The ruminating is over.
Projections of fundamental, and expensive, information system changes have turned into projects. And the electronic integration of diverse healthcare delivery networks is moving ahead with stunning speed.
MODERN HEALTHCARE's sixth annual survey of information systems trends uncovered an explosion of activity designed to computerize patient records throughout an integrated healthcare network. Seven in 10 survey respondents said they've either completed or are actively working on a system that makes patient information and histories accessible throughout their organizations.
And eight in 10 are implementing or already operating a system that computerizes physician orders and retrieves the results electronically.
Among other findings:
The survey picked up substantial progress in laying the foundation for computer networking across multifacility healthcare organizations. Some technical innovations that were obscure and barely acknowledged just a few years ago have caught on so quickly that more than half the respondents are currently using them in their day-to-day operations.
The intense activity is the outward sign of a quickening evolution toward capitated managed care that requires information sharing within and outside the organization (See related story, p. 110). Influencing the priorities of information system projects is the growing tendency of healthcare executives to expand their vision beyond the confines of a stand-alone acute-care hospital.
Healthcare organizations are backing up the vision with spending increases. The average for total projected spending on information systems among the survey's respondents is $8 million a year during the next three years. Nearly half the respondents set their marks at more than $11 million a year.
The spending includes operational costs but primarily reflects new projects, with 23% of the organizations saying they plan to increase capital spending more than 20% a year for the next three years.
"Administrations and boards are approving high-value budgets for information systems that just a few years ago they wouldn't even have considered," said Michael Kreitzer, national director of systems integration services for the Chicago-based healthcare practice of Coopers & Lybrand. The accounting and consulting firm conducted the survey for MODERN HEALTHCARE.
At Baptist Health Systems in Louisville, Ky., the capital budget for information systems initiatives will average $12 million to $15 million a year for at least the rest of the decade, said Frank Clark, vice president and chief information officer.
That doesn't include $28 million already spent to upgrade or replace "core" information systems at Baptist, which includes five hospitals and a private fiber-optic telecommunications network linking facilities and tying physician offices into the data center, Clark said.
"We have the financial side stabilized," he said. "Now the focus is shifting to the clinical side because we have a dearth of information from the clinical side."
Baptist also is concerned about shortcomings in tracking patients, he said. "In our organization, we'd not had a need to be able to do that because our focus has always been on the acute-care side.*.*.*.*But that's changing."
The theme expressed throughout the survey is that when it comes to computerization, hospital and healthcare system decisionmakers have moved beyond reflection and strategizing, Kreitzer said. "They're saying, `We heard enough, we have enough pressures, we're doing something about it.'*"
Zeroing in on CIOs. For this year's survey, Coopers & Lybrand conducted extensive telephone interviews with 101 randomly selected CIOs of healthcare institutions.
About 23% of the institutions had 200 or fewer beds, while 26% of the respondents were from institutions with 400 or more beds. The remainder represented institutions with 201 to 400 beds.
The approach is different from previous surveys in which results were compiled from an average of 500 to 700 responses to survey forms mailed to a range of senior executives. In the 1995 survey, for example, chief financial officers made up 46% of the sample, while 35% were top information systems executives. The remainder were chief executive officers and other senior managers.
Because this year was viewed as a critical one for information systems strategy, Coopers & Lybrand and MODERN HEALTHCARE*decided to pose questions to the executives in charge of taking action and to ask follow-up questions to get a better idea of what that action was, Kreitzer said.
Under construction. Survey respondents were asked to identify their progress toward completion of a range of projects commonly viewed as important to creating a computerized patient record and making it available networkwide.
The list of 11 projects also included electronic services aimed at making clinical and administrative operations more efficient.
The responses revealed a huge number of projects under way, far exceeding the survey's goal of showing how many projects were planned and when they would get started.
Instead, the planned projects were dwarfed by reports of active implementation, with a completion rate approaching 10% or more for complex, costly installations (See chart, this page).
