that the management of human resources in healthcare organizations is a central function because the healthcare and administrative services delivered are based on the knowledge of staff delivering these services.27 Human resources management should focus on employee training as well as developing and refining the work systems to improve the work climate and the quality of service to customers. Although healthcare organizations should include the effective management of human resources as part of strategic planning, most fail to do so. Khatri offers three reasons why many healthcare organizations do not employ optimal human resource practices. First, he argues that human resource activities are institutionalized and undervalued in many healthcare organizations. Second, the clinical culture of healthcare focuses on the clinical delivery of care with less attention paid to the effective management of resources. Finally, low skills in the human resource function have limited the ability of human resource managers to engage effectively in strategic and operational planning. Khatri's premise is that improving human resource capabilities should help human resource managers engage more effectively in managing human resources.

Box 7-3 Sample Vendors Offering Comprehensive Human Resources Information Systems

• Lawson Healthcare Solutions Suite (www.lawson.com/solutions/software/human-capital-management/human-capital-management)

• McKesson Enterprise Resource Planning Solution (http://www.mckesson.com/en_us/McKesson.com/For%2BHealthcare%2BProviders/Hospitals/Enterprise%2BResource%2BPlanning/Enterprise%2BResource%2BPlanning.html)

• Oracle PeopleSoft Enterprise (www.oracle.com/us/products/applications/peoplesoft-enterprise/overview/index.html)

Khatri further proposed five dimensions of human resources capability. The first four are a competent human resources executive in the C-suite, a skilled human resources staff, an organizational culture that elevates human resources to a central function, and commitment to continuous learning. An integrated, computerized HRIS is the final capability.

Human Resources Information Systems Vendors

KLAS analyzed whether HRISs deployed in healthcare institutions have similar capabilities and whether HRISs have developed additional capabilities in the intervening years. The reports should be used with some caution, as the vendors cited by KLAS represent the rankings of just one ratings service; however, this strategy does pare down a much more extensive list of HRIS vendors to just a handful to assess the capabilities representative of these systems. Three examples with comprehensive solutions are listed alphabetically in Box 7-3.

Two vendors offer component solutions that provide some but not all of the components of a complete human resources information system. Although not cited as current Best in KLAS Award winners, the component solutions these vendors offer compete with those of the enterprise human resources suites for the component services that they offer.

•API Healthcare Human Resources and Payroll (http://www.apihealthcare.com/health-systems/)

•Kronos Workforce HR/Payroll (http://www.kronos.com/)

Human Resources Subsystems

The human resources subsystems described below reflect a modification of the subsystems described by Targowski and Deshpande and represent a taxonomy of functions typically described by the vendor websites for HRISs.26

Personnel Administration.

The centralized and integrated management of employee data is a key feature of HRISs. Personnel records are maintained and updated with information such as employee identification and demographics, dates of service, position and job code, location code, and employment status (permanent or temporary, full time or part time). Systems also maintain records of licensure, credentials, certifications, and skill proficiency levels. Increasingly, self-service capabilities allow employees to maintain a personal profile with the ability to access and modify personal information such as name, address, contact information, marital status, and information about dependent family members.

Managing Human Resources Strategically and Operationally.

HRISs can be used to address in whole or in part the challenge of managing human resources from a strategic and operational perspective. First, strategic management of human resources can be accomplished by accurately reflecting the organizational structure of the healthcare institution. This can be completed by using a wiring diagram to illustrate the hierarchy of positions in the organization, the job descriptions associated with each position, and whether the positions are filled or vacant. This analysis is then used to support the recruiting process for vacant positions. Functions that support this process include posting job announcements and application forms; providing status reports for submitted applications; maintaining interview schedules; and providing selection tools such as dynamic interview guides, multistage testing, computer adaptive testing, and minisimulations. Once a decision is made, the formal job offer letter and new employee benefits can be viewed online. Vendors who offer these types of functionality include Oracle's PeopleSoft (www.oracle.com/us/products/applications/peoplesoft-enterprise/human-capital-management/053291.html) and Kronos (www.kronos.com/Hiring-Software/Workforce-Talent-acquisition/Overview.aspx).

HRISs should also have the capability to assist employees in transitioning out of the organization when discharged, displaced by reductions in the workforce, or retiring.26

Staffing and Scheduling.

