As Published In July/August 2003

Meeting the Healthcare Challenge

By David Baum

Sandwell and West Birmingham hospitals and healthAlliance build healthy systems with Oracle.

Information technology is critical to healthcare providers—not only to ensure high-quality patient services but also to reduce administrative and clinical costs. Declining reimbursement, increasing competition, and inefficient resource utilization are all affecting the viability of many healthcare organizations (HCOs). To improve patient care and make rapid and effective decisions, these organizations need to streamline their business processes and deliver information more effectively.

"Outside of the pure public sector, healthcare is probably the largest industry in the world," points out John Wookey, Oracle's senior vice president of application development, who heads up development of Oracle healthcare solutions. "It's a US$1.2 trillion industry in the United States alone, with IT investments in the hundreds of billions of dollars."

Yet healthcare is one of the most challenging environments to work in, an interesting combination of extremely advanced technology for patient services and extremely low investments in administrative systems. On average, HCOs spend only 2.6 percent of their operating budgets on IT services. That's about half of the average for manufacturing firms and a quarter of what most banks spend, but healthcare information management problems are an order of magnitude more complex. Current and historical information associated with each patient must be properly stored, accessed, managed, queried, analyzed, and shared throughout the care delivery network as well as with a vast and complex network of payer organizations and pharmacy benefit management companies.

"One of our biggest challenges is to live within our means," admits Tony Wharram, deputy director of finance for Sandwell and West Birmingham Hospitals NHS Trust, in Birmingham, England. "What we're faced with—and I believe that this is true throughout the U.K.'s National Health Service (NHS)—is the need to balance fairly limited financial resources with lots and lots of demands for achieving patient care targets. The more we can swing costs and resources away from support services to front-line services, the better patient experiences we can offer."

Oracle's Healthcare Solutions

Information technology has become a critical component in improving patient quality of care as well as in streamlining healthcare business operations. Oracle helps in three ways:

• By streamlining back-office information systems to improve services and reduce costs
• By supplying an integrated healthcare information platform for tying these back-end systems together with front-line systems for patient care
• By helping independent software vendors (ISVs) in the healthcare sector create a unified set of applications that are easy to integrate with other information assets

"The benefits of Oracle's workflow functionality are being extremely well received in the health arena," says Phil Buck, Oracle practice manager for Lichfield, England-based Patech Solutions Limited (www.patech-solutions.com), an Oracle Certified Partner that specializes in healthcare solutions. "The Oracle E-Business Suite is a comprehensive solution that embraces not just financials but also purchasing, internet procurement, human resources, payroll, and inventory management. These are all areas that are relevant to the NHS."

According to Buck, the fundamental driver within this publicly funded organization of 1.2 million people is improved service levels to patients. "Our mission is to deliver cost and reporting benefits through the deployment of Oracle E-Business Suite 11i solutions," he says. "The three differentiators of the Oracle E-Business Suite are self-service functionality; multiorganizational functionality; and embedded workflow, such as the requisition-to-pay process."

Buck and his colleagues used the Oracle Application Implementation Methodology (AIM) to streamline the deployment, ensure a successful migration, and train users. Every application in the Oracle E-Business Suite can run in one global instance of a single database. All the applications work together and share the same information. The result is a consistent view of critical information such as inventory levels, head count, revenue, and expenses across all organizations, departments, care facilities, and geographies.

"The Oracle solution is fabulously flexible, particularly in its multiorganizational capabilities, which simplified postmerger accounting for the trust," Buck says. "Because of its functionality and inherent flexibility, there are very few reasons for a client to customize the solution in any way. That means future upgrades are entirely seamless and there is no rework required, because we're using out-of-the-box functionality."

According to Wookey, Oracle has spent a tremendous amount of time in the last few years developing technology to help HCOs adopt a better-integrated, more consistently represented view of information. The result is an industry-specific software solution called Oracle Healthcare Transaction Base (OHTB), a comprehensive data repository and service infrastructure designed to anchor a wide array of healthcare applications.

There are four key components to OHTB. The first is a normalized data repository based on HL7 standards. The second is a set of data-management services that ensures data in the repository is consistently represented, so HCOs can maintain a single view of patients as well as providers. The third is a messaging platform that lets dissimilar types of information systems communicate. And the fourth is a J2EE-compliant development platform that helps ISVs build complementary healthcare applications.

Buck says Oracle's extensive efforts with OHTB are already gaining notice among ISVs throughout Europe. "The Healthcare Transaction Base will allow us to more easily integrate an Oracle E-Business Suite solution with patient-facing systems, so we can transparently share information," he says. "For NHS organizations in the U.K., that will be a tremendous step forward. We're on the cusp of a whole new wave of automation, as solutions such as OHTB find their way into common usage."

