Practical Examples of Use of IT to Improve Processes and Save Costs

In this new post, I will be sharing a few examples of hospitals around the world that have incorporated information technology into their clinical as well as allied operations. These hospitals are known as "digital hospitals" and many of them declare that they have markedly improved patient outcomes, reduced medical errors while resulting in cumulative cost savings in the long run. These sophisticated systems are indeed a sight to behold and may indeed become the "hospital of the future".

1. Hackensack University Medical Centre, New Jersey

Source: Business Week

This hospital was featured by Business Week. According to the article, it has spent over $72 million in advanced technology infrastructure and has achieved a 16% decline in mortality. The images and reports are stunning. Click here to view the full article.

2. Bumrungrad International Hospital

Source: Global Health Travel

This hospital is best experienced than explained. Situated in Bangkok, Thailand, it is a major destination for international medical tourism and one of the "all digital" hospitals. See below for a video tour of the hospital:
Virtual Tour of Bumrungrad Hospital (Video)

3. St. Olav's Hospital, Norway

Play video by clicking here

4. SingHealth Group
This public hospital was a finalist at the Copenhagen Challenge 2008 for its innovation in digitalizing healthcare. Click for website: Sing Health

5. University Clinic of Jena, Germany
Click on this link for a video on this digital hospital in the heart of Europe

This list is by no means exhaustive, but gives you an idea of how many hospitals are leveraging on information technology to improve the care they provide for patients and save costs in the long run. Hopefully, more hospitals will follow suit.

Supply Chain Management: A Vital Role for IT in Health Care Quality Improvement

Variation, Fluctuation, Volatility, Deviation. These terms are anathema to a quality control executive. Imagine that every time you bought your favorite drink, say a diet coke, it tasted different every time, or worse, if you took a pill, say acetaminophen (a pain-killer), you had different constituents in every pill. Wouldn't that be disastrous?

In many industries like manufacturing, engineering, the military and even many service-oriented industries, quality control has been a major part of operations management for a very long time and is just gradually making inroads into the healthcare industry.

Historically, quality in medical care has been discussed in terms of patient outcomes, but with the prevalent drive to reduce costs, health care managers have been investigating innovative ways to drive down cost and improve quality at the same time. What better way to do this than to focus on supply chain management? According to the Association for Healthcare Resource and Materials Management, supplies cost almost as much as 31% of a hospital's expenses on a per case basis, a rise of nearly 40% between 2003 and 2005, as reported by the W.P. Carey School of Health Management and Policy. Supply chain management also directly impacts patient quality, particularly in areas of healthcare that are heavily reliant on supplies like Orthopedics, Cardiac Surgery, etc. This means that any method that can make a hospital's supply chain management more effective will go a long way to improve patient outcomes as well as reduce cost.

Supply chain management is increasingly being used in the healthcare industry to manage inventory levels and improve operational efficiency. An example is the Sisters of Mercy Health System in St. Louis, Missouri which is composed of about 18 acute care hospitals. They employ a Resource Optimization Innovation (ROI) system which is designed to fully automate and integrate all supply chain processes for the consortium. According to the Vice President of Performance Consulting, Marita Parks, this system resulted in increased revenue of $24 million in 2007 with a 7.4 to 1 return on the initial investment. This is not an isolated case as other large hospitals and hospital chains in the US like the Nebraska Orthopedic Hospital and the Johns Hopkins Hospital Group have put in place fully, automated supply management systems to deliver superior results.  See this link for the full article.


Outside the United States, Apollo Hospitals Group, an India Based consortium have also implemented such systems. More impressive however, is the Bumrungrad hospital in Bangkok, Thailand that has been called the "all digital hospital". According to Ravi Aron, the hospital has installed fully automated processes for supply chain management and total quality control, which has assisted the company to post record profits in the 90th percentile compared to its counterparts.

(c) Baldwin Medical

While there is a lot more to be said, it is obvious that information technology offers huge potential benefits in the areas of cost reduction in supply chain management, which makes up a large chunk of hospital expenses. It should not just be seen as inventory control, but rather, a platform to integrate hospital procurement ans supply processes, to avoid redundancy and waste. Of course, we are doing these things to avoid those strange bedfellows I mentioned above: Variation, Fluctuation, Volatility and Deviation and in the process, saving valuable costs.

Supply Chain Management has a lot to offer the healthcare industry going forward, but without doubt, this will be driven by information technology and to borrow, the words of Professor Phil Carter, the supply chain industry of the future will "likely be complex, high-tech, supplier network-driven, and spread out across the globe"

Conclusive Evidence about Impact of IT on Health Care Quality?

In my previous entry, I opened up a discussion about the role of Information Technology in improving quality in healthcare and potentially reducing costs.