Staffing and scheduling replaces the subsystem “time, labor, and knowledge management” as a more accurate representation of the activities supported by this HRIS subsystem. Staffing and scheduling are two different activities. Staffing involves the assignment of personnel to job positions while ensuring that they are qualified by virtue of degree, licensure, certification, training, and experience. Scheduling involves the assignment of qualified personnel to a scheduling template within a work area in the organization to fulfill the mission of that organization. Scheduling of personnel such as nursing staff is extremely challenging, so much so that nurse scheduling can be considered a definitive representative of the archetypal multishift scheduling problem found in operations research and management sciences literature.

Each of the vendors discussed in Box 7-3 offers both staffing and scheduling modules. Other modules manage scheduling for nurse education and facilitate self-scheduling in conjunction with temporary staff management to fill openings in the schedule. Another vendor, Unibased USA RMS, has been the Best in KLAS award winner for enterprise scheduling for the past eight years (http://www.unibased.com/enterprisescheduling.html).

Key requirements for staffing and scheduling include cost-effective staffing while meeting constraints imposed by required qualifications, scheduling visibility, and matching the level and number of caregivers to patient classification and acuity levels as mandated by law or regulation. An example of an enterprise staffing and scheduling product focused on nurse scheduling is McKesson's ANSOS One-Staff. Functions provided by these systems include the following:

•Staff schedules derived from patient acuity and workload data collected by the software

•Hospital schedules automatically generated to meet core coverage goals while enforcing scheduling rules customized to meet schedule constraints and accommodate individual scheduling preferences

•Synchronous staffing data provided to managers to ensure that nurse-to-patient staff ratios are met

•Web-based self-scheduling

•Productivity and labor cost reporting28

Once scheduled, employees' time and attendance are tracked. Key elements include accurate time collection, implementation of user-defined pay rules, compliance with a variety of labor laws, and expeditious identification of productivity or overtime issues.

Just as schedules must be explicitly developed, time-off policies must be proactively managed because of their effect on the schedule. These time-off policies are designed to meet the requirements of federal labor laws such as the Family and Medical Leave Act (FMLA) and state and local laws. In addition to meeting legal and regulatory constraints, time-off policies must enforce organizational policy for vacation, maternity leave, and sick leave. The software used to do this is referred to as “leave management” or “absence management” and is typically a rules-based application designed to manage absence requests while interfacing with workload scheduling.

Because of the difficulty of scheduling in healthcare, innovative scheduling solutions are becoming increasingly common. API Healthcare provides software incorporating three solutions:

•Open shift management: This is a web-based self-scheduling solution in which the nurse manager broadcasts openings in the schedule to qualified staff via a number of instant communication tools. Staff members respond by tendering schedule and shift requests for consideration and approval.

•Incentive management: This involves the use of monetary and point-based rewards for staff who volunteer to fill openings in the schedule.

•Predictive scheduling: Predictive modeling is used to forecast bed demand while accounting for variables such as bed turnover, changes in patient acuity, workload distribution, and variability caused by shift, day of the week, month, and seasonality.29

Another vendor, CareWare (www.caresystemsinc.com/), is a relatively new entry into the health care staffing and scheduling arena, with a suite of products that manage time and attendance, assess patient acuity and estimated nurse workload, and employ intelligent scheduling algorithms to create optimal nursing schedules.

Training and Development.

The three comprehensive vendors featured in Box 7-3 also addressed staff training and development. IT solutions should be able to be used as the infrastructure to plan and manage employee training, to serve as the delivery mechanism synchronously and online, and to link training with the developmental plan for each employee by identifying shortfalls in skills and competencies and then recording when those shortfalls have been remediated.26

Compensation, Benefits, and Pension Administration–Payroll Interface.

“Compensation and benefit plans vary from company to company. They include various plans like flexible and non-flexible healthcare plans, short and long-term disability plans, saving plans, retirement plans, pension plans and Flexible Spending Accounts.”26(p46) When coupled with personnel administration and staffing and scheduling systems and supported by timekeeping and absence management software, management of compensation, benefits, and pension administration becomes more accurate and less time consuming.

One example of a vendor offering integrated compensation, benefits, and payroll applications is Oracle's PeopleSoft (www.oracle.com/us/products/applications/peoplesoft-enterprise/human-capital-management/053949.html). This type of system permits managers to view and update employees records online, receive alerts and decision support when changes in salary and benefits are being considered, receive reports on individuals as well as groups of employees, and permit employees to view and maintain their own records as appropriate. For example, employees may record the renewal of a license or changes in addresses.

