Dr. Carol Brown - distinguished professor at Stevens Institute of Technology , The Howe School of Technology Management enterprise systems in healthcare: leveraging what we know from other industries

1. Confenis 2012 – IFIP WG 8.9
International Conference on Research and
Practical Issues of Enterprise Information Systems
Enterprise Systems in Healthcare:
Leveraging What We Know from
Other Industries
Carol V. Brown, Ph.D.
Stevens Institute of Technology
carol.brown@stevens.edu
September 20, 2012

2. Stevens Institute of Technology
•Established in the 1860s as an Engineering School
•Most famous graduate: Frederick Winslow Taylor (Theory of Scientific Mgmt)
• c. 2,300 Undergraduate Students from 41 states and 50 countries
Howe School (Business), Engineering, Sciences, Arts & Letters
• c. 3,000 Graduate Students
(MS, ME, MBA, PhD)
• c. 220 Full-time Faculty
Campus on 55 acres in Hoboken, New Jersey
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 2

3. Personal Introduction
Educator
MBA, MS in IS, PhD programs
IT Management – including Healthcare IT
Textbook co-author – Pearson, 7th ed.
Researcher
Topics of interest to IT Executives
ERP research beginning in mid-1990s
Field survey & interview research methods
Journal Editor
Editor-in-Chief, MIS Quarterly Executive
Technology Editor, MDAdvisor
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 3

4. MIS Quarterly Executive
Editor-in-Chief www.misqe.org
• Carol V. Brown, Stevens Institute of Technology
Senior Editors
• Omar El Sawy, University of Southern California
• Blake Ives, University of Houston
• William Kettinger, University of Memphis
• Dorothy E. Leidner, Baylor University
• Jeanne Ross, MIT Sloan School of Management
• Leslie Wilcocks, London School of Economics & Political Science
• Philip Yetton, Australian School of Business
Editorial Board Members = peer reviewers
• c.50 academics experienced in conducting practitioner research
Association Sponsors
• AIS and Society for Information Management (SIM)
Primary mission: the transfer of knowledge based on rigorous research that is
immediately relevant and useful for practice.
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 4

5. Why Collaborate on Healthcare IT * Research ?
#1: Historically, a laggard in IT investments – including
enterprise systems with integrated modules
#2: Healthcare sector is a major component in global economy
*IT for Healthcare Delivery Organizations, which include Hospitals (acute care,
inpatient), Physician Practices (ambulatory, outpatient), long-term care facilities, etc.
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 5

6. Why Collaborate on Healthcare IT Research ?
#1: Historically, a laggard in IT investments
In 2003 in U.S.: average IT expenses across all industries = 3.9%
In 2007 in U.S.: average IT expenses by hospitals = 2.6%
• hospital size (=number of hospital beds)
IT = 1.86% for 1-100 beds
IT = 3.87% for 501-600 beds
• rural versus urban locations
IT = 1.81% for rural
IT = 2.67% for urban (Source: HIMSS Analytics 2008)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 6

7. #1: Historically, a laggard in IT investments
Source: 2007 MGH Institute of Health Policy, IHP Study; DesRoches, et al., NEJM, July 3, 2008
In Physician Minimally Fully Functional
Practices Functional EHR EHR System Total
In U.S. (clinical notes; record
pharmacy, lab and
imaging results)
Size
1-3 doctors 7% 2% 9%
4-5 doctors 11% 3% 14%
6-10 doctors 17% 6% 23%
11-50 doctors 22% 8% 29%
More than 50 33% 17% 50%
doctors
Total 13% 4% 17%
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 7

