When Sunset Comes Unexpectedly

June 24, 2011
Daniel Burgess Most hospitals recognize that automating business processes improves business practices, but too often that happens only when there
Daniel Burgess
Most hospitals recognize that automating business processes improves business practices, but too often that happens only when there is time or, more likely, when there's money. MaineGeneral, a 578-bed health system in Augusta, Maine, was driven by real urgency: "We knew our current vendor was going to announce the sunsetting of the core modules on our IBM AS400," says Daniel Burgess, director of applications. "We were motivated."

Like many hospitals, MaineGeneral had duplicate manual data entry in the form of daily faxing and filing of large numbers of invoices for multiple business units. "We wanted to automate paper systems that had been at MaineGeneral since day one" Burgess says. "We were looking for a world class system."

Four months ago, the organization went live with Redwood Shores, Calif.-based Oracle's PeopleSoft Enterprise Financial Management system, automating processes in general ledger, accounts payable, fixed assets, projects tracking, supply, inventory and non-patient accounts receivable.

The organization took a careful approach to system selection. "MaineGeneral had insight into how current issues in the healthcare industry are causing changes in the way (organizations) select technology," says Mychelle Mowry, vice president, Health Industries, Oracle. "They had the insight to say, 'we need transparency across all of our entities, an understanding of our cost within the organization and the ability to integrate all of that cost, whether it's supplies, nursing services, diagnostic equipment — all in a single database.’” In addition to PeopleSoft, MaineGeneral used Andover, Maine-based NaviSite as a system integrator for interfaces and training.

According to Burgess, MaineGeneral laid out all the functions provided by its vendor at the time for the RFP, looking for gaps and functions to target. "We compiled our functional requirements from that process flow and fit, in addition to where we thought we were going for our RFP, and proposed contracting terms," he says. "Early on, we had estimated $750,000 — that was very early on. Fortunately the selection spanned over a fiscal year, and so we put in another $750,000."

A steering committee formed for system selection included the CIO. Project sponsors Burgess, the director of materials management and the controller augmented the initial group with front-end staff and key stakeholders, giving them the chance to evaluate each vendor. "We have vendors come in with scenarios and we do a mathematical assessment," Burgess says. "PeopleSoft presents extraordinarily well, with all the bells and whistles — so my IT skeptic digs and probes. But they were thorough in understanding our RFP. They'd done their homework."

Oracle's pricing was the highest of the vendors, but it wasn't outside MaineGeneral's range. As selection neared the final stages, the organization took due diligence a step further. "Before we made our final decision, we did telephone reference checks and existing client visits," Burgess says. "We also required that the vendor supply their complete customer list, not just the ones they provide." According to Burgess, all selection team members were required to sign off. "They may still complain later," he says, "but they were right there at the table during the decision."

As official announcements began coming out from the original vendor about the sunsetting applications, the team started feeling the pressure. "Thankfully, we were on our way to having everything in place at that point." Burgess says. "In February '06, late in the wee hours, we finally got the contract signed and were ready to kick off the implementation."

Burgess has one key piece of advice: don't be late. "Gather management support early on and get agreed upon scope early, and stick to it. If you don't," he says, "you are inevitably going to delay."

Maine General executives knew their internal resources and skills sets didn't match the implementation needs and selected NaviSite to partner.

"The bulk of our training, because we went to e-procurement, was about 700 requisitioners enterprise-wide. We did them towards the tail end, after we'd refined our training, because you definitely don't want to retrain that many people," Burgess says.

There was extensive communication and education to users. MaineGeneral had traveling road shows to the different sites with the controller, materials director and project manager showcasing the new technology. "This was a major change," Burgess says, "and we were going to have our learning curve and we were going to have our dips, but we were absolutely going to come out of the other side with a solution that was far better than anything we could have created in our previous environment."

The hospital went live with all the modules simultaneously. "At activation we didn't get a huge bang for the buck," Burgess says. "But we did reach our biggest critical milestone: we were no longer dependant on our previous vendor who had indeed sun-setted support for a couple of the modules we were still running."

The new system also shifted accountability for ordering supplies. "You used to fill out a piece of paper, send it to someone, they'd check what was wrong, you'd correct it, and maybe, miraculously, you'd get your supply," Burgess says. Now it's the requester's responsibility to make sure it's done correctly at the front end. "There's a streamlining, without question. We don't have the three days of mail lag. I think the mailroom was happy because their volume went down."

Mowry agrees that getting maximum benefit from a system like this takes time. Providers get immediate results by moving from manual to automated systems, but research shows that most people who buy automation don't implement all of the features and functions right away. "First, they'll have an immediate reduction in process steps and time," says Mowry. "Then, they're going to have the reporting ability to understand their true costs as an enterprise. And once you understand your true cost then you can evaluate where you can decrease it."

Burgess sees more gains down the line. "One of the areas we're expecting ROI is through vendor payments, and taking advantage of vendor credit with timely payments. That's probably the big area from a dollar perspective now that we can manage those details." As the automated process takes over, there is potential for FTE (full time equivalent) restructuring within finance.

According to Mowry, improved access to quality indicators will be available, too. "They'll eventually have business intelligence that sits on top of an integrated database, allowing them to not only look at how they're doing from a financial point of view, but be able to respond much faster to requests for quality indicators," she says. "They'll have the potential to increase revenue due to the ability to capture the metrics for pay for performance." Mowry sees a move towards not only pay for performance but pay for outcomes, such as 'when was the patient able to return to work.'

MaineGeneral views this as a successful project. "Four months in from activation, we're over the hump and the tide is starting to turn," Burgess says. "Our new CFO asked how our numbers on some reports compared from the previous system. We couldn't answer that, because we couldn't get it out of the old system. We're building those baselines now."

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