Stewarding precious resources is something that David Higginson takes very seriously, and he was blunt and to the point about that on April 14, when he spoke at the Health IT Summit in San Jose, held at the Westin San Jose April 13-14.
The key point, Higginson, who is executive vice president, chief administrative officer, and chief information officer, at Children’s Hospital of Phoenix, told his audience, is that, in the context of pediatric hospital operations in the current operating environment, children’s hospital CIOs have no choice but to think very carefully about the financial resources they have available to them, and to strategize rigorously in order to make ends meet. That was the theme of his keynote presentation on Friday, entitled “How Phoenix Children’s Hospital’s LEAN IT Initiative Has Empowered and Engaged Patients, While Saving Millions Annually.” Indeed, Higginson shared with his audience, Phoenix Children’s has saved $4.5 million through changing vendors and through renegotiating vendor contracts, as well as executing a workflow redesign that has resulted in an additional $2 million in savings.
The context of those successes is a stark one: as Higginson noted, 60 percent of the patients whom Phoenix Children’s treats either are Medicaid recipients or are uninsured; meanwhile, he emphasized, “Medicaid pays about 85 percent of cost. And that guarantees a $60 million annual shortfall.” What’s more, compared to other markets, the metro market adjustment is extremely low for Phoenix. So even with the most skillful administration, Phoenix Children’s is perpetually in a financially vulnerable situation.
To add to the complexity of all that, “The payment model is changing,” Higginson told his audience. “We’re moving to at-risk contracts; we are not fee-for-service.” What’s more, the Phoenix pediatric care market has layers to it. “There’s rapid consolidation taking place now in the Phoenix metro market, and there’s vigorous competition in the market, with several different health systems in town. It’s not like it was when I was in Arkansas, where our children’s hospital essentially had no direct competition.”
It’s within that context that Higginson told his audience he came to understand an important frame for what faced him as CAO and CIO when he arrived at Phoenix Children’s. “When I first came to Phoenix Children’s,” he said, “I saw that we were in the bottom quartile in terms of our budget as an IT department. And at first, I said, we need to spend more money.” But then, he said, he carefully studied the broader context of that budget, and changed his mind. “Every state is on a different reimbursement rate for Medicaid,” he notes. “And we plotted the y axis of our reimbursement framework against the x axis of what we’re spending. We’re spending way below our reimbursement rate,” when it comes to IT department budget compared to reimbursement, he said. “There are children’s hospitals in the upper-right quadrant; they’re in danger. And while I wish I had the 400 people in IT and lots of budget, this is a better situation for us.”
All of this has meant an open policy of economizing wherever possible, Higginson told his audience. “Take, for example, the choice of Cisco versus Juniper,” he said. “We made the conscious decision to go with Juniper, because it was a lot cheaper, at half the price, and 90 percent as good. Meanwhile, EMC wanted to forklift a SAN out every three months. So instead, we went with Dell, which I got at a lower price. And now, Dell has bought EMC,” he noted, smiling.
As for the organization’s electronic health record, Higginson said that while he and his colleagues were impressed by Epic’s EHR, his physicians approached him saying that they would rather take the savings from the difference between Epic’s EHR and Allscripts’, and use that savings to fund the build-out of the hospital’s emergency department, which had been designed to support 15,000 ED visits a year, but was actually providing 90,000. At the same time, he reported, “I’m running the help desk software for $5,000, based on software bought six years ago—and it’s fine.”
Of course, what he and his colleagues at Phoenix Children’s Hospital are doing, Higginson said, reflects a broader trend in U.S. healthcare, driven by payment and industry changes. “Lean IT is working its way up,” he said. “And it’s moving its way up in the industry for a reason.” Among the key points he made:
> C-suite business leaders in patient care organizations aren’t inclined to spend money on IT.
> Community hospitals have had to work with that reality for a long time.
> The same financial-operating challenges are now hitting larger hospitals and health systems, in the wake of the meaningful use program.
> It usually takes five to seven years operating with one EHR to justify its replacement with a new EHR.
> “Like for like” upgrades can cost more than a half-million dollars each.
If some CIOs might feel deflated by the need to manage costs so rigorously, Higginson is definitely not one of them. In fact, he finds the challenge of budgetary management in the current operating environment to be professionally empowering. “I like to say the CIO has evolved from being a plumber or engineer, to becoming a project manager, and beyond,” he said. In fact, executing on EHR implementation itself has involved a considerable amount of project management for CIOs. “Getting the EHR in—a lot of that work was project management. Now, we’re evolving towards becoming process improvement ‘rain makers.’ And doing that requires someone who knows the business.”
And here’s the real opportunity, Higginson told his audience: “If you take the time out to learn to understand how the business and the clinical [operations in your organization] work, you can become a process change leader. This is where my finance background helps: I don’t care what the technology is in the data center as long as it works.”
Sometimes, Higginson said, even simple strategies can reap benefits. For example, he urged his audience, “Go for discounts from vendors! It’s amazing what discounts Microsoft will give. And if you can get onto the state pricing model/tier, you can achieve tremendous discounts. That normally requires a political request from your CEO” to a politician with connections, he noted.
In the end, Higginson said, it all comes down to leadership, as CIOs learn to manage with less, in a time of increasingly straitened resources and ever-intensifying demands on every organization’s IT professionals. “My philosophy,” he said, “is that we have to work harder. I’m the highest-paid person in IT in my organization. I believe I have to be the hardest-working person in IT. And when it comes to purchases, I ask myself, would I write my own personal check to buy something? I have to lead my team.” His advice to fellow CIOs? “Demonstrate persistence; model it for your people. Your rallying cry should be, let’s be the best hospital IT department.”
And that means setting priorities. At Phoenix Children’s, Higginson explained, several levels of priority have been established for the work that its IT people need to tackle. At the top level are formal projects that have been approved through an IT governance process. Below that level is the level of ticket-based work. Tickets are used to process requests to fix things that were working and are now broken. “We have about 150 tickets churning every day,” he said. “Some have a three-week life.” The next level below tickets is requests for support, such as, for example, a request for the modification of an order set or for the changing of a drop-down. There are about 400-450 open clinical and business requests at any given time. Meanwhile, when it comes to proposing formal IT-facilitated projects, Higginson said, he asks those proposing such projects to “come to us with a problem, not a vendor solution.”
Higginson closed his formal speech—before taking several audience questions—by sharing the story of Dr. John Snow and his mapping of the 1854 cholera outbreak in London, in order to emphasize the importance of investigation and initiative over the purely technological aspects of the work that healthcare IT professionals need to engage in these days. As he noted, Dr. Snow disbelieved the commonly accepted, but false, understanding at the time, that cholera was spread through “miasma” in the air. Instead, he suspected that cholera was instead spread through contaminated water.
Dr. Snow—obviously without any of the technological tools we now employ to do analysis—went around metropolitan London recording local-neighborhood outbreaks of cholera, handwriting marks on a map of the metro area. Mapping the 13 documented cholera deaths in the Soho district, Snow noted the clustering of cases around one particular water pump; after examining water samples under a microscope, he was able to pinpoint the cause of the outbreak in that neighborhood to a single water pump handle on Broad Street. Comparing the water samples from the Broad Street pump with those from other wells, he was able to document the source of the outbreak, and help to prove the water-borne source of cholera.
As Higginson noted, that is the kind of opportunity that is available to CIOs and other healthcare IT leaders. In other words, he said, it’s not really about the technology; it’s about leadership and management.