Collaborating with EHR Vendors to Streamline Costs

Aug 28, 2014

Executive Insight
Healthcare is under tremendous pressure to control costs and anything with a dollar sign attached to it must be able to demonstrate its efficient contribution to the health system.
Efficient front-end planning, like with many other management practice areas, is essential for developing and implementing a streamlined healthcare record.
With the rush to realize the Meaningful Use requirements, some health systems have forgone strategic structure development to achieve the timing of the incentive payments. Fortunately, itis never too late to review the EHR implementation to assure your system and vendors realigned to optimize costs. It’s essential to periodically evaluate the system roll out and assess any adjustments needed, knowing that this domains going to evolve in major ways in the near- and long-term future.


“If the system goals and objectives are understood in the development phase of the EHR,then the system has the best positioning for cost streamlining. What will the future look like? The health system has to know where it is going,”noted Patrick Pilch, managing director of Consulting, National Healthcare Advisory Leader at BDO Center for Healthcare Excellence and Innovation in New York City. “At BDO we see front-end involvement as being a critical step toward-the successful roll out of any EHR. Lack of planning contributes to a miss of the real value ofthe EHR. It is also important to align the vendor with the same goals of the system.”It is not just about vendor alignment to-control cost; it is also about having a powerful tool that can pivot as the business model changes. Vikas Khanna, chief operating officer of The Pain Center of Arizona, a comprehensive health system focused on the treatment of patients with chronic pain, noted “…In order to scale operations, an EHR is a critical tool in today’s health systems. Further, the value of an EHR spans well beyond patient operations to also include risk management — for both the patient and the health system — by ensuring consistent experience.” Citing an example,Khanna says, “In a recent acquisition of CFO PERSPECTIVE

Collaborating With EHR

Vendors to Streamline Costs

With the rush to realize the Meaningful Use requirements, some health systems have forgone strategic structure development to achieve the timing of the incentive payments
surgery centers, there was no EHR(free standing ASCs were not included in the meaningful use incentives). Thankfully, our current clinical EHR offered a surgery center module that could be deployed. By extending our EHR platform across all locations of care delivery, we will be able to not only monitor activity in a near real-time basis, but we’re well positioned to look at new opportunities and incorporate them into our operations in a more seamless manner.”
Shrini Keskar, vice president of Global Operationsat Larkspur Technology Solutions, Irvine,CA, a global consultancy with experience in large system implementations including hospital system EHR’s, stated, “Health systems mustunderstand/define the key cost points, in its EHR costs, that it intends to strategize for optimization.
Defining, measuring and periodic
review of the high value cost points will create optimization opportunities that will not only control costs but keep business goals and system goals in alignment, keep up with changes in the process and deliver more value from system investments.”


What follows are key considerations:n Subscription or licensing cost per EHR vendor –cost alternatives for expansion of the number ofusers (bundled pricing, etc.)
Maintenance of software costs – costs of updates, annual license and other downstream costs
Relation of data between vendors, including cross system communication; data migration and parallel requirements of systems during periods of regulatory changes (e.g., dual coding period requirement for ICD-9/ICD-10)IT procurement – the standardization of IT equipment purchasing and policy driven budgeting process
Implementation process– the process of conversion to new systems and upgrades
Maintenance and support costs – visibility to and coordination of all contracts
Ongoing system integration costs – understanding of the cost and options of interfacing systems