Source: Cartoon Stock

I did some more reading on the subject and found a fascinating paper or "systematic review" on the "Impact of Health Information Technology on Quality, Efficiency and Costs of Medical Care" by Basit Chaudhry and his colleagues at the Southern California Evidence Based Practice Center in Los Angeles, California. While I have a number of reservations about the methodology of this study and some of its selection criteria, I believe it might be useful in the current discourse.

The authors did well to note a few limitations of the study which include the number and scope of the articles used in the review. Due to the limited amount of quantitative data, they had to use primarily qualitative data, usually involving studies that were not all randomized controlled trials. In addition, they did not have the luxury of focusing on a specific set of technologies, but because the articles reported various types of technological innovations and used different methods for reporting the results, it was difficult to get a common measure of effect for all the various technologies under review.

Source: About.com

More importantly, the authors showed that there are some specific quality-related benefits of health information technology in the "benchmark institutions" they studied, particularly in the areas of increasing adherence to clinical guidelines focused on preventive care, clinical monitoring based on "large scale screening and aggregation of data" as well as increasing disease surveillance. As you might have noted, most of these quality outcomes are in the area of preventive health. I am not surprised that the authors did not report finding a lot of quality outcomes related to inpatient care or chronic disease care- this is partly due to the nature of the limitations reported above. They however found statistically significant findings on the reduction of antibiotics-related adverse drug events.

While I cannot mention all the findings here, it might be important to discuss the findings that relate to cost reduction. Firstly, the authors did not find many papers that investigated or reported this outcome or that could be relied upon. According to them, "most of the cost data available from the institutional leaders were related to changes in utilization of services due to health information technology. Only three studies had cost data on aspects of system implementation or maintenance. Two studies provided computer storage costs; these were more than 20 years old, however, and therefore were of limited relevance".

We definitely need more research on the role of Information Technology in health care. We however need to focus more on what the authors described as "commercially developed health information systems" which are different from home-grown or "internally-developed" systems. The reason is not far-fetched; with the growing demand for interoperability and "ready-to-use" systems, research with this focus, might be more useful to policy makers and organizatioins that need to implement these systems and do not have the time nor the funds to grow their systems from the scratch.

Source: WellSphere

What we need more importantly in my opinion, is a strong evidence base about the true role of Information Technology in reducing health care costs either in the long or the short run. This is important if you have even a modicum of belief in the trite mantra, "the rising cost of health care and the ever widening budget-deficit".

Share your thoughts with me.

Cost versus Quality in Healthcare: The Role of IT

I read an interesting paper today by Matt Thatcher and Jim Oliver, "The Impact of Information Technology on Quality Improvement, Productivity and Profits: An Analytical Model of a Monopolist". This paper made an important distinction between the cost reduction and quality improvement in health care especially as it relates to the role of information technology.

Copyright: Government Technology

In many articles and in discussions, many people take for granted that in the long run, information technology would inevitably lead to the reduction of cost and ultimately also lead to quality increases. These especially came to the fore during the health care reform debates when it was argued that health information technology would have these two desirable effects (see link for detailed description) without actually explaining how this would be so. In line with its goal of ultimately reducing costs while improving quality in the health sector, the Obama administration appointed David Blumenthal to head the Office of the National Coordinator for Health Information Technology, which is tasked with ensuring the smooth adoption of health information technology.
Despite these noble intentions however, the authors of the paper argue that cost reduction and quality improvement do not always go together and that "product quality improvements might come at the expense of firm productivity"

What then is the distinction? The authors argued that cost reduction occurs when the adoption of IT enables a firm produce more with less resources, thus reducing the unit cost of each product while quality improvement on the other hand occurs when IT helps to increase the desire of consumers to purchase or consume more of the product, in the medical field, it might be to make a more accurate diagnosis, to treat a disease more effectively and so on. The authors designed a model that suggested that you might  have one effect but not both- productivity might be affected- depending on the type of technology implemented

There is a caveat however. This model was developed for a single-product monopolistic firm. This is not true of most medical firms today. The question is how well this model will hold-up in the face of real companies and with real data.

The quest to improve quality is unending. The ability to reduce costs might not be so infinite- basic economics tells us so. The question is, in the words of a popular song, "how low can you go?"

Welcome to My Blog!

Hello,
Welcome to my blog. This blog was initiated at the request of Professor Ravi Aron of Johns Hopkins Carey Business School in partial fulfillment of the requirements of his course, IT Integration for Business. Even though the course is dedicated to Information Technology- thus, my initial posts will be devoted to mainly topics in IT and healthcare- I hope to utilize this blog to express some of my views and discuss some interesting issues over time.

Once again, I welcome you on this voyage of discovery. It promises to be an exciting one!