By Cindy Atoji

June 10, 2008 | The newly released ONC strategic plan is an intelligent approach, says James Champy, chairman of Perot Systems Corp. consulting practice. Champy, who is also head of strategy for Perot and one of the founders of the management theory behind Business Process Reengineering (BPR), has long been advocating using information technology to develop a patient-centric services model, one of the primary goals of the ONC plan. To do this, says Champy, IT has to be harnessed to make a fundamental change in the way health care is delivered. “The more transformational IT can be, the more value it can create. This argues for more radical change.”

Champy spoke with Digital HealthCare & Productivity about how he thinks the ONC plan could become a reality, the business case for health IT, and getting the most value out of technology spends.

DHP: What’s your reaction to the federal health IT strategic plan just released by the ONC (Office of the National Coordinator)?

Champy: The plan takes a very sound approach in that it is not proposing a single large system. The U.K. has been challenged in its approach to build large, regional systems. The U.S. plan takes a coordinated approach, leveraging the major investments and progress that many institutions have already made. The approach is one of “harmonization” of the efforts already underway. This approach is much more likely to work.

Some level of standardization (processes, software, and technology) will still be required, and the plan acknowledges this. But achieving standardization in health care has always been a challenge. Without it, however, we will not achieve the goals of the plan.

Small to medium sized institutions may also be challenged in participating in the effort. The plan requires resources at all levels and from all participants to make it work—and smaller institutions may need some financial and professional help.

On the whole, the plan is very complete in its thinking. The challenge, as always, will be in its implementation.

DHP: The ONC plan puts forth specific strategies for interoperability, including fostering the business case for exchange of health information. What is the business case, in your opinion?

Champy: There are two business cases. One is certainly around improving the efficiency of health care delivery, both in terms of time as well of money. Data suggests that 40 to 50 cents of every health care dollar is spent on administrative processes. So if we can standardize health care records and process, we can dramatically improve the efficiency of the whole system. There has to be something in it for everyone, and getting everyone to adopt standards is challenging, especially when it comes to the clinicians—more so than the administrators. The other business case clearly has to do with how the patient or customer experiences the health care system, and this means making the health care record more available, as well as standardization again. It’s so frustrating to go to single large hospital and have to deal with multiple forms and records inside the walls of the same hospital. It’s a primitive and poor patient experience.

DHP: The plan also talks about removing business obstacles for provider use of EHRs to increase adoption. What do you think many of these business obstacles are?

Champy: One big one is cost. For a large hospital to digitize the health care record, it can be a $50 to $100 million dollar bill, and for small to medium-size hospitals, it’s even more challenging. If we can standardize systems and processes, technology can be offered to small to medium hospitals on more of a factory or outsource basis. That means you don’t have to buy or license a software system that will be run inside your hospital, but share a system that’s running on some central computer or server. There are no upfront costs of hardware and software; it’s the SAS (Software as a Service) strategy.

Right now, because of non-standardization of all these records or processes, you have to install your own systems and technology. But if we could standardize, then these services could be provided to hospitals externally on a per transaction basis. This means clinicians have to be willing to accept more standardized forms, processes, procedures, and I see that as the bigger block than the costs and the so-called businesses issues. A lot of these large systems continue to be problematic when they are installed because not enough attention is paid to fundamental changes in the nature of work. That’s a huge execution issue.

DHP: So what are some best practices when installing these large systems and processes?

Champy: Engage the clinicians early, and hopefully get their alignment and agreement around the changes so they understand the business case for change. Standardization should be the underlying assumption unless there is a very, very good case for why your hospital is different. There are multiple big software packages out there that enable the digitization of the health care record: there’s Cerner, Epic, Meditech, McKesson—a broad range of software systems and products. If clinicians or administrators start making the argument that their hospital is different, so that those large systems have to be modified, that becomes an expensive installation. And over time, it becomes a very expensive maintenance issue, because when a new or enhanced version of software is introduced, you can’t just drop it in, you have to modify too. So a best practice is the operating assumption that you are going to adopt standard forms and processes that the system comes with unless there is a clear argument for doing otherwise. That is unpopular idea. Everyone argues that their institution is different, but the truth is from one place to another, a lot of this work is same.

DHP: Much of the investment can be earmarked for corporate compliance as well as general document and record retention. How can companies deal with the possible short-changing of other IT operational areas?

Champy: I think that organizations have to step back and look at the whole portfolio of technology spending and investment, and ask if there’s stuff that’s still delivering value that can be shut off and replaced by more efficient systems. As you know, a lot of systems never get turned on. I tell them to go into their administrative systems and processes and clean them up to get the money they need to pay for the clinical processes. My experience is that hospitals are so bad in collections. They leave shocking amounts of money at the table. If they just got good at collecting what they’re owed they could generate one heck of a lot of cash to pay for clinical system needs. No rational business would ever accept that kind of performance. I see 20 percent savings coming out of the system if we can just improve the settlement and payment processes.

DHP: Given the high risks inherent in IT projects, what’s the best approach to IT management?

Champy: There’s an assumption that you can implement systems by pushing accountability down in the organization and creating an oversight committee, but there is not enough active executive management about the decisions that need to be made along the way. Even if you’re putting in one of these big systems, there are still decisions about what modules you’re going to install, the order you install them in, etc. I would tell any hospital CEO: Don’t leave the decisions to a committee or an oversight group. These are operating decisions and when you leave them to a steering committee, they get compromised. The most successful large system installations I’ve seen are ones where there is an executive who is really hands-on.

DHP: You mentioned outsourcing IT operations. What trends are you seeing in that area?

Champy: I think there’s an increasing willingness of hospitals and payers to actually have servers and computing facilities outside the walls of the hospital, and a lesser movement to allow some of the work to go offshore. Up to recently, hospitals were reticent to let any computing outside their walls and very conservative in allowing the consolidation of their servers and paging centers. But there is more openness to that now.

I predict a lot of the administrative work over the next few years will be moving off shore, even though there’s a concern around quality and responsiveness. The need to get administrative costs down is driving institutions to be more open to off shoring. The cost differential is just too great. Depending on how much you outsource, if I had to give a number, you can save a range of 20-40 percent.

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