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Established in 1990, the Hong Kong Hospital Authority (HKHA) is a statutory body responsible for managing Hong Kong’s public hospitals and their services to the community. Accountable to the Hong Kong Special Administrative Region Government, the authority has a workforce of more than 59,000 people and manages 41 hospitals and institutions, 48 specialist outpatient clinics, and 74 general outpatient clinics. In 2009 and 2010, the government’s subvention for staff costs, medical supplies and equipment, and other operating expenses was about US$4.2 billion (HK$32.7 billion).
HKHA has embarked on a program to improve its service delivery performance. This program includes a range of initiatives, including revamping its clinical management system, managing demand to reduce patient waiting times, improving safety and quality, enhancing employee care by ensuring staff take on reasonable workloads, and changing work processes to improve efficiency and patient welfare.
The systems supporting nonclinical functions, such as finance and payroll, were first deployed in the early 1990s, so by 2005 there was a rising risk of technology failure and technological obsolescence, including software desupport and the loss of skills and tools required for maintenance. The institution wanted a platform that would properly integrate its back-office systems with world-leading software, while deploying internal resources to develop and revamp its clinical systems to achieve greater insight into the cost of patient care. It also needed to deploy resources more efficiently to meet rising demand.
To meet its targets, HKHA initiated a large-scale migration to Oracle E-Business Suite in collaboration with Oracle Consulting. A combination of strong project sponsorship and governance from HKHA and expertise and delivery from Oracle Consulting ensured the success of this vital transformation.
The project included implementing Oracle Human Resources Management System (HRMS) and Oracle Payroll with Hong Kong localization. “Thanks to a technically skilled and professional engagement from Oracle Consulting, in August 2010 we cut over to a new payroll system based on Oracle applications,” said Phil Lansley, project manager, Hong Kong Hospital Authority. “This involved migrating more than 59,000 staff in a single, big bang approach.
“Any problem would have had significant and widespread ramifications. The disciplines, methodologies, and processes Oracle employed—and the functionality of its technologies—meant we experienced a seamless transition.”
To meet its longer term goals, HKHA realized it had to source an appropriate software package to replace its antiquated systems.
“We have very talented developers and technicians who developed clinical systems that are among the best in the world,” said Lansley. “However, our existing back-office applications were not equipped to meet HKHA’s longer term business objectives.”
The age and functional limitations of the existing in-house systems presented an unacceptable risk to the organization. Initiatives to improve the quality and timeliness of information available to HKHA meant back-office systems had to be integrated with clinical applications, which could not be achieved with its legacy applications. HKHA also wanted to standardize the procurement and inventory business processes across its 41 hospitals.
“A key driver was to automate our end-to-end processes,” said Lansley. “In addition, a lot of our applications were not particularly well integrated. We wanted to start obtaining insights in real time to help our decision-making processes become much more streamlined.”
Following an extensive review and tender process, HKHA implemented Oracle E-Business Suite HRMS modules, including Oracle Payroll. The project also involved deploying several other Oracle E-Business Suite modules, including Oracle Financials modules, such as Oracle General Ledger, Oracle Assets, Oracle Purchasing, Oracle iProcurement, Oracle Order Management, Oracle Inventory Management, and Oracle Product Information Management.
For an organization with a strong tradition of in-house development, adopting a packaged system represented a sizeable change. “It was a big step for HKHA to move to a packaged solution—the Oracle system was a real guinea pig for us to see how we could transfer risk, achieve value for money, and adopt an upgrade path that would allow us to use new functionalities to meet our business needs,” said Lansley. “However, now we have started the journey, we are prepared to broaden our enterprise resource planning footprint.”
The design of HKHA’s legacy systems prompted the organization to adopt a big bang transition to the Oracle-based payroll system for its 59,000 staff. “We wanted a minimum risk approach because we could not afford to have our staff not receive their pay when due,” said Lansley. Any failure of the system could cause massive staff disruption and prompt widespread organizational dissatisfaction.
Following several rehearsals, HKHA moved to the new system in August 2010. Oracle Consulting team members were on hand during the 2:30am transition to ensure all went smoothly. The cutover—one of the largest ever undertaken in Hong Kong—proceeded without incident and each subsequent payroll has been processed with similar results.