Performance Evaluation.

“Talent management” and “performance management” are terms used by several vendors. From the healthcare provider's perspective the focus is on recruiting and training employees and developing competencies required to fulfill institutional goals and objectives. The individual career goals of employees are also considered. Information capabilities in this area include the following:

•Profiling employee competencies and any gaps

•Identifying when employee and organizational goals are met

•Identifying top performers

•Manager capabilities such as a dashboard to display unit performance

Lawson's Performance Management is an example of this kind of software.30

Underrepresented Subsystems.

Labor relations and health and safety have received less attention from vendors developing information for managing human resources. On the other hand, web-based expense and travel applications have become more prevalent in healthcare organizations. These areas may represent future directions for ERP systems.

Business Intelligence Systems

For the past 2 decades healthcare institutions have been building data warehouses and integrating data. Along with the technical aspects, data warehousing includes improving data quality, developing protocols for governance, and determining how to select and employ the appropriate analytic measures. This is difficult because of practice variation and changes to the standards of practice over time. Dick Gibson, the CIO of Legacy Health, notes, “We generate and use data like any other industry, but health care does not lend itself to the use of discrete data because the outcomes are necessarily fuzzy and ongoing. Airlines have seats, schedules and know if you landed on time. In health care, we know if you are alive but the big money goes to broad sets of descriptive terms around patient care that are very qualitative.”31(p29) These descriptive terms can be captured more succinctly by the use of diagnostic and procedural codes but data quality and integration is a problem because of the number of procedures and number of providers engaged in the delivery of care.31

Many organizations are turning to business intelligence (BI) software to provide tools to effectively manage and leverage their massive amounts of data. BI software is purported to lead to an improvement in financial (particularly revenue cycle) and operational performance, as well as patient care.32 Implementing BI in healthcare that successfully integrates financial and clinical data is regarded as one of the four pillars of the Value Project undertaken by the Healthcare Financial Management Association.33 Business intelligence is defined as the “acquisition, correlation, and transformation of data into insightful and actionable information through analytics, enabling an organization and its business partners to make better, timelier decisions.”34(p142) However, Glaser and Stone warn that for the BI to be most effective, the following must happen.32 For the analysis to be understood, the BI tools must be placed in the hands of the people who actually do the work; training must be done initially and throughout the project so that users will have time to use the basic functions and expand their knowledge; questions that arise throughout the analysis must be reviewed and answered; and the BI should be used for long-term planning. Glaser and Stone describe the BI platform as “a stack—one technology on top of another.”32(p69) Their description was used to construct Figure 7-6. Effective management of this stackable technology involves making the business case for BI; establishing implementation targets; enlisting BI champions; governing effectively; and establishing BI roles to include data stewards, data owners, business users, and data managers.32

As with the other information systems discussed in this chapter, BI systems may be part of an enterprise system, provided as component software, or employed at application level. Most of the major healthcare information system vendors have BI software imbedded in their products. For example, McKesson has Enterprise Intelligence, Cerner has Knowledge Solutions, Seimens has Decision Support Solutions, and Allscripts has Integrated Performance Management.

KLAS lists the following vendors in this category of software but they are not part of an enterprise healthcare

FIG 7-6 Business intelligence (BI) platform.

(Data from Glaser J, Stone J. Effective use of business intelligence. Healthc Financ Manage. 2008;62[2]:68-72.)

information system. Instead, they provide BI solutions intended to support analytics in conjunction with enterprise software or they provide analytics for a segment of the healthcare marketplace.

•Dimensional Insight's The Diver Solution (www.dimins.com) provides BI and performance management solutions whose applications specific to healthcare include productivity reporting, provider network management, outcomes measurement, disease management, usage review, and Meaningful Use. Other applications that could have utility in healthcare include customer service, finance, human resources, sales and marketing, and supply chain analytics. Capabilities include data discovery and integration without the need to build a data warehouse, interactive dashboards and scoreboards available through a web-based portal, a consolidated view of enterprise data, a variety of data visualization options, and access through a variety of mobile devices.

•IBM Cognos Business Intelligence (www-01.ibm.com/software/analytics/cognos/) offers a tailored line of BI software products, with Cognos Enterprise providing large-scale BI and performance management with capabilities similar to those described for Dimensional Insight, Cognos Express targeting midsize companies and work groups, and Cognos Insight providing desktop analytics for the individual user. IBM also owns the SPPS suite of statistical products.

