Fine, Bernd: IT success stories

Peter Fine, president and CEO of Banner Health in Phoenix, and David Bernd, CEO of Sentara Healthcare in Norfolk, Va., were presented with Modern Healthcare's CEO IT Achievement Awards for 2010 at the Government Health IT Conference and Exhibition this week in Washington.

At a panel session Tuesday before the awards ceremony, Fine said Banner's success in implementing a health IT system and process improvement program stems from “an unrelenting organizational focus” on completing the project and unwavering support for the project from the top.

“Efforts we have made are not for the faint of heart,” Fine said, noting that he used “every opportunity” to talk up the benefits in patient care and safety that the program would create. “Going down this path of significant investments in electronic solutions, we knew it wasn't going to be smooth. We had to have a commitment.”

Project management also was crucial in what he described as a care “transformation effort” that cost more than $180 million since it began in 2003. “There are hundreds and hundreds of steps in implementation we've been able to identify,” Fine said. “We track everything and measure everything.”

Accepting on behalf of Bernd and presenting at the panel session was Bert Reese, chief information officer for Sentara.

Like Banner, Sentara sold its project as not merely an information technology installation but also a process improvement campaign. The company met early milestones of EHR-system contract signing in 2005 and first implementation, in a physician office, in 2007.

Reese said Sentara places its total cost of ownership of the program over 10 years at $237 million, including $67 million in capital costs.

“You do an investment of this magnitude, you're going to be upside down for a while,” Reese said. “You have to be mindful you will be spending more money than you're bringing in.” Reese said the investment initially clipped “2% to 3% off of our bottom line.”

But by redesigning 18 major processes and monitoring improvements, today the transformation at Sentara is producing more than $36 million in annual savings, Reese said. “We estimate we'll have $42 million (in annual savings) when it's completely rolled out.”

Now in its eighth year, the CEO awards competition is co-sponsored by the Healthcare Information and Management Systems Society and recognizes healthcare CEOs who demonstrate leadership and a commitment to using information technology to advance their organizations' strategic goals. Out of 82 entries this year, Fine and Bernd were chosen as winners by a five-judge panel consisting of three CEOs chosen by Modern Healthcare and two CIOs chosen by HIMSS.

The judges reviewed the nominees using three criteria:

• The CEO demonstrated leadership and commitment to using IT to advance his or her healthcare organization's strategic goals.
• The CEO helped achieve measurable results through leadership and commitment to IT in his or her organization.
• The CEO shared his or her healthcare organization's IT experiences to benefit peers and other members of the healthcare industry.

The judges rated the nominees on how well they met the three criteria, using a 10-point scale for each. A perfect score was 30.

In late 2002, two years after taking the helm as president and CEO of Phoenix-based Banner Health, Peter Fine—along with other senior company leaders—realized something: Banner was implementing various clinical systems at its hospitals without coordinating them as systemwide suite of applications.

That conversation led to a determination, said Fine, 58, that Banner's growth and success would depend, to a large extent, on its use of highly automated, standardized systems. What followed was a period of aggressive planning and significant capital investment. It was also at this time that Fine decided that a staggered course of tightly controlled implementations would be the best course of action.

“We determined that if we had varied ways of implementing our IT system, we would not have that viability,” Fine said. “What someone was looking at on a screen in a small, critical-access hospital had to be the same as what they saw in a large academic medical center. We were rigid about our standards and expectations, and to some extent that rigidity made things easier for us.”

More than seven years and $180 million later, Banner, which admits more than 240,000 patients in seven states each year, has implemented an electronic health record from Cerner Corp. in all of its 22 hospitals and is well on its way to a fully paperless environment.

Fourteen of its facilities are expected to be using computerized physician order entry and positive patient identification systems by the end of this year, and the other eight are set to hit that target by the end of 2011. Also, Fine said, Banner aims to equip all of its physician clinics with EHR and CPOE systems by the end of 2012.

“We did it without any of the significant pain or difficulty you might expect, and that's because we did not waver one bit from the method of implementation, the resources needed for it and the expectations for how it would be used in clinical practice,” Fine said.