Below are items to consider when developing a cost optimization strategy:
Total cost dashboard — routinely updated (provide management weekly/monthly assessment with quarterly C-suite reporting). The dashboard should include system objectives, vendor usage,internal staffing, costs, budget to actual comparison and tracking of goal achievements
Set targets for cost reduction— involve the vendors with the goal of reducing the overall system cost. Solicit their ideas and make them part of the solution.
Licensing and subscription costs — understand the software costs when respective system is fully operational and discuss pricing alternatives with vendors.
Cost benefit of outsourcing — challenge standard processes/routines that are appropriate for out sourcing. In some instances there are system processes/routines that can be performed by a third-party organization, specifically focused on that sector, at a higher efficiency and lower cost than internal staff.
Standardize system IT procurement and implementation process — whenever possible the
health system should be purchasing standard products and following a standard implementation process. There are many generic hurdles for every new system implementation.
Data maintenance and support standardization— coordination of maintenance and support costs throughout the system for both cost control and efficiency.
Rube Goldberg Avoidance — be wary of excessive work-arounds or patches that are indicative of system inefficiency and potential for future runway cost. All new projects must first addressthe fit and impact upon the overall system.


What if your health system is not streamlined with its vendors? Every healthcare CFO wants to prevent their health system from pouring capital into a black hole. It is never too late toimprove the process and EHRs should be continually reviewed for efficiency. Involve your vendors in a plan to define and bracket the problems,then in a collaborative manner tackle thesolutions.


A key challenge for the CFO is to make certain that the associated costs provide value to the institution and are essential to the management of the health system.


Sean Best is director of Business Intelligence & Business Applications at Children’s Hospital Colorado, one of the nation’s top 10 children’s hospitals in the U.S. Larry Zagata is vice president of Solutions Delivery for MIPRO, a consultancy focused on implementations, upgrades and optimizations of Oracle’s PeopleSoft applications.
For the healthcare industry, the government-mandated move to electronic medical records (EMR) has helped to overcome some pervasive industry-wide inertia and sparked the adoption and implementation of new IT infrastructure for a large swath of organizations.
While this has been a welcome and necessary move forward for an industry that, historically,has been a late adopter of new information technology,the transition to an electronic platform has also highlighted a chronic healthcare shortcoming:Mining meaningful data and utilizing it to make better business decisions has been along standing industry pain point. Healthcare CIOs and CFOs are constantly struggling with disparate data strewn across multiple systems,and significant resources are spent trying to collect and consolidate data, rather than analyze it.
The good news is that while the EMR (r)evolution has made it painfully clear just how far the industry has to go in this respect, it has also put the tools in place to get it there. Today, healthcare organizations are recognizing the importance of utilizing quality data to enable analytics that can provide key answers and inspired solutions. Leveraging the newly available technologies effectively,however, is anything but easy. Sophisticated strategies and best practices must be adopted to ensure that an organization is mining meaningful data, and, more importantly, putting that data to good use to address timely concerns like population management and clinical effectiveness.
To understand why it is so important for health care organizations to gather and analyze quality data and what steps need to be taken todo so effectively requires a more detailed understanding of the structural inefficiencies the industry has had to overcome and what obstacles remain in place today.


Prior to the EMR changeover, the lack of any central record keeping or data-gathering system was a crippling industry handicap. While some niche products were in place, many organizations were still reliant on a paper-based record-keeping system.
As a result, the immaturity of data quality across the industry was prohibitive to any kind of reliable or meaningful analysis—and still remains challenge.
That poor data quality was exacerbated Diagnostic Rigor
Utilizing technology to collect, store, analyze and utilize meaningful healthcare data By Sean Best and Larry Zagata The healthcare CFO partners at Hardesty are faced with the vendor cost streamlining challenge on a daily basis across the country. Especially in larger health systems, understanding who all the players are is sometimes the biggest challenge. With multiple vendors and even multiple teams within the same vendor there is real exposure for unnecessary overlap and cost. Examples include:Key CFO measures for EHR management Dashboard from vendors/CIO of direction, achievement and workload
Understand purpose of all vendors
Define “must haves” vs. niceties Align vendors with system goals
Vendor focus on new areas and training vs. perpetual assignment Transition new areas to routine practice Success/milestone payments
Documentation of changes
Software update/maintenance programs System entities onboard with same processes. The EHR has certainly been transformative tool for healthcare.
A key challenge for the CFO is to make certain that the associated costs provide value to the institution and are essential to the management of the health system.