Dave Burda: Now, what capabilities—if you could say where, and I know HIMSS likes to measure these things in stages, where would you assess Banner's IT capabilities now and where you want them to be in a few years?
Peter Fine: We are, for the most part, by the end of this year we'll have virtually the whole organization at a Stage 6, so we've had significant movement, according to HIMSS' pyramid. You know if you go back in Banner's history to a certain extent, it's about a 12-year-old company or so, and, from the very beginning, we had organized Banner information technology as an enterprise function crossing over the whole enterprise that we have. It was designed from the outset to mirror the Banner corporate operating model structure that we have. In 1999, when the organization was put together, we had 370 IT folks, professionals spread throughout the organization in a disorganized central, regional and local distribution model, which pretty much mirrored the fragmented prior approach that we had for IT. We realized that to be successful, we had to have a centralized corporately driven function enterprise-focused IT organization that would be necessary and required to achieve our vision for success as we get more into the future. We developed a set of IT guiding principles at that point in time, a set of IT core strategies that we even use to this day. Now, 10 or 12 years later, still using those core principles and those core strategies. And we'll continue to use them into the future because they're being used to guide all of our IT activities—things like vision, architecture, planning, execution, operations, support functions. All of these were laid out in a game plan early on to take us through the transformation from a paper environment to a paperless environment. In 2002, we created the Banner franchise model, and that was a vision of a broad suite of clinical applications designed to transform clinical care at Banner. It was a bold move in my mind because it began to step on the toes of people who were comfortable where they were, and we were upsetting the apple cart.
Dave Burda: And there I'm going to guess you're referring to some physicians in your organization?
Peter Fine: Clearly. Physicians, nurses, a whole host of clinicians. But the attempt was to figure out how do we improve clinical outcomes using an electronic environment? How do we reduce inappropriate clinical variation? How do we implement best clinical practice and implement it throughout the organization, and that's where the franchise model came into play where we'd try something in one place, and then we would just roll it out into all of our other parts of the organization. An attempt to adopt best clinical knowledge and best science associated with that clinical knowledge, and put together and provide clinical decision-support capability at the point of care. And that was laid out like I said almost over a decade ago as the goal that we were aiming for. We weren't quite sure how we were going to get there, and we had to put the plans and activities and, quite frankly, come up with the investments to support that. This Banner franchise model of integrated clinical applications consisted of a broad suite of applications that would be integrated throughout the whole organization—standardized across the whole enterprise. So individual organizations weren't able to re-create what they wanted to, because we said the only way to get to where we wanted to get to, we had to standardize IT functions across the whole organization.
Dave Burda: So do you require each piece to use the same platform or the same principles?
Peter Fine: Absolutely. You can go to our hospital in Worland, Wyo., in the northern reaches of Wyoming, and the computer screen there will look the same as it does at our academic medical center here in Arizona, so everything was operated out of a single corporate data center, operated as basically a single cluster of computers—all data being housed in a single database structure delivered over an enterprisewide network that covered the whole organization, and deployed by a corporate team using standardized training modules and a standardized training model and then supported by essential support desk and IT customer support organization. So wherever you are in the organization, you can dial one number and you can get into the support that you needed. We communicated the care transformation plan, which is what our naming of it was, through the Banner organization with an understanding that local opting out of the franchise model really wasn't an option.
Dave Burda: OK
Peter Fine: And that took awhile to sell because people tend to think—or have—the not-created-here syndrome. We didn't think it up that it's probably not as good, and we had to get people to understand to manage our cost structure and to effectively have consistency of product we had to do this through a centralized mechanism. To acquire, to build, to train, to deploy, to operate and support what I think was a pretty ambitious and relatively gutsy enterprisewide care transformation model across an organization that at the same time was growing. So it made that much more difficult.
Dave Burda: So as you added pieces, people arrived with a different system.
Peter Fine: They could. And we had some external people join the organization and we had to go through that particular issue. But it forced us to rapidly expand the IT staff so when I said in early stages we had 370 IT professionals and now we have 630 IT professionals, it's a huge increase in the development of our professional staff. And this number includes all of our IT resources wherever they happen to be—wherever they exist within the organization. And that became not an issue but we had to get people to understand that consistency in an IT environment was a key to success.
Dave Burda: Right.
Peter Fine: It was a strategic advantage for us. And that would allow us to have rapid implementation. So to give you an example: In 2008, September of 2008, we acquired an organization called Sun Health. It was a two-hospital system with a research institution, a whole host of other functions. Large organization. Over a half-billion dollars in revenue. About 40,000 admissions. And they did not have the IT capability that we had. And so to bring them into this new culture was a task in and of itself. And to get them to modify their own behaviors to the behavior that existed in the Banner culture, one of those behaviors was the rollout of our IT functions. So in 12 months, we implemented their electronic medical record in the organization. We implemented physician order entry. And so we brought them up basically to the Banner standard of an electronic environment.