Topping the list was the computerized entry of physician orders and retrieval of results, a project that 43% of respondents said is already operational. Those could include previous generations installed years ago, as well as newer systems.
Many of the newer systems emphasize easy-to-use screens aimed at attracting use by physicians.
Including works in progress, the order entry systems were in the lineup of 83% of organizations surveyed. The rest of the respondents were in various stages of planning such systems. Not one respondent said the project was not contemplated.
Nearly as far along were projects to make patient information and history available across diverse healthcare networks, with 32% of the CIOs reporting that their installation was operational. Another 39% said the system was being implemented. Only 2% said they were not contemplating such a system. The remainder were in various stages of planning.
The chart on progress toward the computerized record shows that six other sophisticated types of information systems were reported to be under construction or operational by at least 40% of the survey sample.
A rising concern among healthcare organizations is computerization at the point where most care is delivered: the doctor's office.
That's a key priority for Presbyterian Healthcare System in Dallas, said Michael Alverson, vice president of information systems. "Probably the biggest single initiative is linking the physician office data with the hospital-based data," Alverson said.
Only then can an institution complete the loop of information on patient care and offer assurances that it's treating conditions in a consistent way, he said.
If information is focused only on the hospital, "it's like looking at the world with one eye closed."
At Tidewater Health Care in Virginia Beach, Va., executives are shopping for clinical information systems to computerize the point of care at its two hospitals and 24 physician offices, said Peter Garrison, corporate director of information services.
The healthcare system already converted 18 of those offices to a common billing system within a tight four-month period at the end of 1995, Garrison said. That system will serve as a standardized foundation upon which to add new clinical capabilities, he said.
Emerging technologies. The building blocks of information systems include products and inventions that were considered emerging technologies a few years ago. In fact, when MODERN HEALTHCARE*polled interest in a list of technologies in 1994, it simply asked for a yes-or-no answer to plans for implementation within three years (Feb. 14, 1994, p. 70).
Two years later, the operative question for some of those technologies isn't whether they're planned, but when. In the current survey, respondents were asked whether they were interested in, seriously evaluating or currently using those technologies. The results showed the rapid advance of technology over two years (See chart, this page).
Nearly all the technologies were operational in at least 10% of respondent organizations, with percentages approaching or exceeding 60% for:
Interface engines, which provide a software translation and a routing hub for multiple information systems that otherwise could not communicate with one another.
Open systems, which describes the technical underpinning of certain information systems built to accept data and instructions from systems of other vendors.
Wide-area fiber-optic networks, the systemwide use of a new generation of cabling and switches capable of carrying complex electronic messages at high speeds.
At Schumpert Medical Center in Shreveport, La., more than 50 physician offices representing 300 doctors are linked mainly through modems to the main information systems, said Jose Gonzalez, vice president of information systems and CIO. The computer systems on the medical campus are tied together through dedicated fiber-optic lines, he said.
The main project this year will use an interface engine as the integration springboard into a comprehensive clinical data repository, Gonzalez said.
That initiative eventually will allow aggregation of data from Schumpert and two other Louisiana hospitals in Sisters of Charity of the Incarnate Word Health System, he said. The project ultimately will include data from Schumpert's physician offices, a management services organization, a physician-hospital organization, a PPO and an HMO.
Computerization crunch. With so many complex objectives being pursued at the same time, the concern becomes how to manage them all, said Frank Cavanaugh, a principal at Coopers & Lybrand and national director of its integrated healthcare consulting practice. "You look at the (information technology) schedule for the next several years and you say, `And how many people do you have doing this? Are you going to be doing anything else?"'
Cavanaugh said existing staffs at healthcare organizations "may not be up to implementing these (project loads) in the time horizon that many organizations think they need to have it done."
Besides being pressed for time, organizations are unleashing significant operational and cultural changes on their clinical and administrative staffs.
