As Published In May 2005

Integrated Health
By Carol Hildebrand and the staff of CXO Media

Priority healthcare launches new system to integrate corporate data companywide.

It's a common story for fast-growth companies in industries where the pace is meteoric: Sooner rather than later, they outstrip the basic IT infrastructure that took them from startup mode and through their youth. The question is, What next? Some companies opt for quick fixes that shore up systems for the short term, whereas others choose managed incremental growth.

Then there are those that think big.

Snapshots Priority Healthcare Corp. www.priorityhealthcare.com Priority Healthcare is a leading national provider of specialty pharmacy and distribution services. The company provides biopharmaceuticals, medical supplies, and complementary support services tailored to the individual needs of its customers and patients. Location: Lake Mary, Florida Year founded: 1994 Employees: 1,400 Annual revenues: More than US$2 billion forecast for 2006 Oracle products and services: Oracle Database; Oracle E-Business Suite, including Financials (Enterprise Budgeting and Planning), Inventory Optimization, Order Management, and Sales Force Automation; Oracle Consulting Services Other products and services: Agilysys implementation services and support, IBM xSeries servers, Red Hat Linux, Deloitte consulting

For Priority Healthcare Corp., no less than a full-scale overhaul of its IT architecture and nearly every major application would answer its pressing business needs. By taking on such an ambitious project, the company built a system that offers a fully integrated view into customer transactions across its clinical, fulfillment, and financial operations and has given it a wealth of information that it uses to harness its skyrocketing growth.

The Challenge of Success

Based in Lake Mary, Florida, Priority Healthcare is a leading specialty pharmacy and distributor of pharmaceuticals and medical supplies. Priority Healthcare fills and ships prescriptions to individuals nationwide from 32 fully licensed specialty pharmacies and infusion centers (where drugs are administered to patients with long-term illnesses or complicated drug regimes) located throughout the United States. The company also sells more than 5,000 different types, or SKUs, of specialty pharmaceuticals and medical supplies from two specialty distribution centers directly to physicians' offices and clinics.

The company rocketed in size from approximately US$400 million in revenue in 1999 to more than US$2 billion revenue forecast for next year. According to Bill Elliott, senior vice president of Information Management and Technology, the company used a snarl of different technology, some homegrown, some a result of acquisitions. "We had multiple systems doing the same thing—more than 500 different databases, for example," he says. "To find the right data among the systems was always a challenge. We needed standardization and stability."

In response to this challenge, Priority Healthcare committed unprecedented resources in 2003 to a forward-looking, cutting-edge IT systems program that would allow the company to integrate disparate systems required for clinical and financial operations in its distribution and pharmacy divisions as well as enhance its ability to mine its huge, ever-increasing volume of corporate data for real business intelligence.

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Working with Deloitte & Touche (now known as Deloitte), a Priority Healthcare task force quickly scoped out the project goals. The complexity of the technical and business requirements meant that no single application could be expected to meet the company's needs. Instead, the task force focused on identifying best-of-breed applications in four key functional areas that could be fully integrated around an enterprise resource planning (ERP) hub.

Business Processes Drive the System

The resulting project scope would touch the majority of the company's most strategic business processes, including

• Customer resource management (sales force automation, order entry, insurance verification, and patient coordination)
• Pharmacy management (drug interactions, online adjudication, pharmacy inventory management, prescription fulfillment)
• Pharmacy automation (automated pharmacy fulfillment and distribution centers)
• Medical billing (pharmacy AR, claims processing, secondary and tertiary billing, e-remittance posting)
• ERP (financials, budgeting, distribution inventory management, distribution systems)

The IT initiative, which Priority Healthcare has dubbed COMPASS (COMPrehensive Analysis & Systems Solution), is a Linux-based system built on IBM hardware and based on Oracle E-Business Suite, including CRM, ERP, and sales force automation, as well as custom-built pharmacy applications from Oracle and McKesson APS High Volume Solutions group. Built in concert with Oracle Consulting, which took the overall lead on the project, and Oracle partner Agilysys, which provided the servers on which COMPASS runs, COMPASS promises a fully integrated view into customer transactions across Priority Healthcare's clinical and financial operations. The system provides Priority Healthcare and its external partners with an unprecedented level of business intelligence that has been, to date, unavailable in the specialty pharmacy and distribution marketplace.

A 360-Degree View

Integrating systems across the company's clinical and financial operations gives employees throughout the enterprise in-depth views into almost every major data point associated with a customer transaction. Elliott believes that this unique "360-degree" view into complex transactional histories sets the channel standard for business intelligence—no easy task, considering the tangled and unbelievably complex paths woven by what he calls the four Ps: patients, payers, pharmaceutical manufacturers, and prescribers, all of whom have unique processes and situations. By building COMPASS, Elliott hopes to create a system that lets the four Ps interact and draw information from each other cleanly and intuitively.

Priority Healthcare analyzed its business processes role by role, to ensure that each process interacts seamlessly within the COMPASS system. The examples are endless, but here are a few:

Disease treatment management plans. Many of the drugs Priority Healthcare sells are for serious diseases such as cancer, hemophilia, or multiple sclerosis. These can be chronic, ongoing situations that require a lot of hands-on care, and Priority Healthcare offers disease treatment management plans to help make sure patients stick with their treatments. A treatment course for hepatitis, for example, typically lasts 11 or 12 months. "A lot of people drop off in month 2 or 3, because the treatment doesn't make you feel good," says Elliott. "But if you have clinical staff calling every third week to help with treatment, rates of treatment adherence are much higher."