8. IT Investments in Other Industries: 1990s - Today
Information Technology Types of Software Applications
Early 1990s
Portable computers (with mouse input) • PCs with Windows operating systems
Graphical user interfaces (Windows) • Suites of integrated apps for knowledge
workers (MS-Office)
Local area networks connect desktop
computers • Network operating systems enable multi-user
sharing of apps, data, printers
Mid-1990s and Later
Enterprise systems with centralized Suites of integrated software apps to support
databases and client/server architectures multiple departments and cross-unit workflow
(ERP, CRM, SCM)
• Data repositories and analytic tools for  Executive information systems and decision
“business intelligence” support tools using integrated databases
 Easy-to-use Web browsers
 WorldWideWeb (WWW) standards (URL,  E-commerce websites by dot-com (online) &
HTML, IP protocol) traditional firms
 Web 2.0 applications Organizational use of social networking tools
Smart phones and tablet computers  Small, downloadable software “apps”
8 Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 8

9. Packaged Software for Hospitals:
Enterprise Systems for Operational Efficiencies
Administrative Systems ERP vendors
(like SAP)
• Financial Management
– Accounting/Finance
– Materials Management
– Decision support (including budgeting support, Executive Information
Systems)
• Human Resources
– Payroll
– Benefits management
– Personnel management)
• Payment Systems
– Claims/billing
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012
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10. Packaged Software for Hospitals:
“Best of Breed” Applications by Niche Vendors
Clinical Systems Not ERP vendors
• Electronic Health Records
– Patient Record (Electronic Medical Record)
– Order Entry with Decision Support  CPOE with Decision Support
– Physician Documentation
• Nursing
– Staffing, Scheduling, Medication administration)
• Health Information and Document Management
– Charting, Dictating, Encoding, Transcribing, Forms Management
• Ancillary Departments
– Emergency Department, Intensive Care
– Lab, Radiology
– Pharmacy
• Operating Room (Surgery)
• PACS (Imaging)
– Radiology, Cardiology
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012
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11. Why Collaborate on Healthcare IT Research ?
#1: Historically, a laggard in IT investments – including
enterprise systems with integrated modules
#2: Healthcare sector is a major component in global economy
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 11

12. Healthcare Spending in U.S. as % GDP
Healthcare costs = 16% of U.S. GDP by 2006
Healthcare costs >18% of U.S. GDP by 2012
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 12

13. Healthcare Spending per Capita
in Developed Countries
McKinsey&Company, Dec 2008
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 13

14. Two Universal Healthcare Goals
Costs
Reduce growth rate
Quality
Improve Patient outcomes
(& reduce medical errors)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 14

15. Two Universal Healthcare Goals + 3rd U.S. Goal
40+ million
Costs Uninsured
Reduce growth rate In U.S.
Quality
Improve Patient outcomes
(& reduce medical errors)
Patient
Access
to Provider
Physically accessible
(& financially affordable)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 15

16. Health Care System Models (Reid, 2009)
• Bismarck model
– Provider = Private
– Payer = Private
• Beveridge model
– Provider = mostly Gov’t
– Payer = Government
• National Health Insurance
– Provider = Private
– Payer = Government
• Out-of-Pocket
– Provider = Private (in cities)
– Payer = Patientby Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012
Prepared 16

17. U.S. System
• Bismarck model
– Provider = Private If employed….
– Payer = Private By Employers who subsidize
Healthcare insurance; may
Include $$ deductibles
• Beveridge model
– Provider = mostly Gov’t If military veteran
– Payer = Government Serviced by Veterans Health
Administration (VHA)
• National Health Insurance
– Provider = Private If over 65 Medicare
– Payer = Government If classified as “poor”
Medicaid
• Out-of-Pocket
– Provider = Private (in cities) Uninsured patient
– Payer = Patient Est. 40 Million under age 65
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012

18. Two Universal Healthcare Goals + 3rd U.S. Goal
Costs Affordable Care Act
2010
Reduce growth rate [“Obamacare”]
Quality
Improve Patient outcomes
(& reduce medical errors)
Patient
Access
to Provider
Physically accessible
(& financially affordable)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 18