The new system allowed HKHA to apply more generic and business-oriented terminology within its human resources management systems. Using the features and functions of Oracle products, the authority has consolidated 200,000 staff position descriptions within the payroll system to just 18,000. The organization now has an unlimited ability to undertake pay runs, as the new system eliminates the two-working-day minimum gap between runs that the legacy system required. This allows structuring pay run schedules to meet business requirements.
Deploying the new system has also enabled HKHA to process its journals in real-time and calculate depreciation on fixed assets monthly basis rather than semi-annually, improving control and efficiency for interim and year-end closures.
The organization also has a more up-to-date and accurate view of its financial position through budget utilization reports. In addition, HKHA has greater insight into purchase and invoice information, enhancing control of procurement and the supply chain. For example, HKHA has updated its ledger information with automatic inventory account posting, improving its ability to manage inventory turnover.
HKHA has also moved to full electronic purchasing, with purchase orders automatically transmitted to suppliers through e-mail, electronic data interchange, and automated fax. Combined with automated account and approval generation, and self-service requisitions and receipts for over 10,000 employees across 41 hospitals, the organization has reduced procure-to-pay times by 28%, on average.
Rigorous invoice matching and requisition-to-purchase, order-number tracking processes also dramatically reduced the potential for duplicate payments and other inefficiencies. HKHA can also implement 100% compliance with procurement approval controls, including proper segregation of staff duties.
With the foundation of its new enterprise resource planning system in place, HKHA plans to integrate this with its clinical systems. The enterprise resource planning deployment also complements HKHA’s initiatives to replace its legacy budgeting and forecasting systems. The organization finalized the first-phase implementation of Oracle Hyperion software in September 2010, encompassing Oracle Hyperion Planning, Oracle Hyperion Smart View for Office, and Oracle Hyperion Financial Reporting.
HKHA is also evaluating ways to leverage its new enterprise resource planning system and its integration with clinical data to provide greater enterprise performance management and business intelligence. It is extending the Oracle system to include the procurement and supply of pharmaceutical products and will deploy the Oracle Mobile Supply Chain application to support HKHA’s supply chain improvement initiative. It is moving to capture scanned data from a wireless handheld scanner to track and trace supplies. HKHA expects the new system to go live at pilot hospitals in 2011.
In late 2005, HKHA issued a request for proposals covering software and services. “There were multiple vendors, and it was a highly competitive process, with detailed assessments of quality and price factors to provide the best outcome for HKHA,” said Lansley. “To make our decision, we undertook an extensive review process, including reference site visits and negotiations.”
Following this process, HKHA selected Oracle’s proposal and awarded the contract in December 2006. Oracle Consulting aided the decision by providing extensive documentation on the technology, as well as its credentials in deploying it at customer sites.
“We met the key people proposed for the implementation; in Hong Kong, as the people dimension was very important,” said Lansley. “The Oracle Consulting people brought credibility to the solution and a good technical and cultural fit—which was very important when working among our own, very knowledgeable people.
“In addition, their proposal was detailed and extensive. This included the ability to bring in additional resources to meet our specific requirements when needed.”
Oracle Consulting’s preparedness to work as a partner rather than a supplier also played a part in convincing the HKHA to engage the business. “While our contract provided the rigor we needed, we did not have to apply any of the terms and conditions to ensure they would complete a piece of work,” said Lansley.
HKHA adopted a staged approach to minimize the risk of the implementation. While Oracle Consulting assumed responsibility for leading all stages of the implementation, it would regularly review the project schedule with HKHA and adjust it accordingly. “This was all very well managed,” said Lansley. “Without the strong project sponsorship and governance of the key executives, we would not have gone live when we did.”
The project governance framework included a Project Steering Committee chaired by the Chief Executive of HKHA, which ensured the project had the right mandate. Other participants included project sponsors from business functions, such as finance and human resources.
“The sponsor on a day-to-day basis was the Director of Finance, and she was the real driving force behind the project. I turned to her regularly to help resolve key issues,” said Lansley.
Oracle Consulting completed a number of complex customizations to meet HKHA’s requirements and provided onsite support during the critical system integration and user acceptance testing stages. The user acceptance testing was particularly critical as staff had accustomed to working with legacy, in-house-developed systems.
“Oracle Consulting’s methodologies were central to the success of the implementation,” said Lansley. “At its peak, the project involved about 60 Oracle Consulting staff, including experts from Oracle Australia, Oracle India, Oracle New Zealand, Oracle Singapore, and Oracle Taiwan.”