COMPASS has what Priority Healthcare has dubbed Caring Paths built into its CRM and custom pharmacy components, helping clinical staff give the best treatment. These paths include smart scripting that automatically leads the patient assessment process and offers branching questions, depending on the patient's response. The assessments can automatically trigger events to further patient treatment management.

Resources Oracle Solutions for Healthcare GHH Tests the Oracle Healthcare Transaction Base Oracle Reduces Complexity in the Healthcare Industry Oracle Provides Integrated Healthcare Solution

Order management. COMPASS has a management portal that tracks all of Priority's open orders, including order aging. Many of Priority's orders are for drugs that must be administered under medical supervision, so they are shipped overnight as soon as the orders are placed. COMPASS coordinates both e-orders and faxed orders in a system that creates and indexes multipage orders. For example, one fax or e-transmission might contain referrals, or prescriptions, for five different drugs for three patients. Each drug must be ordered individually through the pharmacy system, but several drugs ship as one package. "The order images are indexed so that they travel together to become first a task in CRM and then an order in the pharmacy system," says Elliott. The final step: The order passes automatically to Oracle Financials, where an invoice is created. "What you'll see here is a single workflow process," says Elliott.

Patient care coordination. COMPASS offers a single patient database across Priority Healthcare's major pharmacies, replacing 10 or 15 pharmacy software packages that often contained redundant information about the same patient. The intake process, in which a new patient is introduced into the system, is standardized, with built-in paperless access to electronic documents such as e-referrals or images of prescriptions. Now, all the information about a patient can travel together, says Elliott. As a result, "Patients ultimately get their medicine more efficiently," he says. Moreover, the system is capable of capturing payer-specific data for insurance and drug cards, remembering the specific requirements of each payer company and making it possible for Priority Healthcare to coordinate patient care more accurately.

Priority Healthcare is still exploring all the possibilities inherent in COMPASS, but judging from the response from other healthcare enterprises, the system is setting standards within the industry. The company has entered into a joint venture with Aetna to build a specialty pharmacy. "One of the key selling points was the right to license the use of the COMPASS platform," says Elliott.

Trend Watch Q&A Terry Golesworthy: Healthcare Customer Service has room to grow. How do healthcare companies stack up when it comes to customer service? We spoke with Terry Golesworthy, president of the Customer Respect Group, in Boston, whose company researches and judges Web sites in terms of how they treat customers. PROFIT: How do you measure customer respect online? GOLESWORTHY: We interview hundreds of internet users to find what's important to them online. We have specific criteria related to what people expect in regard to customer service on the Web. We measure a site's transparency, or clarity of information; its simplicity of navigation; its attitude; its responsiveness; its principles, or the way it conducts business; and privacy issues. For each criterion, we can create a continuum of service levels, and we judge companies on that scale for each criterion. PROFIT: How do healthcare organizations score in terms of customer respect? GOLESWORTHY: We've measured hundreds of sites across multiple industries and averaged them to get a good baseline figure across industries. Looking at healthcare compared with the baseline figure, the industry—comprising companies such as prescription benefits, medical practices, HMOs, and insurance companies—is below the line in terms of customer respect. PROFIT: Why do you think they lag? GOLESWORTHY: I think they haven't analyzed the ROI for doing certain things, so the impetus isn't there. Companies such as Orbitz or Amazon can make a change and then see how revenue responds—that's a measurable effect. Healthcare may spend money, however, without knowing what the results will be. Healthcare just hasn't pulled together the costs of doing a site correctly or incorrectly in terms of customer respect. PROFIT: In what particular areas do healthcare companies lag? GOLESWORTHY: One problem is responsiveness, which is essentially how fast they'll respond to a question e-mailed from their site. Healthcare is particularly weak here—probably only one in three e-mails gets a response within a day. This is particularly bad when you take into consideration that healthcare sites are also weaker than most in the area of self-service—that is, good FAQs, site maps, and site search. Users typically don't e-mail until they've already exhausted those resources, so they're already frustrated at their inability to find an immediate answer. And many companies don't respond to e-mail at all—they don't have a good process for managing their mail, so it goes nowhere. They completely miss the point that e-mail can be a huge cost savings in terms of customer service. PROFIT: Are there any other vulnerable spots? GOLESWORTHY: Another area in which the industry is fairly weak is privacy. Our research says that people are very concerned about what happens to online data—a surprising number of people read privacy statements, for example. But 15 percent of healthcare sites don't have a privacy statement at all—typically, 98 percent of sites across an industry will have privacy policies. PROFIT: Are any healthcare segments doing a good job of this? GOLESWORTHY: The companies that have a shorter-term relationship with their customers are improving faster than those that have a long-term relationship—if you have customers locked in, apparently you aren't as worried about customer respect. For example, prescription benefit management companies see themselves as e-businesses. They have millions of customers online, and they compare themselves with companies such as Amazon, not other healthcare companies. As a result, these sites are more responsive and helpful. Other companies still see the Web as a bit of a brochure. PROFIT: What can healthcare companies do to improve? GOLESWORTHY: First, start treating online users the same as those who phone or walk into an office. Don't throw e-mails away, but respond quickly. Make sure online users can find things as easily as possible on the site. The healthcare industry needs to improve its self-service capabilities on the Web, not least because it's much cheaper to service a customer online than offline. Second, make sure privacy concerns are covered. Create that privacy policy, and do it in plain, clear language. Allow users to be in control of their data—for example, let users opt in to marketing solicitations rather than requiring them to opt out. Source: Terry Golesworthy, president of the Customer Respect Group, Boston, Massachusetts, an international research firm specializing in customer respect. You can contact Mr. Golesworthy at terry@customerrespect.com.