Building a Healthcare Prioritization Model

Building a Healthcare Project Prioritization Model

By Carolyn Reid

CSR Consulting LLC

Developing a Portfolio Management and Project Prioritization in IT Healthcare

Introduction

The IT PMO of a large Healthcare organization determined it needed project prioritization. A small, diverse team of people from its hospitals and IT was brought together to develop the prioritization model. The team consisted of the VP of Strategy for these hospitals, hospital staff members (clinicians, nurses, Doctors, radiologists etc.) as well as IT leadership for the hospital.

In addition to the prioritization model, the Portfolio Management process for the business was being developed. Here we discuss why the business needed project prioritization and portfolio management. In the second section, the development process is outlined.

Issues faced by the Organization

What drove the decision to make such a significant change? The issues facing the organization were:

The organization consisted of mergers and acquisitions: Stove-piped, independent businesses with no incentive to work toward common goals
Division between Business and IT
Strong resistance to change
Major change efforts were not properly supported by executives and therefore failed
The PMO Leader believed that a tool alone was the solution for Portfolio Management
Resulted in Application Implementation with very little process or business improvement
Diverse mix of businesses (locations, size, focus, age etc)
No application/ systems standards (multiple solutions for the same capability)
No view of resource capacity/ demand
No single view of all projects
Current process: IT Site Leaders expected to push through the PMO all projects suggested by their specific hospital
No requirement to justify a requested project
Strategic plans were not being carried out
Strategic leaders believed Project prioritization alone would solve their major problems such as frequent project failure while IT leadership believed that an improved Resource Management visibility (new tools) alone would solve these issues
Portfolio Manager (currently part of IT) needed to convince them the leaders that they must have prioritization and resource management capacity to demand visibility to select the optimal portfolio of projects

Poor Project Intake led to Project Management Inefficiencies

Important projects were not getting done. With no prioritization and no view of true resource demand/ capacity, low value projects could take up resources needed by high value projects. This caused the more valuable projects to be stalled or stopped mid implementation. This also resulted in corners being cut when project managers tried to push the projects through the lifecycle quickly to ensure they did not lose resources. Project planning was one key phase that was shortened or skipped altogether, leading to a higher rate of project failure.

What was the current process for Project Intake?

Projects under a certain budget limit could be submitted and were automatically put in queue. Anyone could submit a project request and provide very minimal information. Once the requestor filled in a resource grid and a risk survey, the project would go through the resource management process (a meeting of Resource Managers) to assign resources. Once resourced, the project could be rejected by an oversight committee but this was seldom the case.

The organization had tried different methods for prioritizing (such as high, medium or low priority). However, these methods yielded only top priority ranking for almost all projects.

For higher cost projects, IT Governance did exist. In the fall of each year, the IT site directors were given instructions and deadlines for preparing the next years IT project plans for the site. The plan would provide budget information, justification, categorization according to standard functional areas and tie to the IT corporate strategy. The regional leader would review and accept the projects he or she deemed priority for the site. This was then reviewed by the PMO oversight committee, which eliminated additional requested projects from the plans. The results of these meetings determined the site’s budget. In the following year, the sites were free to substitute other projects for those that had been approved.

Goals of the Portfolio Management Process Implementation

The goals for the Portfolio Management implementation (and Project Prioritization model development) were as follows

Help ensure realization of the business strategy
Projects must be tied to the corporate strategy
Portfolio of projects optimized for maximum benefit to the organization
Needed to determine Risk, Cost, Benefit and Return before going forward with each project
Methodical and strategic method for selecting projects, with clear justification of the project selection
Prioritize at site, region, enterprise
View projects across all sites to determine opportunities to combine efforts
Improved future planning of projects
Develop IT Standards
Catalogue of accepted applications for specific capabilities

The Pilot of the prioritization model

A small group of hospitals had been discussing the concept of a prioritization model for some time as they recognized the need to successfully complete the projects that would help them compete in a highly competitive market. Project prioritization would lead to smarter decisions regarding what should be funded. The model was based on research of best practices in the industry, input from all areas of the hospitals to determine the greatest needs, and tie to their strategic goals.

