D'Arcy Gue

Health Care IT Portfolio Optimization — Do You Have the Right Stuff?

July 28, 2014

Healthcare IT 6 Minute Read

Recently, we’ve made the case that the current focus in health care information technology needs to be value. More specifically, we’re suggesting a focus on serving health care business objectives, optimizing return on IT investment, and remaining in front of key regulatory requirements. We’ve addressed the importance of focusing on IT activities that have measurable business impact, and how these concepts apply to optimizing IT spend. 

To achieve a value-driven strategy, there are four areas to consider and questions within those areas that you must ask yourself:

  1. Portfolio OptimizationWhere have you invested, and how are those investments performing?
  2. Strategic Optimization – How are your IT investments impacting your business objectives?
  3. Financial Optimization – Are you spending your IT dollars wisely?
  4. Services Optimization – How well are IT services delivered?

This post explores the area of Portfolio Optimization and addresses how your organization is maximizing the ROI of your IT spending by examining the software products you have implemented and how those products have been deployed. 

goal settingWhat are your business goals?

The starting point in a portfolio optimization (or any optimization) is to establish the metrics and goals that will be used to evaluate ROI. The best place to start is the organizational strategic plan.

It’s important to determine which clinical goals the organization is focused on, such as lower readmission rates or higher performance on core quality measures. Ask yourself, “What broad organizational measures are we focused on?” These could be more community referrals, or better staff satisfaction. Lastly, what financial measures is your organization prioritizing? Examples are reduction in days in AR and visits discharged not final billed (DNFB), improvements in clean claim and denial rates, or increased charge capture.

Once these goals are understood, you can begin to ask the three core questions of a portfolio optimization:

  1. Investment — Which IT products has the organization invested in?
  2. Alignment — How does your software align with your business goals?
  3. Deployment — Are the products properly deployed?

1. Investment — Which IT products has the organization invested in?

The question of what software does the organization have is not intended as just an inventory of products (although you certainly should have that). This is an assessment of capabilities. A careful review of capabilities may show, for example, that an insurance verification tool that is deployed throughout the hospital has not been deployed into physician practices, leaving a gap in that capability.

Similarly, it’s not uncommon, particularly with the high volume of acquisitions occurring, for hospitals to have two products that perform the same function, e.g. physician offices and hospitals using two (or more) different billing platforms. Consolidating to one platform would allow the organization to achieve higher volume discounts, lower maintenance costs, achieve better integration, and gain expanded functionality.

2. Alignment — How does your software align with your business goals?

When comparing software capabilities against your business goals, you might find holes, where there isn’t a software product (or project effort) that addresses an important goal.

One example I observed recently is a hospital with a stated goal of improving physician engagement and referrals, but the leadership has consistently resisted the idea of implementing a clinical portal to allow physicians access to patient test results remotely.

Another recent visit took me to a facility with a goal of improving patient safety. However, the clinical leadership repeatedly resisted an IT project to create clinical decision support capability in the EMR and its associated CPOE modules.

In another case, Phoenix worked with a hospital where the stated goal for the IT department was to reduce operating costs and improve integration between clinical and financial systems. Unfortunately, the hospital was proceeding with a revenue cycle project that would have directly opposed both goals.

It’s imperative that you assess your organization’s goals and ensure that you have the systems and products in place to support them.

3. Deployment — Are the products properly deployed?

As a final question to measure (and ultimately improve) the value derived from IT spending,  it is critical to look at the practical deployment of the software identified. There are many ways that implementation (systems or policies and procedures) can impact value delivered.  Here are three of the most important:

  • Quality of Implementation – Often the most valuable exercise in optimization is assessing quality of system implementations. This quality can be measured in IT metrics such as stability, support hours required, and up-time. It can also be measured using operational metrics such as adoption rates for EMR, time required to complete certain activities, and usage of certain functions by clinicians, such as educational tools or ePrescribing.  Similar measures are available for revenue cycle metrics such as clean claim and denial rates.
  • Integration issues – In many hospitals, due to the rush to implement new software — development, testing, and deployment of interfaces becomes an issue. Often, only truly critical interfaces like unidirectional ADT and charge interfaces are built during the initial implementation, with the stated plan to implement a number of other helpful interfaces in stage 2. Very often, however, the whole stage 2 project is postponed, or only partially completed, leaving significant opportunities for more efficient and accurate use of data on the table.
  • Sub-optimal utilization —  To completely assess value, and more importantly identify areas where quick efforts can produce meaningful value wins for the organization, it is critical to look at areas where user adoption of software tools and capabilities is lacking.  The best software package in the world is of little value if users don’t use it correctly and often. In a clinical setting, Meaningful Use / MIPS measures like utilization of patient education functionality can be excellent markers for poor utilization. Patient education has been shown repeatedly to improve patient compliance with discharge instructions and reduce the incidence of readmissions. Logically, every discharged patient or their caregivers should receive some kind of education, yet many hospitals barely make the 10 percent measure required by stage 2 of Meaningful Use / MIPS. Similarly, many hospitals and physician offices provide insurance verification tools for their registration personnel, yet still receive a significant number of denials because the patient was not covered at the time of service, primarily because the verification tool isn’t being used consistently.

    Equally important when assessing utilization is to include the operational side of the process. The most capable IT tool in the world is of little value if end-users don’t know how to use it, or if their policies and practices are not aligned with the platform. This portion of the analysis requires personnel that are well-versed in the IT systems, end-user operations, and the best practices that support those activities.

Portfolio optimization is not just an academic exercise. Through focused portfolio optimization efforts, your hospital can reap quick and measurable benefits, such as:

  • Reduced spend from the elimination of duplicate capabilities like two separate physician billing systems,
  • Improved quality of care from practical, workflow driven interventions that directly assist the clinical team in providing the best care to the patient,
  • Finally, because focused interventions can produce rapid and measurable results that are wins for IT, clinicians, patients, and hospital bottom lines — portfolio optimization is well positioned to serve as the first-line effort to improve the value of the hospital’s IT spend.

We will continue to explore portfolio optimization efforts in future posts, in addition to providing guidance on clinical and revenue cycle systems.

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