19. Affordable Care Act (2010)
Patient Protection and Affordable Care Act
also referred to as “Obamacare”
Date
In effect Increased age for “child” under a parent’s plan
2013 New “caps” on coverage and insurance payments
New Pharmaceutical company taxes, more drug subsidies
New Medical Device company sales tax
2014 INDIVIDUAL MANDATE: Federal Tax (penalty) for Individuals
with No insurance coverage
EMPLOYERS: Penalty if 50+ workers and No health insurance
PRIVATE INSURERS: No caps on annual or lifetime $$; cannot
drop individual for pre-existing condition or charge more
STATES: Must establish a health insurance “exchange” for
individuals & small employers to purchase insurance plans
etc….
NOT upheld by Supreme Court (June 2012):
STATES must accept new Federal definition of Medicaid eligibility
(which would increase Medicaid roles by about 17 Million people)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 19

20. Other Recent U.S. Legislation: HITECH Act
Costs Affordable Care Act
2010
Reduce growth rate [“Obamacare”]
Quality
Improve Patient outcomes
(& reduce medical errors)
Patient
HITECH Act of 2009 Access
$19.2 B for Electronic
Health Record to Provider
Adoption
Physically accessible
(& financially affordable)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 20

21. HITECH Act (2009)
The HITECH Act: Some Specifics
Part of the American Recovery and Reinvestment Act (ARRA)*
* Economic stimulus package
• $19.2 billion for Electronic Health Record adoptions
An electronic record of health-related information on an
individual that conforms to nationally recognized
interoperability standards and that can be created,
managed, and consulted by authorized clinicians and staff
across more than one healthcare organization.
-patient demographics -medications
-existing conditions & progress notes -vital signs
-past medical history -immunizations
-laboratory data & radiology reports
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 21

22. HITECH Act (2009)
The HITECH Act: Some Specifics
Part of the American Recovery and Reinvestment Act (ARRA)*
* Economic stimulus package
• $19.2 billion for Electronic Health Record adoptions
– To receive payments:
Certified EHR software package installed
including CPOE module with DSS
Demonstration of achieving “Meaningful Use” (MU) of EHR
over 3 consecutive stages
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 22

23. CPOE: Computerized Physician Order Entry
An EHR module in which healthcare providers enter patient orders—such as
medications, diagnostic tests, discharge instructions –which can be distributed
without transcription to those responsible for carrying them out or monitoring
their completion.
Orders are captured as
structured data:
data elements are
retrieved from order
sets with established
names in an electronic
database
…NOT entered into
systems as free text
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012
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24. CPOE Module: Difficult to Implement
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 24

25. HITECH Act (2009)
The HITECH Act: Some Specifics
Part of the American Recovery and Reinvestment Act (ARRA)*
* Economic stimulus package
• $19.2 billion for Electronic Health Record adoptions
– To receive payments:
Certified EHR software package installed
including CPOE module with DSS
Demonstration of achieving “Meaningful Use” (MU) of EHR
over 3 consecutive stages
Incentive payments disbursed via CMS in HHS (Medicare and Medicaid)
Max. $44K - $63K for Eligible Physicians
Max. $2M + per-discharge amount for Eligible Hospitals
& future reductions in payments if not an EHR adopter [in future]
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 25

26. “Meaningful Use” Criteria increase
over 3 stages (multi-year periods)*
* August 2012: Stage 2 criteria released & some time period adjustments
•Disease management
•Improvements in outcomes
•Clinical decision support (quality, safety, efficiency)
• Electronic capture of structured
data
•Medication management •Decision support for national
•Tracking key clinical indicators high priority conditions
•Transition in care
•Patient self-management tools
• Care coordination
•Quality measurement and
research •Improving population health
• Reporting for clinical quality
outcomes
and public information
• Bi-directional public health
Stage 1 Stage 2
Stage 3
Data Capture Advanced
Clinical Improved
and Sharing Outcomes
2011-2012 Processes
2015-2016
2013-2014
Source: Medical Informatics: An Executive Primer, 2nd edition, 2011
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 26