•Information Builders WebFOCUS (www.informationbuilders.com/products/webfocus) advertises capabilities similar to Dimensional Insight and IBM Cognos Business Intelligence.

•Omnicell Pandora Clinicals (www.omnicell.com/Products/Business_Analytics/Pandora_Analytics.aspx) is part of Pandora Analytics, a suite of products that also includes Pandora Financials. Omnicell Pandora Clinicals provides the analytics to manage medication compliance and clinical operations. Pandora Financials facilitates cost and inventory management.

•Vitera Practice Analytics (http://www.viterahealthcare.com/solutions/intergy/Pages/PracticeAnalytics.aspx) provides clinical and BI for ambulatory practices.

Given the cost, time, and complexity of the large-scale implementation of enterprise BI, application-level BI should be employed strategically to address “key processes, functions, or service lines.”35(p95) Application-level BI software provides some of the data integration and visualization of enterprise packages, analyzes existing data that may be overlooked in traditional reporting, and creates actionable knowledge. However, some caution is necessary. Glaser and Stone note that ad hoc, smaller-scale analysis may lead to the creation of data silos, inefficient or repetitive management of data, and unnecessary duplication.32 These are appropriate cautions but application-level BI can complement the development of enterprise BI by producing results in the interim as the enterprise capabilities are developed.35

Conclusion and Future Directions

Given the magnitude of the investment in health information systems and the fact that administrative applications are more mature than clinical applications, a salient question is whether these administrative applications have made healthcare delivery more productive. In “Unraveling the IT Productivity Paradox—Lessons for Healthcare,” Jones, Heaton, Rudin, and Schneider explore the paradoxical relationship between “the rapid increase in IT use and the simultaneous slowdown in productivity.”36(p2243) Several lessons emerge from the authors' analysis:

•Mismeasurement partially contributed to the paradox. The authors suggest that “assessment of the value of healthcare outputs could be improved through the more sophisticated use of clinical data to understand access, convenience, and health outcomes.”36(p2244)

•New information technology often requires redesign of the processes that were previously tailored to the technology or manual system just replaced.

•New information technology that fails to be user-centered compromises productivity.

•Finally, healthcare organizations can no longer afford to have an abundance of untapped data that fails to improve decision making. Improvements in healthcare information systems, BI, and analytics must continue to improve the quality of decision making.

Administrative systems in this chapter were listed as separate applications because they evolved independently of clinical systems. Many of the future benefits will accrue from integrating data from all systems. For example, if a healthcare system cannot effectively track the total cost of all materials used to treat an individual patient and aggregate data to determine the cost of treating groups of patients, managing the cost of healthcare is not possible. As new information becomes available for decision making, healthcare professionals on both the administrative and the clinical sides of the organization will need to learn new interprofessional approaches to using these data in making decisions.

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Discussion Questions

1. Explain why healthcare facilities would require the use of an FIS and provide examples of this type of system.

2. Describe how a decision maker would use the FIS reporting function to make decisions and provide a summary of what the various reports tell the decision maker.

3. Explain the importance of physicians using a PMS and provide examples of tools that can be used at the point of care.

4. Describe and defend three principles of a quality SCM system with regard to patient care and support of clinicians providing care.

5. Discuss how self-service applications are typically deployed in HRISs.

6. Discuss the advantages and disadvantages of using BI at application level as opposed to enterprise level.

Case Study

Michael H. Kennedy, Kim Crickmore, * and Lynne Miles *

Managing the flow of patients and bed capacity is challenging for any hospital, especially for unscheduled admissions. For Zed Medical Center, a large regional referral center in the South and a member of the University HealthSystem Consortium, the challenge is even greater. As the flagship hospital for a multihospital system with more than 750 licensed beds and a Level 1 trauma center with 50-plus trauma beds, approximately 70% of annual admissions are unscheduled.

The Assistant Vice-President for Operations has a PhD in Nursing, is a Fellow of the Advisory Board Company, and has more than 20 years' tenure at Zed Medical Center. Three of the ten departments under her purview (Patient Care Coordinator, Bed Control, and Patient Transfers) are directly engaged in managing patient flow and bed capacity. The division is also responsible for systemwide care coordination for patients discharged to skilled nursing facilities, to home health, and to home without planned service delivery. Current operational goals include (1) decreasing the current length of stay by 0.3 days from 5.7 to 5.4 days and (2) “ED to 3”—a slogan incorporating the intention to place patients from the emergency department into a bed within 3 hours of the decision to admit. With the Centers for Medicare & Medicaid Services in the process of clarifying penalties for readmissions within 30 days, Zed Medical Center has begun to prepare by determining its baseline percentage of readmissions within 30 days.

