With a speedy, brawny electronic network in place, Staten Island University Hospital is wasting no time getting an edge.
It's already scheduling 30,000 clinical appointments a month through connections to its two main campuses, a few specialty facilities and a couple of ambulatory sites.
That's just the beginning. The growing healthcare system has dozens of remote locations in metropolitan New York that eventually will tap into the scheduling software application and add to the load on the network.
The traffic on the wide-area infrastructure soon will include diagnostic images, medical records and exchanges with a clinical repository of patient data.
The network is designed to handle it all, says Patrick Carney, the system's vice president for information services. Not bad for an initial investment of about $1.5 million for the electronic backbone and switching system. But Carney knows there are hefty capital costs and permanent operating expenses in the bargain.
Five years into a manic pace of consolidation, hospital-based health delivery systems across the country are feeling the pressure to establish a computer network to unite all sites and services. In the campaign to lift healthcare out of an era of paper and pencil, organizations have spent freely on healthcare software applications to enter and receive orders, capture patient data electronically and store images in computers (Feb. 23, p. 70).
But that's not enough, computer pros are saying. In a recent survey of 1,700 healthcare information professionals, respondents said their biggest challenge was to get more value out of the existing data their systems are churning out (See chart below).
The voting for top clinical challenge ended in a tie between the urgency to get both diagnostic services and patient records to remote locations (See chart, p. 67).
The Staten Island system is about halfway through a five-year plan to catch up on data-capturing capacity in areas where it had lagged behind and then to warp ahead to a level of integration that differentiates its care from the competition.
That means creating value greater than the sum of the system's separate activities. "If the sum of the parts is greater than the whole, then the part that's greater than the whole is due to integration," Carney says.
Gotta have it. In a multiple-site system, what counts is not just computerizing information but putting it into caregivers' hands, no matter where the data originated or where it's needed, says Michael Gorsage, senior manager in the Atlanta office of First Consulting Group, a Long Beach, Calif.-based healthcare information systems consulting firm.
"Without a network, the (software) applications are basically not accessible," Gorsage says. "It is the means of making information available."
It's also a separate project that can determine how fast the information gets there, how well different sources of data can be combined and how easily new provider sites can be added to the information flow.
The design also can affect ongoing technical management. If not set up effectively, the network will cost more than it should to operate, experts warn (See related story, p. 70).
"The technical infrastructure is a big component that may be often ignored but has some of the biggest ramifications," says Frank Cavanaugh, a principal at Coopers & Lybrand and national director of its Chicago-based integrated healthcare consulting practice.
The ramifications include a higher level of mission-critical computerization that requires more-sophisticated on-line tools and skilled managers than ever before.
With other carrying costs to negotiate and absorb-such as leased telecommunications lines and protection against computer crashes-senior executives have a lot of financially sensitive decisions to make.
Based on business. The place to start, though, is not with the technol-ogy. "The hardware decisions and (software) solutions should be the last decisions, not the first decisions made," says Dan Vogel, program director for healthcare with Meta Group, a Stamford, Conn.-based information technology research firm.
By taking stock of business needs and analyzing how to meet them, the proper technology decisions will fall into place, says Andrew Rushmere, president of Aviant Information, a Simi Valley, Calif.-based company specializing in healthcare network planning and design.
Such upfront analysis could have prevented some early failures among healthcare organizations rushing to get a network up and running, Rushmere says. "No one took the time or made the small investment in determining what their business requirements are and what it takes to meet those requirements," he says.
That includes not only determining current operational needs but also forecasting future market position and sources of revenues, Rushmere says. The investigation could bring certain network-building needs into focus.
Executives at the Staten Island system investigated their future and came up with a sobering calculation: They were headed for a financial tumble under managed care in the new deregulated business climate of New York. Their response to that revelation set the course for an ambitious network buildup.
Calculated expansion. Situated on an island borough of New York City, the healthcare system has two hospital campuses 10 miles apart at opposite ends of the island and a third site housing administrative and data-center functions.