27. Example: Medicare payments to eligible Physicians
Maximum
2010 2011 2012 2013 2014 2015 2016+
Incentive
Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 Stage 3
$44k
$18k $12k $8k $4k $2k $0
Stage 1 Stage 1 Stage 2 Stage 3 Stage 3
$44k
$18k $12k $8k $4k $2k
Stage 1 Stage 2 Stage 3 Stage 3
$39k
$15k $12k $8k $4k
Stage 1 Stage 3 Stage 3
$24k
$12k $8k $4k
Stage 1: Data capture and sharing
Stage 2: Advanced clinical processes
Stage 3: Improved Outcomes
Source: Medical Informatics: An Executive Primer, 2nd edition, 2011
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 27

28. HITECH Act (2009) in U.S.
Part of the American Recovery and Reinvestment Act (ARRA)
– $19.2 billion for Electronic Health Record adoptions
Regional Extension Centers (to facilitate EHR adoption by
eligible physicians)
– $$ millions allocated for:
Healthcare Information Exchanges (state & regional networks)
– Office of the National Coordinator for Healthcare IT
Permanent position within the Health and Human Services
(HHS) department with roles for executing HITECH Act
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 28

29. Why collaborate on Healthcare IT research ?
#1: Historically, a laggard in IT investments
#2: Healthcare sector is a major component in global economy,
and HIT is a major enabler of 2 universal healthcare goals
#3: Historically, not a mainstream IS research context,
but we have 2 decades of ES research in other industries
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 29

30. Leveraging what we know from
Enterprise Systems Research in Other Industries
• Organization Level
– Key Drivers (benefits sought by the organization)
• Project Level
– Initial Implementation Projects (usually up to Go-Live)
• Program Level
– Multi-stage Enterprise System Cycle (includes after Go-Live)
What’s the Same and What’s Different for
a Healthcare Delivery Organization Context?
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 30

31. ERP Benefits Sought by Other Industries
Initial Internal Drivers New Millennium Internal
• Enable cross-functional & External Drivers
business processes
• Leverage modern • Enable global operations
technology platforms and • Enable information sharing
centralized database for across business partners
improved data access (external supply chain with
• Configured for “best suppliers & customers)
practices”
• Ability to integrate data for • “Jump on bandwagon”
decision support and/or “options” investing
External Driver –
• Avoid Y2K costs
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 31

32. EHR Benefits Sought by Healthcare Industry
Initial Internal Drivers Additional Internal &
External Drivers
• Enable cross-functional
clinical workflows • Enable information sharing
• Leverage modern across other healthcare
technology platform and stakeholders (suppliers,
centralized database for insurers/payers, patients,
improved data access government)
• Configured for “best clinical
practices” • Government mandates
• Ability to integrate data for (& HITECH incentives)
decision support
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 32

33. Understanding the Healthcare Context:
• Organization Level
– Key Drivers (benefits sought by the organization)
Healthcare Industry:
What’s Different: Government role
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 33

34. Leveraging what we know from
Enterprise Systems Research in Other Industries
• Organization Level
– Key Drivers (benefits sought by the organization)
• Project Level
– Initial Implementation Projects (usually up to Go-Live)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 34

35. Enterprise System Projects
ERP early adopters EHR early adopters
• ERP suites of integrated • EHR suites of integrated
modules to replace modules to replace
“functional silos” (often “functional silos” (usually
custom legacy systems) best-of-breed packages)
• Heavy reliance on 3rd-party • Heavy reliance on software
“implementation partners” vendors and internal staff
by early ERP adopters (not consultants)
(Fortune 500, Global 1000)
• Publicized failures by major
• Publicized failures by major health systems (EHR
companies (EHR suites) suites, CPOE modules)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 35

36. Leveraging what we know from
Enterprise Systems Research in Other Industries
• Organization Level
– Key Drivers (benefits sought by the organization)
• Project Level
– Initial Implementation Projects (usually up to Go-Live)
Critical Success Factors (CSF)* Research
* What “must go right” for Initial Implementation Projects
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 36