The eight staff members assigned to Patient Transfers coordinate with hospitals within the region wanting to transfer patients to Zed Medical Center. They take calls, connect outside transfers with accepting physicians, and arrange transport. The accepting physician determines the patient's needed level of care, special care needs (e.g., diabetic), and the time frame for transfer. The Patient Transfer Department uses the software package CentralLogic (www.centrallogic.com/), specifically the ForeFront module (www.centrallogic.com/products/forefront), to manage the transfer and admission of patients. After a patient has been accepted for admission by the admitting physician, Bed Control makes the bed assignment. The staff members of Bed Control assign incoming patients to specific beds once the Patient Placement Facilitators from the Patient Care Coordinator Department identify the nursing unit to which patients should be assigned. This determination is made based on the level of care required, physician preferences in choice of nursing unit, and the scope of care supported by the nursing units. The Bed Control Department uses the Capacity Management Suite (www.teletracking.com/solutions/products/index.html) of TeleTracking software (www.teletracking.com/). The PreAdmitTracking module keeps track of bed status through the use of an “electric bedboard,” which provides a graphical user interface through which planned admissions, transfers, and discharges can be annotated. The status of a bed freed by patient discharge for which a cleaning request has been made is also noted (dirty, in progress, cleaned). The Bed Tracking module uses the medical center's paging network to notify the environmental services staff of a cleaning request and the head nurse of the unit that a patient is incoming. The TransportTracking module automatically dispatches patient transport requests via phone or pager.

Discussion Questions

1. How are patients prioritized for bed assignment?

2. Describe some of the advantages and disadvantages of this new software. Include the stated organizational goals in your answer.

3. Discuss how this software might share data with other institutional applications to provide a dashboard view of census-type activity.

* Kim Crickmore and Lynne Miles are Advisory Board members for the East Carolina University Health Services Management Program.

Pageburst Integrated Resources

As part of your Pageburst Digital Book, you can access the following Integrated Resources:

Bibliography and Additional Readings

Web Resources

Chapter 7 Applications for Managing Institutions Delivering Healthcare

Michael H. Kennedy

Kathy H. Wood

Gerald R. Ledlow

If a healthcare system cannot effectively track the total cost of all materials used to treat an individual

patient and aggregate data to determine the cost of treating groups of patients, managing the cost of

healthcare is not possible.

Objectives

At

the completion of this chapter the reader will be prepared to:

1.Outline the evolution of financial information systems (FISs) in healthcare organizations

2.Discuss the basic FISs and their application in healthcare organizations

3.Compare an

d contrast practice management systems (PMSs) and integrated healthcare systems

4.Describe and explain the attributes of an efficient materials management (supply chain) system in a

healthcare organization

5.Appraise how a quality supply chain syst

em supports the operation and management of clinical

systems

6.Describe the human resources management actions associated with the subsystems typically

deployed with a human resources information system

7.Define business intelligence

8.Distingu

ish between enterprise

-

level and application

-

level business intelligence

Key Terms

Accounts payable, 108

Accounts receivable, 108

Assets 108

Business intelligence (BI), 121

Charge description master file, 116

Chapter 7 Applications for Managing Institutions Delivering Healthcare

Michael H. Kennedy

Kathy H. Wood

Gerald R. Ledlow

If a healthcare system cannot effectively track the total cost of all materials used to treat an individual

patient and aggregate data to determine the cost of treating groups of patients, managing the cost of

healthcare is not possible.

Objectives

At the completion of this chapter the reader will be prepared to:

1.Outline the evolution of financial information systems (FISs) in healthcare organizations

2.Discuss the basic FISs and their application in healthcare organizations

3.Compare and contrast practice management systems (PMSs) and integrated healthcare systems

4.Describe and explain the attributes of an efficient materials management (supply chain) system in a

healthcare organization

5.Appraise how a quality supply chain system supports the operation and management of clinical

systems

6.Describe the human resources management actions associated with the subsystems typically

deployed with a human resources information system

7.Define business intelligence

8.Distinguish between enterprise-level and application-level business intelligence

Key Terms

Accounts payable, 108

Accounts receivable, 108

Assets 108

Business intelligence (BI), 121

Charge description master file, 116