University of Illinois Hospital & Health Science System

University of Illinois Hospital & Health Science System

MGMT 590

November 29, 2012

Amrita Ghoshal

Hongyan Pei

Liz Pisney

Maggy Tieche

Neeta Venepalli

BACKGROUND

The University of Illinois Hospital & Health Science System (UIHHSS) is one of the largest medical research districts in Illinois, and integrates three university systems, seven health science colleges including the College of Medicine, and two Federally Qualified Health Centers (FQHCs).UIHHSS consists of a 496 bed tertiary hospital, an outpatient facility with multiple diagnostic and specialty clinics and 19 neighborhood clinics through Chicago[i].In 2011, UIHHSS saw the following: 18,201 inpatient admissions; 490,155 outpatient visits; 2,633 births; 6,288 inpatient surgeries; 41,176 emergency department visits. Approximately 360 physicians and 1175 nurses are on staff[ii]. UICHSS’s mission is to “leverage its unique combination of clinical care, health sciences education and biomedical research in providing high quality, cost effective healthcare for the people of the State of Illinois and delivering personalized health in pursuit of the elimination of racial and ethnic health disparities”[iii].

Important priorities for the UIHHSSare to improve clinical outcomes and quality metricsas measured through criteria established through the Joint Commission[iv], and Centers for Medicare and Medicaid (CMS)[v]and patient satisfaction as measured through the Press Ganey Survey[vi], while reducing overall expenses.After review of the UIHHSS strategyfivespecific organizational goals have been selected:

1. Decrease 30 day hospital readmissions and hospital acquired infections
2. Improve patient experience in the inpatient setting
3. Improve CMS core measure objective scores
4. Formalize quality improvement plan with data collection and benchmarking for individual physicians
5. Reduce expenses and improve financial status of organization

Through the following situational and resource analysis, we propose strategyrecommendations focused on optimization of the current electronic medical record (EMR). We also explore UIHHSS’s uncertainties and how to prepare for them.

STRATEGY OVERVIEW

In 1995, UIHHSS implemented Cerner’s PowerChart electronic medical record (EMR)to manage patients’ health records electronically. The implementation improved patient care through improved data management and communication.Currently, the EMR links to the inpatient and outpatient setting and is integrated with radiology, laboratory and pharmacy. It includes e-prescribing (eRx), computerized provider order entry (CPOE)and clinical decision support (CDS) assistance. Because of its outstanding performance on infrastructure, business and administrative management, clinical quality and safety and clinical integration;UIHHSSwas selected as one of the Most Wired Hospitals in 2012 for the sixth year in a row[vii].

Review of the UIHHSS competitive landscape shows that there is more to be gained by continual optimization of Cerner PowerChart with regards to the afore mentioned organizational goals.The following resource analysis shows how this can be achieved by first evaluating the status of UIHHSS’ finances, operations, marketing, design and engineering and information systems. The following situational analysis identifies opportunities for strategic changes.

RESOURCE ANALYSIS: FINANCES

UIHHSS’s finances are a portion of the entire University of Illinois’ budget[viii]. Annual reports list hospital and other medical activities for revenues, expenses and health services’ assets and liabilities (Figure 1) with June 30, 2011 as the most recent fiscal year end. The limited breakout of financial figures and lack of specifics for UIHHSS, such as total equity and inventory, prohibits a complete financial analysis.

The hospital and other medical activities have had negative net revenue for the last three fiscal years, with 2011’s at -$86,627 million. A number of factors contribute to the growing expenses, including employee compensation and the rising cost of care. The current ratio of 2.9 shows ability to cover debt with liquid cash, even with negative net revenue. The debt-to-asset ratio is 0.42, showing low risk and the ability to gain financing. There may be fewer liabilities attributed directly to the hospital and it retains valuable land assets that helps keep these ratios in check. Liabilities reduced from 2010 to 2011, which may indicate that even with a negative margin, UIHHSS has the ability to pay down its debt. 96 percent of payment comes from insurance companies, indicating an incoming source of cash for services rendered. In 2011 the hospital provided over $16 million in charity care, which is care provided to patients who areunderinsured or are without insurance.

Figure 1: University of Illinois Annual Report[ix]

RESOURCE ANALYSIS: MARKETING

UIHHSS markets to two consumer groups: patients and medical services payers. Patients are encouraged to use UIHHSS’s services while insurance companies cover the cost of these services. UIHHSS’s slogan is “Changing medicine. For good.” and their message emphasizes providing equal care to all patient types, especially for groups with health disparities. In early 2012, the hospital underwent a rebranding, which reflected the organization change of combining all health related university activities[x]

UIHHSS must attract new patients and ensure patients continue to receive ongoing care and services. For some patients, how doctors, nurses and other staff treat them encourages them to continue to seek treatment from UIHHSS. Promoting the patient’s involvement in their overall health creates a consumer base that is knowledgeable and driven. The MyHealth[xi] website is a resource for patients to participate in their care with news and general health information. Current and recent marketing activity includes traditional print and radio campaigns[xii],a YouTube channel featuring patient stories[xiii], an online magazine highlighting stories about the system and emphasizing the quality of care provided[xiv] and television segments about specific clinical services for news outlets[xv]. UIHHSScan enhance MyHealth to allow patients to view their patient record, test results, schedule appointments, make payments and consult with health care providers.