Combined with a dozen physician offices and other ancillary facilities on the island, the network-building task already was sizable. But the business plan determined that it couldn't stop there.
When administrators tallied up expected future revenues based on monthly capitated payments instead of regulated fees, they found the island service area didn't have enough insured patients to sustain the institution, Carney says. Even allowing for cutbacks in expenses and some inroads into competitors' turf, the mathematical formula for success dictated that the system had to increase the number of people under its care by 30% to 40%, he says.
Buying another hospital wouldn't work. A local study already had forecast that the metropolitan area would be 40% overbedded by 2000. So the system's management made a strategic decision to expand into adjacent Brooklyn through affiliations with physician groups and ambulatory facilities, Carney says.
Separated from Brooklyn by the nation's largest suspension bridge, the Staten Island system had to bring physician partners closer to the organization electronically. "The infrastructure became a critical success factor for our business plan," he says.
In return for being a technology pioneer, the system worked out a sweet deal with Teleport Communications Group for a high-speed, high-capacity circuit that can handle electronic images, digital voice messages and live-motion video as well as data at lightning speed.
Even with the price break from the telecommunications carrier, the lease of that high-performance circuit amounts to an annual operating expense in the hundreds of thousands of dollars, says Carney, who didn't want to be more specific for competitive reasons. But he considers the investment worth the premium price for the speed and image-sending capabilities of the technology, called asynchronous transfer mode, or ATM.
The ATM backbone is part of a larger electronic network that now serves nearly 40 physician practices in Brooklyn as well as the Staten Island collection of facilities.
Technically, the network has no value without sophisticated information systems to ride on it, integrating all facilities, and producing important data to share and combine. The healthcare organization is about halfway into a five-year investment of $15 million to $20 million to supply those systems.
A clinical data repository is being tested and should be rolled out midyear, as will an initiative to send both diagnostic and document images electronically, Carney says.
In an industry that once had hospitals as the hub of activity with spokes leading to other sites, the Staten Island system is well on the way to making information services the hub, with spokes leading to all sites, including the hospitals, he says.
Order, unity and savings. Twenty miles northwest of Staten Island, a fledgling New Jersey healthcare system was faced with bringing order and unity to four facilities that had limited and incompatible computer capabilities.
Seizing on the shortcomings of computerization inherited from the hospitals merged into Florham Park-based Atlantic Health System, Vice President and CIO Jim Klein devised a strategy to rapidly deploy common information systems tied together through an ATM-powered network.
When the healthcare system formed two years ago, differences in basic financial information systems from facility to facility complicated the objective of attaining a consolidated financial statement, Klein says.
What's more, the systems were old, their performance levels didn't measure up to contemporary software standards, and they were rife with faulty coding on dates representing the year 2000.
But to Klein, the sagging state of information affairs presented a golden opportunity to quickly integrate and standardize basic business functions by purchasing a single replacement system and running it at all four hospital sites from a central location.
To make that plan succeed, Klein says Atlantic Health paid telecommunications carrier Bell Atlantic between $300,000 and $400,000 for a wide-area ATM circuit connecting the hospitals. "That gave us an enormous amount of capability for a very small cost," he says. The cost does not include ongoing fees for use of the high-speed line.
The infrastructure expense pales in comparison with the capital and operational costs of building and adding to Atlantic Health's information systems. But those systems "will cost many millions of dollars less" because the organization is implementing a single software application instead of four, Klein says.
That's the place to tackle savings, because the cost of software over time is rising while hardware and telecommunications costs are falling, he says.
Including the operational savings from centralizing much of the information systems operation, Klein says he's "hoping to have a stable operating budget going forward." Atlantic has spent roughly $10 million on capital projects and $10 million on operations during the past two years, and he anticipates about the same level during the next three years.
Once the basics are in place at the end of this year, the healthcare system will have network capabilities to add clinical information systems that include voice, video and imaging, he says.
The next challenge will be to add other healthcare facilities to the network, a list that continues to grow. The system includes two convalescent centers, a rehabilitation institute, numerous community health facilities and a physician management services organization.