37. Critical Success Factors (CSF) Research
EXAMPLE: Brown and Vessey, MIS Quarterly Executive, 2003 – research
based on ERP case studies in Manufacturing firms
#1: Top management is engaged in the project, not just involved.
#2: Project leaders are veterans, and team members are empowered as decision
makers.
#3: Third parties fill gaps in internal expertise and transfer their knowledge.
#4: Change management goes hand-in-hand with project planning and includes
people & process changes, not just system changes.
#5: A satisficing mindset prevails for customization and rollouts
– initially, as well as when unanticipated events occur.
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 37

38. Critical Success Factors (CSF) Research
Comparative analysis with award-winning EHR implementation projects *
#1: Top management is engaged in the project, not just involved.
#1: Key physicians are committed to and “engaged” in the project
#2: Project leaders are veterans; team members empowered as decision makers.
#2: Project leaders and team members are trusted by other clinicians & hospital staff
#3: Third parties fill gaps in internal expertise and transfer their knowledge.
#3: Software vendors and other IT service providers/consultants fill skill gaps
#4: Change management goes hand-in-hand with project planning and includes
people & process changes, not just system changes.
#4: Planning for workflow changes and training are organization-specific
#5: A satisficing mindset prevails for customization and rollouts
#5: A “satisficing” mindset prevails for adjusting plans as needed
*For paper presented by C.V.Brown at HIMSS pre-conference academic workshop, contact author.
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 38

39. Understanding the Healthcare Context:
• Project Level
– Initial Implementation Projects (usually up to Go-Live)
 Critical Success Factor research
Healthcare Industry:
What’s Different:
- Dual administrative role in hospitals (staff administrators
& chief medical officers)
- Heavy dependence on Physicians for Champion roles,
project leadership, workflow redesign, order sets
- Traditional reliance on niche software
- Quality delivery for acute care delivery takes
precedence over operational efficiencies
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 39

40. Learning from Other Industries:
Enterprise Systems Research in Healthcare
• Organization Level
– Key Drivers (benefits sought by the organization)
• Project Level
– Initial Implementation Projects (usually up to Go-Live)
• Program Level
– Multi-stage Enterprise System Cycle (includes after Go-Live)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 40

41. The ERP Journey: 5 Stages
Ross, SIM-Seattle; Ross, Vitale and Willcocks, 2003
Based on ERP case studies from late 1990s:
Continuous
Improvement
Design
Stabilization
Implementation
-“Go Live” (initial Implementation) is analogous to “diving off a cliff” into the water, and then
attempting to “resurface” before running out of breath (Stabilization).
- Once a stable state is reached, a Continuous Improvement phase begins, which is a
precursor to achieving the organizational Transformation benefits that are the “ERP promise.”
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 41

42. 4-Phase Enterprise System Experience Cycle
Markus and Tanis, 2000
Based on ERP case studies from late 1990s
- Problems in achieving success in later phase(s) may have roots in an earlier phase –
but it is possible to achieve goals in spite of earlier mistakes (or even an early failure).
Phase I Phase II Phase IV
Phase III
Project The Onward
Chartering Project Shakedown and
(configure Upward
& rollout)
Project Chartering includes documenting current business processes, analyzing for
potential improvement, comparing processes with embedded “best practices” in ERP
software, selecting software, and planning the rollout (modules, business units)
The Project includes Design and Implementation
Shakedown includes Stabilizing = getting to normal operations
Onward and Upward includes Continuous Improvement (also with new versions)
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 42

43. Why Collaborate on Healthcare IT Research ?
Four types of prior IS research in a Healthcare context*:
#1: IS theory without consideration of healthcare context
#2: IS theory with some consideration of healthcare context
#3: Healthcare context using IS theory to explain phenomena
#4: Healthcare context without consideration of IS theory
Type #3 research has the potential to significantly contribute new
knowledge – to academics and practitioners –
because it takes into account how the healthcare industry differs
from other industries.
*Source: Chiasson & Davidson, 2004
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 43

44. What else is Different from Other Industries ?
Enterprise Systems Research in Healthcare
• Software Maturity Curve:
“Mature” for ERP, but not Healthcare ES
Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 44

45. Prepared by Carol V. Brown forIFIP WG 8.9, Ghent, Sept. 2012 45