"None of them are like the typical installation of a financial or general ledger system," which comprised most previous experience with information system implementation, Cavanaugh said.
CIOs will have to position themselves as overseers of project managers, rather than trying to take responsibility for all projects, said Kreitzer of Coopers & Lybrand. If installations can't be done one at a time, they can be coordinated to leave breathing room and learning periods for healthcare and technical staffs within the course of a deliberate, phased implementation process, he said.
Clark of Baptist Health Systems calls it "multithreading" of projects. "We've got a lot of activities going on. It's not sequential."
Any week now, a system to support financial decisions becomes operational within the Baptist organization. Meanwhile, a system to support home healthcare operations is well into implementation. A centralized scheduling system for operating rooms just started its implementation schedule. And executives are beginning a series of visits to sites that are operating point-of-care data management systems under consideration by Baptist.
To juggle effectively, "you need to get good project committees in place, a good champion to head that up, and it's got to be a `content' person, not an (information systems) person," Clark said.
Schumpert Medical Center currently has five project teams planning new information systems or upgrades to existing systems, Gonzalez said. "We have just an almost impossible load we're trying to carry forward," he said.
During the past year, the network finalized implementation of a decision-support product from Boston-based Transition Systems. Among other things, the decision-support system will take clinical information and create multidisciplinary "action plans" based on cost data it's merging on certain diagnosis-related groups of illnesses.
Interfaces are being audited to make sure they're passing accurate information on charges, which is essential to constructing cost data, he said.
As information transfers increase in sophistication, workstations are being upgraded to handle new demands.
And the organization now is gearing up for implementation of the interface engine, an essential step to creating the data repository.
Healthcare organizations will depend on additional help from software companies and other sources of skilled implementation experts, which constitutes part of the price of contracts with vendors of information technology, Kreitzer said. "We'll be just as dependent on outside system vendors as we always have been to get these things done."
Spending bulge. The financial commitment to hire expertise and to pay for computerization is being made unevenly.
Overall, the weighted average increase in capital budgets is projected at 10.9% for each of the next three years. That's an uptick from the 10.6% annual average expressed in 1995.
But this year's survey uncovered a polarity in spending: A third of respondent organizations are planning annual increases of 15% or more, but more than half are projecting increases of 10% or less (See chart, this page).
Those extremes could reflect the difference in thinking between hospitals that are forming networks and hospitals that appear destined to be taken into someone else's network, Cavanaugh said.
"Those that are in integrated delivery systems are spending big bucks. The others are either becoming part of an integrated delivery system-and so they aren't spending much-or they're just trying to make do," he said.
With 23% of respondent organizations projecting capital spending increases of more than 20% a year, plus another 10% of them envisioning increases of 15% to 20% the resulting investment could easily make up for the large percentage of low-spending institutions, said Tim Zinn, national director of the integrated healthcare delivery services practice of Coopers & Lybrand.
In some cases, the relatively lower spending could mean that CIOs "were waiting on some decisions because they were wondering who was going to own whom," said Zinn, who oversaw the survey process. He said it also means that more respondents were thinking about a comprehensive healthcare organization rather than just about a hospital.
Percentage increases also don't account for current levels of spending that already may be higher than several years ago, before the information technology transformation became an issue.
Before 1990, the capital budget for information systems initiatives at Baptist Health Systems weighed in at about $5 million to $7 million a year, Clark said. That's half the $12 million to $15 million currently budgeted, he said.
At Schumpert, direct spending on information systems totaled $12 million during the past three years as a core of new financial, clinical and ancillary systems was implemented, Gonzalez said.
Projected spending during the next three years is about $3 million a year to integrate the systems and replace components "that just aren't working in this environment," he said.
Total annual spending planned on information system initiatives is well over $10 million for nearly half the survey sample.
About 45% of the CIOs said their annual spending would be more than $11 million, which includes both capital projects and operating expenses (See chart, p. 104).