Once the model was in place, it was used to prioritize the projects submitted for the yearly budget to show the decision makers why they should fund the proposed projects. This trial run also showed what needed to be changed in the model in cases where the priorities were not as expected. The pilot was deemed successful, so the next step was development of the enterprise-wide project prioritization model.

Developing the Prioritization model for the entire organization

This organization had grown by acquiring new hospitals. Each hospital still ran like an independent business, with no incentives in place to encourage the hospitals to work together.

The hospitals were of different sizes, budgets and age, from different states and differing specializations – all competing for the same resources. These factors made it very difficult to determine a prioritization model that would work across the enterprise.

The final model is shown below. The number of business drivers at one point was approximately 3 times this number but was narrowed down to these business drivers. The business drivers were prioritized to determine their weight in scoring.

Patient safety, care and satisfaction
Physician strategy/ alignment
Financial benefit
Compliance
Sunsetting/ Risk mitigation
Clinical transformation
Competitive advantage
Operational readiness
Operations improvement

One example of the very specific answers developed for the business driver of financial benefit:

Answers to choose from for Financial Benefit:

•This will not provide new revenue or enhance revenue capture or appreciably reduce costs.

•This will provide small revenue enhancement for a single business unit or will reduce IT or business unit operating costs by a nominal amount annually.

•This will provide: (a) medium-level revenue enhancement for a single business unit; and/or (b) small revenue enhancement for multiple business units or will reduce IT or business unit operating costs by a small amount annually.

•This will provide: (a) medium-level revenue enhancement for multiple business units; and/or (b) significant revenue enhancement for a single more business unit or reduce IT or business unit operating costs by a moderate amount annually.

•This will provide significant revenue enhancement for the service group as a whole or reduce IT or business/operating unit costs significantly annually.

Very specific answers were developed for all of the drivers listed above.

What did the organization have to say about the model and the process?

Project selection would now have structure and justification of the investments
The hospital could use the information from this to help justify proposed projects to their leadership (for obtaining hospital funding)
From Portfolio Management: this would be used with improved resource management process and tools to ensure the correct mix of projects with:
Highest value
Resource capacity to demand balance
When the answers for the survey are developed, the answers must be very specific to lower concerns of subjectivity and the process must provide a non biased check on the answers
Implementing Portfolio Management will improve Project Management as projects are staffed correctly and priorities are clear
While this was developed for IT, Portfolio Management should also be used for business
The hospital CFO’s were the biggest fans of this method for showing the value of the proposed projects
This is a huge culture change – from current process of accepting every idea to a strategic planning of projects
Resistance would be high
Also required more work with the additional evaluations

There were negative and very real concerns about this significant process change as this would be a major culture change. However, there was also the conviction that a major change was needed and would lead to the organization strategically applying resources and achieving its goals.

The Prioritization model process

Leadership had required rapid development of the pilot prioritization model. For this reason, a small group of participants developed the pilot model with the understanding that the model would be further developed with participation across the business for the company’s enterprise solution. To develop this final model, sessions were first held with each region, with its IT site leaders attending. The results from these 3 sessions were then used in a final session with all site leaders.

This section contains the information that was provided for those attending the prioritization model development sessions. This information was developed to help the participants prepare in advance. The material provides information from IT Health industry research, input from the Pilot team and information to provide background and questions to think about. In addition to this information, the attendees were to review the company’s business and IT strategic goals. This material was expected to inform on background and ensure the attendees were prepared for the required brainstorming.

IT Site leaders were the focal points for project requests coming from the hospitals, so these leaders were invited to the sessions to develop the model with the expectation that they were to discuss this model development with their hospitals to ensure input came from the business as well as IT. The IT Site leaders would share the results with the hospital and the model could still be adjusted in the future as needed.