Banner may have kept a tight rein on hospitals' implementation, but it also learned from mistakes made along the way. One of the keys to its success was a reliance on a franchise model that rolled out IT systems one hospital at a time, watching carefully to see which methods worked and which ones faltered.

The company embarked on automating at Banner Estrella Medical Center, a brand new hospital with new employees that opened in 2005 in Phoenix. Hiring an entirely new staff gave Banner a significant advantage, Fine said, because the incoming employees knew ahead of time that they would be working in a highly automated environment.

After achieving success at getting Estrella, the basis for its franchise model, up and running, it took the lessons learned and applied them to Banner Gateway Medical Center, Gilbert, Ariz., a new hospital that opened in 2007 and replaced Banner Mesa (Ariz.) Medical Center, an older facility that opened its doors in 1963. That site proved to be more of a challenge because there was an existing staff and no automation agreement in place, said Fine, who credits the use of physician champions and gradual phase-in of CPOE.

Since then, they have rolled out their clinical systems at several more of their smaller hospitals. Last October, they completed implementation at 391-bed Banner Thunderbird Medical Center, Glendale, Ariz.

“We had three opportunities to learn: first, at a new hospital with a new staff, second, at a new hospital with an existing staff, and third, at an existing hospital with an established staff,” Fine said. “Each stage brought progressively more difficult challenges and we learned something new about how to do implementations successfully.”

In January 2007, two years after implementing clinical systems at Banner Estrella, the health system collaborated with Cerner in a study to assess quality improvements and cost savings. When compared with a weighted average of eight other Banner hospitals, they found a 7.1% reduction in average length of stay, a 17.8% reduction in pharmacy costs, an 84.3% reduction in adverse drug events, a 15.8% reduction in nursing staff turnover and a 95.6% reduction in document storage costs.

Two years later, they conducted a second study examining performance on key quality indicators at Banner Gateway compared with five facilities that had not yet undergone a franchise model implementation. The results demonstrated similar gains in length of stay, prevention of adverse events, nursing turnover and other metrics.

Bernd, 60, has had decades to perfect his tenacious approach at Sentara, where he was first hired as assistant administrator at Sentara Norfolk General Hospital in 1973 after earning his master's degree in hospital and health administration from the Medical College of Virginia. He became executive vice president and chief operating officer of the Sentara system in 1985 and CEO in 1994.

By the early 2000s, the notion of a systemwide EHR had become an established goal of IT in healthcare, but the high cost and risk of such a venture hung in the air.

“When David got up and said, ‘We need to do this, and it's going to cost over $250 million,' there were a number of deep breaths around the table. We can build a 200-bed hospital for that,” said Marc Sharp, chairman of the Sentara system board of directors since last November and a board member when Bernd and Bertram Reese, Sentara's senior vice president and chief information officer, presented the blockbuster proposal.

“He had guts,” said David Levin, vice president of medical informatics and a family-practice physician. “This was a courageous thing to do in 2005; it still is in many ways.”

Sharp said Bernd's articulation of a solid game plan helped get the board quickly behind it. “The combination of David Bernd explaining the business case and Bert Reese explaining the technology and what we were getting for the money, it was a very dynamic duo,” he said. “I think it really only took one meeting.”

Bernd's insistence on calculating a total cost of creating, managing, rolling out and tracking benefits of the project over a 10-year period also set properly long-range expectations that prevented overreaction to periodic budgetary free-falls or missed milestones.

The capital cost typically associated with an EHR purchase was $67 million, about one-fourth the projected $270 million total cost. Staff time and consulting costs were built in for re-engineering the targeted 18 processes, such as bed management, clinical communications, medication management and emergency department flow.

It was time well-spent, even if it delayed fundamental IT design work by more than a year, Bernd said. “We tied together the outpatient diagnostic areas, the physicians' offices, the inpatient into one software program, that's totally interoperable, and I think that's why we got such great results from our implementation,” he said.

The health system had expected $17 million in return on its investment in 2009; it attained $12 million more than expected.