A look at how shared services can improve the ROI of EHR

1. Shared Services for Healthcare:
Boosting the ROI of EHR
Presented by: Pale Rhino Consulting
paul@palerhinoconsulting.com
1

2. An Example—Hospital Overview
 Hospital Overview
– Assume we are looking at a large pediatric hospital
– Over 8,000 employees
– Provides inpatient and ambulatory care services
– Several physician practices support patient care, including:
• Children’s Healthcare Associates
• Children’s Oncology Associates
• Children’s Radiology Associates
• Children’s Anesthesiology Associates
• Children’s Surgical Associates
– The hospital is in the process of implementing EHR across the enterprise including
several satellite locations
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3. Hospital Overview(Con’t)
 Cultural Overview
– Enjoyed lucrative environment
– Enjoyed healthy relationships and contracts with payers
– Academic medical model
– Strong philanthropic support
– Financial strength has provided funding for many clinical and supportive programs and
systems
 Current Economic Forecast
– Payers contracts may be cancelled or altered
– State and Federal funding at risk
– Increase in Charity Care and unreimbursed care
– Investments have been negatively impacted
– Management looking to reduce costs and improve efficiencies throughout the
enterprise
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4. Current State
The Hospital has duplicated departments, processes and technology
operating in each of the major organizations. IT applications vary.
Current State
Hospital
IT-EHR
HR
Billing
Finance
Scheduling
Registration
Healthcare
Associates
IT
HR
Billing
Finance
Scheduling
Registration
Surgical
Associates
IT-EHR
HR
Billing
Finance
Scheduling
Registration
Radiology
Associates
IT-EHR
HR
Billing
Finance
Scheduling
Registration
Oncology
Associates
IT
HR
Billing
Finance
Scheduling
Registration
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5. Future State with Shared Services
The future state should consolidate departments, workflows
and technology into a single organization
Potential Future State
Hospital Healthcare
Associates
Surgical
Associates
Radiology
Associates
Oncology
Associates
Shared Services
IT-EHR (1 or more)
HR
Billing
Finance
Scheduling
Registration
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6. Challenges
The hospital faces numerous challenges
Limited ability to manage an
effective shared services initiative
Limited ability to structure an
effective shared services business
case
Limited ability to realize executive
buy in
Ineffective processes and tools to
measure performance
Limited experience in defining best
practice business processes in a to
shared services environment
Limited experience in managing
enterprse transformation
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7. Two Approaches to Shared Services—which is
best for you?
Structured Approach OR
• Structured Methodology
• Program Management
• Risk Management
• Project Management
• Partner Team
• Staff to “do the work”
• Accountable for delivery
Advisory / Executive Coach
• Retainer based coaching
• Meet regularly with
Project Sponsor
• Advise and coach
• Partner team
• Hospital does the work
• Less accountable for
delivery
PLUS
Health Care/Commercial Enterprise Transformation Expertise
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8. Key Phases of Structured Approach
A structured approach with five key phases
places great emphasis on Workflow & Change Management
Align & Engage
Leadership
Develop the Strategy
& Vision
Prepare & Equip
the Workforce
Transition the
Organization & Implement
Communicate with
Stakeholders &
Measure and Monitor
Build a coalition of leaders with a common vision and
understanding that leads to united action
Define organizational vision, change strategies & plans
required to enable the intended business results
Move the workforce from current assignments and
competencies to new assignments/competencies
Assess organizational change impact driven by the
solution and implement change plans
Provide clear, timely messages to foster understanding,
involvement and feedback; monitor & measure
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9. Typical Shared Services Timeline
3 months 4-9 months 10-18 months
Develop
Strategy/
Vision
Transition / Implement
Prepare Workforce
Communicate Measure Comply
Align and Engage
Leadership
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10. Typical Structured Approach Tasks
 Design
- Process
- Organization
- Technology
 Define Service
Level Agreements
(SLA)
 Align business
units on SLAs
 Pilot
 Baseline
 Set up infrastructure
 Develop HR processes
- Competency
identification
- Recruitment
- Training
- Retention…
 Redeployment of
people arising from
set-up of the SSC
 Training to enable
new roles
 Contracting and
legal support
 Initial transition
management
(managing
additional loads in
the initial phase)
 Risk management
 Structure shared
services model
- Single or multi-location
- Decide on
ownership
model and level
of control
 Develop phase
planning
 Structure legal
entity
 MIS reporting /
dashboards
 Run shared services
as independent
business, monitor
financial and
operational
performance
 Ongoing controls
improvement
(including SOX
compliance)
Align and Engage
Leadership
 Secure executive
sponsorship
 Establish scope
of services –
processes and
business units
 Develop initial
business case
with both
quantified (ROI)
and qualitative
benefits
Develop Strategy
Vision
Prepare Workforce Transition and Implement
Communicate
Measure
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11. Key Components of Advisory, Coach Approach
Partner Team of Health
Care, Shared Services
and Commercial
Transformation Experts
Meet Regularly to
Understand Challenges and
Coach the Executive
Sponsor
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12. Why a Shared Services Center?