Since the majority of payment for health services comes from insurance companies and government aid, UIHHSS also has an obligation to seek sufficient payer options. UIHHSS accepts 26 insurance plans[xvi], in addition to Medicare and State and Federal programs.

RESOURCE ANALYSIS: DESIGN

UIHHSS consists of a 496 bed, inpatient hospital with seven specialized intensive care units and an ambulatoryfacilitywith multiple sub-specialties. The hospital has 8 floors; 5 dedicated to inpatient care and 3 including radiology,surgery suites, the cafeteria and administration offices.Each floor is divided into two to three units and categorized by sub-specialty (for example: 8W is an oncology area and 8BMT is the stem cell transplant area). Each unit has a central nursing station equipped with computers, a nursing staff room, and hospital beds extending in a line from the nursing station. The hospital has a combination of single and double rooms, and reserves single rooms for patients with hospital acquired infections or those requiring isolation.Computer workstations are located primarily in the nursing station, with two to three computers located in other areas of the unit. The medication carts are located at the nursing stations in close proximity to the computers and the nursing staff rooms. Except for the intensive care unit rooms, inpatient rooms lack computer stations and the hospital has few mobile workstations. The hospital has wireless capabilities that are free to all patients and staff.

Cerner PowerChart is a fully integrated system with electronic order entry and charting, clinical decision support, medication alerts and e-prescribing used in inpatient units and ambulatory clinics. Multiple providers can access patient records although only one provider can input orders at any time. Currently, there are no portals connecting patients to their hospital records, or allowing patients to communicate with their providers electronically through Cerner. Although partially paperless, UIHHSS still relies heavily on paper; electronic orders printed by nursing staff after placed by the providers and paper copies of patient imaging/labs/discharge instructions being given to the patient.

RESOURCE ANALYSIS: OPERATIONS

UIHHSS’s inpatient operations and supply chain management are complex but similar to other tertiary hospital centers and involve multiple ancillary systems that run in parallel. These include laboratory, pharmacy, radiology, housekeeping, food delivery, transport (patients and materials), surgical suite management, admissions and discharge coordination. At the epicenter of operations is the physician-nurse-pharmacy-patient interaction.

Currently most of the physicians’ and nurses’ time is spent on the computer rather than face-to-face time with patients. Daily work flow in the inpatient setting revolves around three physical foci: computers location, medication room, and patient rooms.

Daily workflow is physically centered on areas of the floor with computer stations and medication carts:

1. At shift changes, nurses and residents give verbal reports about overnight events to their counterparts

2. Residents print rounding reports, which include vitals, medications and labs

3. Residents ‘pre-round’ and physically visit every patient and spend about 5-10 minutes examining them and talking with them about their clinical situation

4. Attending physicians then re-round with the residents, either by sitting in the resident room (where there is access to a computer for updated labs) and then visiting each patient’s room or by ‘rounding at the room’

5. Residents break away from rounds to place electronic orders into the computer as they have time. Residents also break away to place orders requested by the nurses.

6. Nurses receive orders electronically, and then must chart with each order implementation

7. Patients call for nurses through the intercom systems that are answered by a receptionist at each nursing station, who then verbally communicates patient requests to the nurses.

8. Medications are stored in a central medication holding area in each nursing station; each patient has a ‘bin’ in which their medications are stored which are manually delivered by pharmacy technicians. ‘STAT’ medication orders are sent via tube stations. There is no bar code administration closed loop system for medications as of yet, although this is being planned for December 2012.

RESOURCE ANALYSIS: INFORMATION SYSTEMS

The process of implementing and maintaining a system to facilitate electronic medical records is three-fold: automate, informate and transform.[xvii] The first level automation was complete with Cerner PowerChart. The system changed some of the clinical workflows.The second order of change, to informate is when the roles of the actors involved within the system have changed as a result of the automation. It is important that UIHHSS continue to have a set plan for training new employees on use of the system as part of an on-boarding process as well as ways to train all users on upgrades or changes. The last type of change, to transform is when information systems and technology permeate to the point that they flatten the organization and have bearing on organizational structure and roles. UIHHSShas not realized many of the transformational changes at this time, but can soon, through the use data harvesting. For example, theEMRhas the potential to store more than just prescription and discharge information. Databases could store elapsed time between treatments/visits or provide insight into a patient’s return because of an unresolved complaint. The manual, paper based processesand workstation centric order entry seem to have reduced time actually interacting with the patients. Transformational changes can begin to happen by redesigning the mobility of the technology and further improving the workflow – which will ultimately lead to more time interacting directly with patients.