Materials for the Prioritization Model Sessions

Purpose of the Prioritization Model sessions:

The purpose of the prioritization model session is to determine the model that best fits the business to ensure the portfolio of approved projects provides the most value to the organization.

How will the Project Prioritization model be used?

Below the high level process is outlined to explain how the model will be used.

•The submitter evaluates their requested project against the business driver by answering each question related to the business driver.

•Each question provides 5 specific answers to show the relationship of the proposed project to the driver.

•Each Business driver is weighted so that the total project score reflects the weighting as well as the score resulting from the answer.

•All projects will be analyzed together based on scores (benefit/ value, risk) and cost.

•Along with prioritization, the resource analysis will determine the final approved portfolio of investments (projects).

To determine the model

The remainder of this document contains ideas to think about in determining the prioritization model that will define the value of the projects to the business.

Defining Value/ Determining Prioritization model – questions to ponder

What defines value for your hospital? For CHW? For your region?
As the decision maker, granting project funding, how would you decide what are the most important projects to do?
Think about: 1. Operations. 2. Market/ Competitiveness. 3. Customers. 4. Financial return/ benefit.
How is the hospital measured?
What are current specific issues for the business?

Typical Criteria (comprehensive list, not industry specific) for Value Evaluation:

•Business:

–Strategic Alignment

–Productivity

–Process Improvement

–Competitive Advantage

–Business Impact

–Employee satisfaction

–Customer Satisfaction

–Impact of not doing the project

•Financial Benefits:

–Revenue growth

–Cost Savings

–Cost Avoidance

–NPV

–ROI

–Payback Period

•Risk-related criteria

–Business risks

–Technology risks

–Project Mgt risks

–Implementation risk

–Public relation risks

•Legal/ Regulatory compliance criteria

•HR Related criteria

–Specific competency

–Employee satisfaction

•Market Advantage

•Technical

–Architectural alignment

–Information delivery

–Success probability

–Conformity to Standards

From the Strategic Plan: Healthcare Business Drivers to consider

•Patient Safety

•Patient Care

•Patient Satisfaction

•Sun-setting/ Fixing

•Regulatory/ Legal/ Mandatory

•Operations Improvement

•Cost Reduction

•Business Impact

•Avoid Negative Consequences

•Competitive Advantage

•Physician satisfaction/ strategic/ alignment

From the Strategic Plan: Strategic Areas

•Ambulatory Care

•Regulatory

•Patient Safety

•Operational Improvement

•End of Life

•Clinical

•PACS

•BI

•Rev Cy

•HIM,

•Finance

•Supply Chain

•Employee Services

•Web and Portal

•Integration

•Infrastructure

Example of a model from the Pilot:
Risk Evaluation:

•Management Support –measures level of interest by senior management

•Risk of not doing the project – Risk to organization if project is not approved.

•Schedule Risk – risk of not completing per schedule.

•Cost Sensitivity – evaluates quality or sensitivity of cost estimates.

•Organizational risk – risk project will fail due to organizational disruption.

•Technical risk – risk to complete based on technical point of view.

Organizational Impact:

•Business Process redesign – allows organization to do things in a better way.

•Business Model – degree of alignment with the organization’s business model.

•Quality of work life

Mission Effectiveness – measure of system on internal and external customers

•Improve internal program services

•Improved service to patients

Top 10 Healthcare IT Systems Priorities (in order of importance, taken from IT Healthcare research)

•Move toward electronic health record

•Improve patient care capabilities

•Improve decision support for all clinicians

•Improve revenue cycle capabilities

•Improve productivity and reduce costs

•Improve ambulatory and outpatient capabilities

•Make optimal use of networks and infrastructures

•Implement wireless access and personal digital-assistant usage

•Improve financial management and supply chain