In addition, two acute-care facilities recently signed an affiliation agreement short of a merger: Newton (N.J.) Memorial Hospital and Bayonne (N.J.) Hospital.
Atlantic Health's four owned hospitals are Morristown (N.J.) Memorial Hospital, Overlook Hospital in Summit, Mountainside Hospital in Montclair and General Hospital Center at Passaic (N.J.).
Electronic premises. A strategy at Anderson (S.C.) Area Medical Center similarly had included standardizing software in the aftermath of a merger-but the merger ended up falling through in late 1996.
The medical center's executives had pushed ahead with a network strategy during the merger attempt, however, and they were able to accomplish much while biding their time.
As far back as 1994, says CIO Darrell Hickman, Anderson Area's management was working from a short list of assumptions governing information technology decisionmaking:
An electronic medical record, currently considered an option, will be mandatory within the foreseeable future.
Diagnostic images will need to be moved around electronically.
The organization will continually change and will need to move people around as changes warrant.
The use of information technology will expand exponentially.
In addition, Hickman says, the hospital made a strategic decision not to purchase physician practices but rather to forge partnerships with "free-agent" providers to create the necessary system integration.
The hospital has spent between $5.5 million and $6 million on network infrastructure to lay the foundation for information strategy as well as dangle a carrot in front of physicians enticing them to participate. The expense includes 500 new personal computers and software licenses.
About the time Anderson Area started rolling out its information strategy, it became part of a proposed mergerlike partnership with Greenville (S.C.) Hospital System and Spartanburg (S.C.) Regional Healthcare System. Hickman says it didn't make sense to proceed with investments in software applications until the transaction was final and all partners could agree on what to purchase.
But it also was apparent that the network piece of the strategy was needed regardless of what software eventually was implemented, he says. So the hospital was wired up, and an outpatient facility three miles away was connected by a high-speed ATM line leased from Bell South.
The 500,000-square-foot outpatient center, nearly half the size of the main hospital facility, includes professional offices that are connected to the network at high speeds. The infrastructure is capable of sending diagnostic images in the blink of an eye.
For starters, that allows interpretation of images independent of location, "so radiologists don't have to bounce back and forth between the two campuses," Hickman says.
Anderson Area also offers physicians the latest PCs and the use of a physician practice management information system on the network for a nominal monthly charge, the minimum necessary to recover costs, he says. Fourteen physician offices were on the network as of mid-April, and other physicians' interest in participating in the network "has increased rather dramatically" with the network package on the table, Hickman says.
In the wake of the aborted merger, meanwhile, the hospital's board is weighing a four-year proposal to spend $22.6 million on information systems purchases and $5.5 million on computerized systems for handling diagnostic images.
Anticipating the future. Hickman says Anderson Area describes itself as "a very sophisticated country hospital," a characterization that will affect decisions on information technology into the future. With no direct competition in a town of 30,000 and a county of 100,000, accessibility and outreach to physicians throughout the county take precedence over competition with other facilities for physician attention.
Most of the decisions a healthcare organization makes about business and service strategies will affect the type of technology to purchase and put in place, says Eric Ringwall, vice president of technology services with Daou Systems, a San Diego-based company that designs and implements healthcare networks.
For example, a healthcare system that makes a business decision to develop a management services organization likely will make a strategic decision to aim for a target size, he says. That decision calls for implementing information systems to fit that projected size.
As mergers create larger organizations, hospitals might take on an HMO-like role and provide services such as electronic data interchange to customers and partners, says Vogel of Meta Group. Those expanded roles must be considered early in a network-building strategy, he says.
In general, it makes sense to purchase 20% to 30% more network capacity and speed than current needs suggest, providing for unexpected needs, he says. "It's that flexibility that will have heavy emphasis down the road."
But decisionmakers also have to think things out to avoid being talked into putting in more capacity than they need, Vogel adds.
For example, a telemedicine technology that enables live-action, interactive video may be warranted if a healthcare system has a large rural population or a big prison in the service area to serve remotely.
Otherwise, a link that stores transmissions and forwards them to a destination is sufficient-and a lot cheaper.