Dave Burda: Now that's an example of where you acquired an entity and rolled out your own system. What about an organization that's just affiliated with Banner? Do you, for example, subsidize IT for a physician group that you want to bring in?
Peter Fine: Well, in Banner we either own the component parts or we lease the component parts of organizations. So organizations don't really just affiliate with us because it makes it hard for us to accomplish what we need to accomplish when we say, ‘You have to take these suites of services.' So all of the hospitals that we have are either owned outright as an asset, or we lease them over long-term leases that allow us then to make the investments in the IT environment that would be necessary to bring them up to the standard of clinical performance that we're looking for.
Dave Burda: Speaking of clinical performance, what have you seen patient safety wise or clinical outcome wise that you could point to as a direct benefit of your investment in IT?
Peter Fine: You know we built a hospital called Banner Estrella about five or six years ago. And we built it to be an all-electronic environment. So it was our test case. And we then, with the help of Intel and the Cerner Corp., did a make-good analysis after we had it installed for a few years over what they were doing and the outcomes, and compared it to the grouping of Banner hospitals that we had not yet implemented all of that IT technology. And we got some fascinating results, and we think conservative results as a matter of fact. And this study was done very carefully using external resources as I said from companies like Intel and Cerner in which we were able to identify significant improvements across a whole suite of things. So to give you some examples: If you compared Banner Estrella when we did the study against the composite of other Banner facilities, we were comparing against, average length of stay was 7.1% less for patients. Our overtime for nurses was 5.3% less. Our pharmacy costs were reduced by 17.8%. Forms elimination because we were going electronic at that point, we reduced forms by over 41% in the organization. Document storage costs went down 95%. Here's a very good one: Reduced adverse drug events, which is important for patient safety, were reduced at Banner Estrella compared to the composite of other Banner organizations by 84%.
Dave Burda: Wow.
Peter Fine: Medication-related claims avoidance, a reduction of almost 72%. And reducing nursing staff turnover were reduced to almost 16%.
Dave Burda: Really.
Peter Fine: That one hospital, [unclear] study compared to a composite of other Banner hospitals—
Dave Burda: How would IT affect nurse turnover?
Peter Fine: Well, it's the technology and the environment. Basically, our nurses in our electronic hospital when we saw it were incredibly satisfied.
Dave Burda: Interesting.
Peter Fine: It became less frustrating for them. They were doing less paperwork and having the frustration of the paperwork, and now to be fair, we recruited a staff—both a physician staff and a nursing staff—that absolutely wanted to work in an electronic environment. So, they already came into that hospital with an acceptance of what they were getting themselves into. They were charged up and interested and excited to be part of that, but nonetheless, when you compared that environment to a composite of other Banner hospitals, it was huge. That then told us a lot. It said, ‘OK, we have to really become more aggressive [unclear] strategies.' So over the last couple of years, we've been very aggressive in our implementation, so all of hospitals we have our electronic medical record in we will by May of this year I believe—May or the summer of this year—we will have our computerized physician order entry in all of our hospitals. Our medication control system will be laid out in all of our hospitals and a number of other subsystems that we think really affect clinical outcomes and clinical performance.
Dave Burda: Now are you going to apply for any meaningful-use subsidies?
Peter Fine: Yes. Absolutely. We've been very aggressive along—
Dave Burda: I don't think you'll get $149 million, but—
Peter Fine: Interestingly, our projection right now is we would be eligible for somewhere between $130 million and $150 million.
Dave Burda: You may end up making a profit.
Peter Fine: So we're very excited about that.
Dave Burda: Congratulations.
Peter Fine: Of course we're—a lot of that is also laying out these electronic environments in our physician offices for our medical group. That's an ongoing activity as well. But we were ahead of the game a little bit because we were going down this path in a very aggressive fashion. Now, hopefully, the government who had decided to make these investments in pushing organizations to be an electronic environment doesn't pull the plug on those resources and say, ‘Oh, we're not going to do it now.'
Dave Burda: Right.
Peter Fine: Because we're actively in the very early stages of giving the information that they need. We think we'll be a pretty good recipient, but we've spent a lot of time and a hard effort in trying to advance a clinical environment, and we believe—like some other peer organizations—that we're very close like Sentera [Healthcare] in Virginia. We think it has an end game for the patient because at the end of the day, we're not doing this just to save some money—because we're investing a lot of money—we really think it affects the clinical outcomes. And some of the data points that I gave you, which we're revising with some of our other pieces of the organization to update it, we think it's going to show that those initial savings that we demonstrated in the research study are going to play out throughout the whole organization.
Dave Burda: Very good. Peter, why don't we take a short break, and we'll talk about your own personal journey through the healthcare system next. Thank you.