Bernd says his not-for-profit system's early decision to start spending on a vast, interconnected information infrastructure is paying off in clinical efficiency and stronger financial results, as evidenced in the SDI rankings.
“For years, people in our industry said that higher quality costs more. I think we've demonstrated that higher quality is less expensive,” Bernd says. “It's better for the patient and the organization's bottom line.”
That's perhaps easy to say for a system that started its planning and spending during the flush years of the mid-2000s. Analysts with SDI saw a major drop in scores among integrated providers last year because of the fallout from the Great Recession, which hit financial performance hard just as federal regulators and quality analysts were making increased technology spending a necessity.
Pat Witman, associate product director with SDI, says net profit margins and debt-to-capitalization ratios have been the most dynamic metrics for the past two years among the 33 attributes on which the company ranks participating systems.
“We saw people's financial stability scores come back, and that wasn't any surprise,” Witman says of the latest rankings. “The people who took the largest hit last year were those who had strong financial stability scores” in previous years.
Decreases in financial stability dragged down systems that otherwise would have ranked highly on the 2010 list, such as Providence Health & Services of Oregon, a Portland-based eight-hospital regional division of 26-hospital Providence Health & Services, which is based in Renton, Wash.
Likewise, when economic conditions recovered and boosted hospital margins, Providence was among the many systems that saw their scores rise again for the 2011 edition.
After landing in the top seven from 2006 through 2009, Providence of Oregon ranked 31st in 2010. For the latest list, the Roman Catholic system came in at No. 5—its best showing since hitting the No. 4 spot in 2006.
However, Greg Van Pelt, CEO of Providence Health & Services of Oregon, says the system didn't set out with the strong financial results in mind.
Rather, he calls the improved financial results highlighted by SDI a direct result of the clinical and technological integration work the system has been undertaking. “I would say that's the payoff of integration,” Van Pelt says.
Providence's Oregon hospitals have been in the midst of an “operational transformation” for more than two years, finding ways to coordinate care, reduce unnecessary clinical variation and eliminate never-events, he says.
With each change that is considered, Van Pelt says the system's executives consider how it fits into the Triple Aim criteria developed by the Institute for Healthcare Improvement. The intent of the Triple Aim philosophy is to optimize health delivery using three criteria: the experience of the individual, the health of a population, and the per-capita cost of care for the population.
“If it's in service to our patients, then (clinicians) get it,” Van Pelt says. “It is hard, but it's not just about cost containment or budgets. It is in service to something like Triple Aim, which is a balanced score card.”
John Tiscornia, a managing director with Chicago-based Huron Consulting Group, says clinical integration is one of the key challenges for large health systems that are building a continuum of care across the various types of care: acute, primary, urgent, long-term and home-delivered.
“The benefit to the patient is more-coordinated care,” Tiscornia says. “It's like one-stop shopping vs. having to go to five shops to get what you want.”
But the benefit of treating the same patient in multiple venues over time is no longer just a matter of efficiency. Increasing federal emphasis on clinical integration, including the prospect of bundled payments, is requiring providers to get a handle on patients' full episodes of care.
That means finding or building an information system that can present detailed clinical and financial data to help a CEO understand what's happening with a patient at each step of the delivery process, experts say.
“Without that, you're not going to be able to understand your cost per patient episode. And in the new world, you need to be able to understand that metric,” says Rob Wasserman, a principal and consultant with ECG Management Consultants, Boston. “Without a good IT system, you're not going to get there.”
Such a system also can help executives get a stronger handle on the collections process, which can create return on investment for computer systems.
Executives also can cut down on bad debt at the patient level through better tracking, experts say, and IT also can help them get a better handle on items such as Medicare denials.
“They won't just say, ‘Gee, we wrote off $20 million in denials to Medicare, find out why.' They can say, ‘How do we drop that to $10 million?'” says Matt Seefeld, CEO of IT consultancy Interpoint Partners, Atlanta. “The market leaders have a much better understanding today than the ones who are just jumping on the bandwagon.”