As ISVs, systems integrators, and healthcare providers converge on this new software platform, they will take part in a tremendous effort to improve society. There are very few industries, with the possible exception of education, that have a bigger impact on the public welfare than healthcare.

"It is no longer a question of whether information technology can help an HCO fulfill its mission," concludes Gartner Inc. analyst Barry Hieb. "Rather, it is a question of making the most effective use of IT capabilities and making wise choices. Information technology is expensive, and the associated decisions are difficult, but they should no longer be considered optional."

Providers Get a Healthy Return

Established in 2002 after the merger of the City Hospital and Sandwell Healthcare NHS Trusts, Wharram's organization is one of the largest NHS teaching trusts in the U.K. Following the merger, the newly created trust sought to cut overhead and improve financial control by reducing the level of effort required for financial administration and procurement.

"The legacy systems we inherited were not integrated or Web-enabled, which resulted in silos of information held in different formats and led to process inefficiencies," recalls Wharram. "We needed a single information database; standardized, automated processes to drive down costs; and advanced reporting tools to give us a real-time picture of performance."

In April 2002, the trust purchased Oracle Financials, Oracle Procurement, and Oracle9iAS Discoverer and then solicited help from Patech Solutions to implement the new software.

According to Wharram, the trust chose these Oracle E-Business Suite applications for their scalability and established upgrade path. "Oracle offered a future-proof solution with sustainable, long-term business benefits," he notes. "In terms of self-service and workflow functionality, Oracle was well ahead of the other vendors we considered."

Oracle Financials helped integrate the trust's financial management and procurement processes and ensured an uninterrupted flow of data across the organization. Now that the e-business software is in place, information is entered only once and verified at the source, resulting in consistent data and fewer errors replicated across the system. The integrated database and applications allow accurate, up-to-date performance reports to be generated in minutes, a task that previously took three hours. "Oracle did exactly what we wanted: It delivered integrated e-business, rather than lots of bits and pieces bolted together like we had before," Wharram says. "Now we have one integrated solution."

Purchasing professionals at the trust use Oracle Procurement to analyze buying patterns, identify savings opportunities, and establish a consistent purchasing strategy. Buying only from approved suppliers at prenegotiated rates enables Sandwell and West Birmingham to gain control over employee spending and optimize supplier relationships. Workflow-based process automation expedites orders, eliminates unauthorized spending, and reduces requisition time. Additionally, the seamless interface between all Oracle E-Business Suite modules has cut the time spent generating monthly general ledger feeds from days to minutes. Importing pay details from the trust's payroll system to the general ledger, which used to take one working day, now happens in 10 minutes.

"This type of savings will make it relatively easy to pay off our initial investment in Oracle systems in two or three years," Wharram says. "We expect to reduce transaction processing costs by 50 percent once we are fully operational," he adds. "At present, it takes up to two weeks to raise an order; with Oracle iProcurement, that should be cut to one day. This will enable us to be more responsive to the needs of operational services and, ultimately, patients."

Transforming Healthcare

As Sandwell and West Birmingham have demonstrated, innovative healthcare providers are using e-business software to drive closer and closer to what analysts at Gartner commonly refer to as a real-time enterprise (RTE)—an organization that competes by using up-to-date information to progressively remove delays in the management and execution of its critical business processes. Achieving this level of responsiveness enables healthcare providers to be more efficient in their core processes and better able to compete. In addition to providing business advantages, the implementation of RTE helps care delivery organizations prevent, detect, and correct medical errors.

"In today's turbulent managed-care market, healthcare organizations must transform themselves or face extinction," writes Gartner's Barry Hieb. "They must find ways to dramatically improve their efficiency and customer service levels, to better leverage information to support improved decision-making, and to adopt techniques that bring the enterprise ever closer to a real-time operational model."¹

These objectives cannot be accomplished unless the HCO has established a flexible and comprehensive enterprise software architecture. To get there, HCOs typically begin with basic administrative functions—such as human resources, payroll, finance, and procurement—and then move to front-line patient management systems at the point of care. The starting point is to construct a common data model that encompasses many types of information systems. Once that's done, healthcare providers must tackle the far more arduous task of sharing information—not just among the various departments of an individual hospital but also throughout their care delivery networks, which often include multiple hospitals, clinics, pharmacies, and nursing homes.

For example, healthAlliance has created a common information platform for lab systems and patient management systems, along with a common chart of accounts that links several district health boards (DHBs) across New Zealand. "We run a patient management system that sits on an Oracle database, along with all of our e-business applications," says Kathy Frame, business solutions manager for healthAlliance, a shared service center for three hospitals in Auckland, New Zealand. "We're sharing lab information among DHBs, so that patient records can be accessed from any hospital. We're really striving for standardization."

