Healthcare’s Consolidation Landscape
The most ambitious aspect of IU Health’s consolidation activity "timeout" was a $50 million upgrade of the health system’s information technology infrastructure, Kitchell says.
"It started with the core IT systems. When I started as CFO, we had seven different electronic health record systems. As patients moved within our system’s hub-and-spoke structure, while we were branded as one system, it really didn’t feel like it. We spent about two-and-a-half years and moved all of our hospitals to a common electronic health record, a common revenue cycle system, and a common enterprise resource planning system. Now, we have all the financial, human resources, supply chain, clinical, and billing all in one system, and it has helped to glue everything together. Before, people were not really even talking the same language. They didn’t have the same data, and we were not getting the advantages of being a system, where we could compare how we were doing on measures like infection rates and be able to decide that somebody had gotten it figured out and we should spread that elsewhere."
Measuring the return on investment from the systemwide IT upgrade has been a challenge, he says. "Starting with the electronic health record, the cost side of that is easy to measure. The return side is the harder part.
"A return could come when a patient moves from Bloomington Hospital to Indianapolis; now that we are on the same electronic health record, we can check on patients faster because we have a complete record of their health. We don’t have to order as many lab tests because we already have lab results in the record, so there is a savings there from an expense standpoint. There are a lot of those little things, and you could probably make estimates for them, but we are much more focused on lowering our overall cost structure over the long term as reimbursements are reduced. So, we viewed this IT investment as a key driver to get us to a reduced cost per patient."
While IU Health has shied away from acquisition transactions in recent years, the organization has embraced several partnership deals. For example, the health system signed a five-year lease agreement last year to manage Frankfort Hospital, a 25-bed county-owned facility.
"We already had a significant primary care presence in that county. Of the eight primary care physicians, four of those were our doctors and they had been in that community for decades," Kitchell says.