Zinn said it would be hard for even a small hospital to spend less than
$1 million a year on information systems in the current healthcare climate. But the higher estimates, and the weighted average of $8.1 million a year, may owe partly to who's being polled this year.
"A lot of CEOs would be floored by that number," said Zinn, who predicted a more even distribution of dollar estimates if the same question were asked of CEOs. But "CIOs are thinking, `That's the right number,'*" because they're closer to the action, he said.
Those projections of total spending actually are conservative because of the limitations of the survey question on CIO responses. Because the most they could confirm is a spending level of "more than $11 million," there's no way to know how much more than that they're anticipating spending.
Zinn said he had considered setting the open end at $15 million but "couldn't imagine" having so many respondents already spending that high an amount at the time of the survey.
The weighted averages in the survey were arrived at by taking the midpoint of each spending range and multiplying it by the percentage of respondents selecting each spending range. In the case of the open-ended total spending projection, the minimum had to be used for that spending range.
Justifying spending. Where it's hard for CIOs to get capital spending commitments, the problem can be traced in part to difficulty in proving benefits under traditional formulas, said Garrison of Tidewater Health Care. The main benefit of point-of-care data collection systems in hospitals and physician offices, for example, is to put patients on a protocol of care, identify variances from that standard and adjust accordingly, he said.
But traditional benefits, such as nursing time saved, are not convincing by themselves. The benefits are established over time and throughout the organization in reduced length of stay, less resource consumption and more efficient follow-up treatment such as rehabilitation, Garrison said.
"We don't yet get the big money," Garrison said. In contrast to the survey's $8.1 million average, Tidewater budgeted $1.8 million last year for information systems capital projects, including its physician-office initiative.
This year's capital budget is $9.5 million for all purposes, of which about $2.3 million is allocated for information systems, Garrison said. The health network, which includes two hospitals, generated $266 million in revenues in 1995.
"We're doing a lot of interesting things and doing it at a low price," Garrison said. For example, a "low-tech, low-cost approach" to sharing data was able to merge three databases into one repository for "several hundred thousand dollars," inexpensive compared with a lot of projects at other institutions.
"It doesn't take the latest and greatest to get this stuff done," Garrison said. "The name of the game is data."
Despite the many millions spent or allocated at Baptist, "you've got to be able to demonstrate that it's going to help them do their job better," Clark said. That includes fostering changes in work flow to take advantage of what's implemented. "We've thrown technology at problems and not really solved them," he said. "What's difficult is to get the organization to look at the process."
Because of consolidation pressures in healthcare, capital may be more available than in previous years, Kreitzer said. Assuming similar capital-budget levels as before, there's not as much pressure for "bricks-and-mortar" projects, allowing capital to be shifted to information systems and other network-building priorities. Those other priorities include acquisition of physician practices and "continuum-related" additions such as home-care businesses, he said.
Operational costs. And though capital investment is rapidly rising within integrated networks, increases in operating expenses for information systems departments are actually leveling off. "We're maybe finally seeing some economies from information systems," Zinn said.
The weighted average increase in operating expense projected during each of the next three years is 7.4% compared with 8.7% projected in the 1995 survey and 9.6% in 1994.
Presbyterian in Dallas is trying to drive down its operating costs, continuing a streak during the past three years in which it maintained a level of 1.7% of the health system's operating budget, Alverson said.
In this year's survey, seven in 10 respondents forecast increases of 10% or less in direct operating costs, a further leveling from the 60% who made the same forecast in 1995. Only 3% of CIOs this year projected annual increases of more than 20% vs. 6% who projected that level of increases last year (See chart, this page).
Part of that drop could be attributed to consolidation of information technology departments as hospitals merge their hierarchies and eliminate duplicate positions, Cavanaugh said.
But consolidation would not reduce the need for skilled professionals at the implementation and problem-solving level, Kreitzer said, because of the complexity and volume of new projects.