Shared Services combine the benefits of both centralized and decentralized operations
Decentralized Centralized
• Remote from
Business
•Unresponsive
• No BU Control of
Central Overhead
• Inflexible to BU
Needs
•Variable
Standards
• Different Control
Environments
• Higher Costs
• Duplication of
Effort
Shared
• Independent of
Business
• Common
Systems &
Support
• Bus Maintain
• Lean, Flat
Control of
Organization
Decisions • Consistent
• Synergies
• Dissemination of
Forward Looking
Practices
• Responsive to
Client Needs
Standards &
Controls
• Economies of
Scale
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13. The Rationale for Shared Services
 Reduce and/or control costs by eliminating workflow duplication
 Reduce head-count
 Free key resources to focus on strategic and analytical functions
 Standardize processes across business units
- Consistent reporting and control across business units
- New / stricter regulatory framework(s)
 Reduce / eliminate non value add activities, improve efficiencies
 Align processes / functions with business strategy
 Leverage the emergence of enabling technologies
 Free up capital for core business operations
 Leverage Purchasing Power
 Leverage Utility/Energy Spend
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14. Different Models for Shared Services
Eliminate non value-added services and processes
Strategic Specialised Transactional
Business
Corporate Centres of Excellence Service Centre/Call Centre
REGIONAL
GLOBAL
• Strategic activities remain at
Corporate Centre including
• Overall direction & strategy
• Policy & corporate
standards
• Portfolio management
• Common specialist value added
activities that require teams
possessing deep knowledge and
expertise and that leverage
regional or global advantage
• Efficient processing of high
volume, standard activities that
provide scaling opportunities
• Consolidation of information
and transaction based activities
• Require one point of contact
Business Unit/Divisions
• Core business activities
including
• Customer facing/locally
specific activities
• Local planning & decision
support
Physical Models
Functional
Function 1
Function 2
Function 3
Geographic
Function 1,2,3
Function 1,2,3
Function 1,2,3
Hub & Spoke Virtual
Hub
Centres are
organised by
function.
Centres are
geographically
dispersed.
Parallel centres
exist.
Organised by
Geography.
For each
centre, there is
a single hub,
supported by
local spokes.
There is no
physical
centre, with all
activities
performed
remotely using
web enabled
Technology.
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15. Key Design Issues & Considerations
 Shared Services vs. Outsourcing?
– Between shared services and outsourcing is a continuum of options
that allow varying degrees of control and ownership – and it is
important to analyze and arrive at the right model.
 Single location vs. multiple locations?
– The decision on whether to set up one or more centers depends on
important considerations including
• The number of business unites from where processes will be
consolidated and the resultant complexities within processes
• Regional, location or business unit specific unique
requirements (driven by market, regulatory or technology
constraints)
• Regulatory and language requirements
• Tax
• Need to manage risk
• Current locations and resources; the ability to leverage, for
example, a current location as a staging post
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16. Key Design Issues & Considerations
 Where do we locate our center(s)?
– The decision on location for the shared services center(s) must
be taken after analyzing important considerations, including,
• Cost and tax structures, including set-up costs
• Resource availability – current and future
• Tax and regulatory requirements
• Assessment of the location’s overall local environment –
public services & infrastructure, political climate,
regulatory & compliance issues…
• Tax, treasury and legal issues with regards to entity set-up,
information flow, confidentiality and data protection,
intellectual property protection…
 Designing a Pilot
– Structuring a pilot program that ensures coverage (unique
activities are covered as far as possible) as well as depth and
helps resolve issues pre go-live.
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17. Key Design Issues & Considerations
 Operating Structure and Range of Services
– Migration of services to the Shared Services Center on the basis of
business units or processes, or both?
• Selecting the range of services offered by the center. Should
there be a big bang or phased migration of processes?
• Should the phasing be based on process clusters or location,
or a mix of both?
– Migrate processes in ‘as-is’ state or migrate post process
improvement?
– Change or enhance supporting technology or applications?
 Designing the post shared services operating model
– Decisions with respect to
• Governance and reporting structures
• Resources to retain, redeployment of retained resources
• Changes to support and staff functions organizations (IT,
Legal, HR, etc.)
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18. Key Design Issues & Considerations
Fundamental to the business case is the assessment of the various operating model options and
implementation approaches
NEW OPERATING
MODEL
S
P
O
R
T
S
EXISTING
OPERATING MODEL
Implementation
sequencing and
planning
Key changes
Risk assessment
Business Case ‘blue print’
Time
Cash flow
Site/Location
Integrated Process
Model
Organization &
People
Regulatory & Legal
Technology
Service Management
Relationship
S
P
O
The above is based on Shared Service Methodology
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19. Trends and Good Practices for Shared Services
 Companies are placing more emphasis on “service” rather than “shared”.
 Current trends are towards simplification, consolidation and centralization.
 Successful centralization is being driven by technology and new IT architectures
initiatives such as Service Orientated Architectures and renewed enthusiasm
about application service providers.
 Clear understanding is required about consolidation economics. Lots of small
initiatives and SLA’s are likely to be more successful than large ones.
 Competition within the organization is a good thing around individual applications
and services. Who provides the best service?
 Managing strategic change and changes in the business agenda while maintaining
an efficient outsource relationship.
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20. Good Practices in Shared Services
Set-up and Management
We list a few of the design principles and good practices for
setting up and managing a financial shared services center
- Run shared services like a business, and be customer focused
- Wherever possible recruit new staff - no “bad habits”, reduced
hierarchy
- Flat organization reflecting minimal management layers
- Organized around teams evolving to self-direction
- General management leadership skills rather than functional
- One leader for all shared services
- Special reward and recognition programs to drive behaviors
- Service Level Agreement (SLAs) maintained between provider and
customer
SSC Structuring
By
Country
14%
By
Process
79%
Other
7%
Source: Published Research commissioned by The
Association of Chartered Certified Accountants
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