New Zealand has 21 DHBs serving a population of about 4 million people. healthAlliance provides shared services to two of the largest of these health boards, with an emphasis on finance, supply chain, procurement, and staff recruitment functions for about 9,000 employees. Its IT department of approximately 80 people is split between the North Shore and Middlemore Hospitals, two large hospitals in the country.

"Our objective is to lower the cost of essential back-office functions to free up more resources for front-line patient services," sums up Craig Presland, chief operating officer for healthAlliance, echoing a familiar rallying cry among HCOs worldwide. "In our case, we've achieved significant standardization for back-end administrative systems such as financials, supply chain, and HR. In some cases, the information platform encompasses clinical systems as well. For example, we have a common lab-test-results repository that allows clinicians to view records from just about anywhere and sign off electronically."

Next Steps FIND out more about Oracle and healthcare oracle.com/industries/healthcare READ more about Oracle Healthcare Transaction Base oracle.com/industries/healthcare/more1.html LEARN about Oracle Consulting's solutions for healthcare oracle.com/oramag/industries.html DISCOVER how Oracle supports other industries oracle.com/industries

Initially, healthAlliance selected Oracle due to its proven ability to integrate all aspects of the procurement process—including the finance, purchasing, and human resources functions that come into play. According to Frame, the Oracle iProcurement solution reduces the number of steps involved with administering purchase orders. Administrative staff use the software to access online catalogs, requisitions, and supplier agreements, and each user has a customized template with a predefined list of frequently ordered items. Since the implementation of the system, savings have totaled more than NZ$5.4 million.

On the HR front, recruiting officers at healthAlliance enjoy being able to access an electronic talent pool, minimizing their reliance on outside consultants to help with new hires. "That's a big deal when you have 9,000 staff representing roughly 70 percent of your costs," says Presland. "We're turning over 200 to 250 staff members per month, and by recruiting people electronically, we avoid media print costs and consultant fees, which run around 15 to 20 percent of remuneration."

Helping Manage Data

Many healthcare providers have difficulty obtaining accurate information, whether it's patient data or insurance records. The problem stems from disconnects among information systems. "Most hospitals and care delivery networks are departmentally focused," says Oracle's Wookey. "There's a tremendous lack of integration within hospitals and especially from one hospital to another." Many hospitals have begun tackling this problem by standardizing on the Oracle database through every facet of their operations, helping them gain control of the data in their information systems.

Now, some healthcare providers have begun building information portals for their doctors, patients, and back-office staff. Portal-based systems can integrate patient registration, scheduling, and various clinical applications with an Oracle-based information architecture, adding a new layer of efficiency—efficiency that Oracle's Wookey says ultimately benefits the public. "Our goal is to help healthcare institutions recognize that information is an asset to be effectively managed," says Wookey. "Meeting that goal will ultimately have a positive effect on public health, and we're very excited about that."

David Baum (david@dbaumcomm.com) is a freelance business and technology writer.

¹ Hieb, Barry, M.D. and Burghard, Cynthia, "Gartner Healthcare Key Issues for 2003," (AV-18-8337 - December 5, 2002).

Glossary District Health Boards (DHBs) — A group of 21 organizations that are responsible for running New Zealand's public hospitals. HL7 Standards — A set of standards for governing the format and exchange of information among healthcare software applications. Oracle Application Implementation Methodology (AIM) — A proven, structured approach for implementing business solutions based on Oracle E-Business Suite applications. Oracle Healthcare Transaction Base — A comprehensive data repository and service infrastructure for building healthcare applications. U.K. National Health Service (NHS) — The organization responsible for delivering healthcare services throughout the United Kingdom.

Snapshots Company Profiles healthAlliance Auckland, New Zealand www.healthalliance.co.nz/ha/ healthAlliance NZ Ltd is a company that was created by Counties Manukau District Health Board (CMDHB) and Waitemata District Health Board (WDHB) in July 2000. It now serves as a vehicle for providing shared services to both stakeholders. Oracle Products & Services Oracle Database, Oracle9iAS Discoverer, Oracle E-Business Suite, including: Human Resources, Financials, Supply Chain, and iProcurement Sandwell and West Birmingham Hospitals NHS Trust Birmingham, England www.swbh.nhs.uk Sandwell and West Birmingham Hospitals NHS Trust is one of the largest NHS teaching trusts in the United Kingdom, with a reputation for excellent staff who provide high-quality care from three hospitals: City Hospital, in Birmingham; Rowley Regis Community Hospital, in Rowley Regis; and Sandwell General Hospital, in West Bromwich. Oracle Products & Services Oracle9i Database, Oracle9iAS Portal, Oracle E-Business Suite, including: Financials, Procurement, General Ledger, Payables, Receivables