With UIHHSS’s research facility, collected data can drive analytics to identify gaps in care and services. UIHHSS would need to ensure their databases are not only accessible for reporting, but that they have the talent to harvest and in turn, interpret the data.

The following value creation framework (Figure 2) demonstrates how value can be added to a customer (in this case patient) relationship[xviii]:

Figure 2:Value Creation

On the left vertical axis is the theoretical repurchase frequency (low to high, bottom to top)and the horizontal axis is the degree of customizability (low to high, left to right), withUIHHSSrepresented by the star. In this instance, patients at UIHHSS have a substantial “repurchase frequency” as everyone will need healthcare throughout their lives and the opportunity to use data to customize the experience of and care for a patient is high. As described, this data can not only improve healthcare operations, but also benefit the patient by tailoring to their needs. UIHHSS has an opportunity to add value to their patients by providing EMR access along with customized tools and information based on their healthcare needs.

Security of patient data is a cornerstone of any EMR system. It is crucial that the UIHHSS ensure not only the patient data is kept securely, but that there is also enough storage space for records and data to be housed. UIHHSS must ensure they have solid planning for server uptime, redundancy and capacity.

SITUATIONAL ANALYSIS

SWOT ANALYSIS

Strengths

Strengths of UIHHSS are that it is affiliated with the largest and best medical schools in the country. Care is provided locally in Chicago, across the region and the state of Illinois and is provided regardless of patient ability to pay.

Weaknesses

Weaknesses of UIHHSS are that it is financed by the state of Illinois, which means that fiscal trouble for the state can translate into funding issues for the system. Traditionally, healthcare has not been a highly profitable business. And finally, population changes move demand for care over time, which makes strategic planning and resource allocation a challenge.

Opportunities

There are many opportunities for UIHHSS to gain a competitive advantage as the landscape of care is at a transformational stage. Overall, there is a greater focus in the US than ever before on adopting healthy lifestyle choices. Robust employment of an EMR system can help patients make and commit to those changes.

Threats

Threats also loom large for UIHHSS. With the increased use of technology, competition for healthcare services and information has increased dramatically. This has informed patients more than ever and influences how they select their healthcare provider. As federal funding has shifted and changed, there are more limitations that not only affect how patients care can be funded, but also how aspiring caregivers such as doctors and nurses can fund their education. The latter of the two greatly affects maintaining a knowledgeable staff and recruiting over time.

PORTER’S FIVE FORCES ANALYSIS

Competitive Rivalry within the Industry (High)

UIHHSS has five major competitors (Figure 2):

• Loyola University Medical Center (LUMC)
• Rush University Medical Center(RUMC)
• University of Chicago Medical Center(UCMC)
• The John H. Stroger, Jr. Hospital of Cook County(CCH)
• Northwestern Memorial Hospital (NMH)

UIHHSS is the smallest of the five hospitals. The affiliation relationship of UIHHSS and University of Illinois at Chicago (UIC) Health Science Colleges does not bring any extra competitive advantage as other hospitals are also affiliated with a medical university or college. As UIHHSS highly relies on government aid, federal policy changes will affect its capital resource.If any organization does not have its initiative to control its capital, it may reduce the flexibility when determining strategy. All hospitals other than UIHHSS have their own specialized care center, something which distinguishes their brand or image. Each comparison hospital uses an EMR.

Bargaining Power of Suppliers (High)

The main suppliers of UIHHSS are medical equipment, pharmaceuticals, insurers, doctors and nurses. UIHHSS’s state funding creates limitations when compared with private university hospitals. This also limits the hospitals bargaining power. As private hospitals or clinics enter the industry, doctors, nurses and insurers bargaining powers also increase.

From suppliers of medical equipment and pharmaceuticals, UIHHSS can get data - storage, consuming, costs, outcomes, and readmission rates associated with those products, then joingroup-purchasing organizations to increase bargaining power.

Doctors and nurses are also suppliers to the hospital andshould optimize their services by utilizing products like EMR to improve operationalprocedures, reduce cost and waste of human resource and time.

Threat of new entrants (Low)

Two important considerations when evaluating new entrants are the level of attractiveness and barriers to entry. Traditionally healthcare is said to be a local business because providers must deliver services to patients in person. Advances in technology and communication, as well as the ability to recruit providers nationally, some aspect of the physician - patient relationship is no longer true.

The challenge of streamlining patient care through digitized medical records, e-prescription programs, and online hospital communication, has gained some momentum, giving younger companies a chance to make inroads. With a $19 billion federal stimulus to develop new health information tracking technology, health IT employment is expected to grow by 18 percent through 2016[xix]. When considering income as a key indicator of industry growth, it can be concluded that the industry would be moderately attractive to potential entrants.