healthcare intel it 443835 443835

The Value of Healthcare IT (HIT) A Practical Approach to Discussing and Measuring the Benefits of HIT Investments

White PaperBen Wilson, MBA, MPH

Director of Healthcare IT

Digital Health Group

Intel Corporation

Jim Athanasiou

Senior Strategic Finance Specialist

Digital Health Group

Intel Corporation

August 2007

White Paper The Value of Healthcare IT (HIT): A Practical Approach to Discussing

andMeasuringtheBenefitsofHITInvestments

�

Executive Summary TheIntel®HealthcareIT(HIT)ValueModelprovidesanindustry-testedapproachtodiscussingandmeasuringthebenefitsofHITinvestments,withafocusonquantifiablebenefitsthatproduceafinancialimpact.TheValueModeloffersanintuitivestrategicframeworkandreusablecalculationstoidentifymeasurablechangesinhealthcarebusinessmetricsthatwecallvaluedials.Valuedialsincludequalityofcare,cliniciansatisfaction,clinicianproductivity,revenueenhancement, costoptimization,patientaccessandmore.UseoftheHITValueModelcanhelphealthcare institutions:

• Makemoredata-driveninvestmentdecisions • ManageHIT-enabledchangemoreeffectively • EvaluatetheimpactofHIT-basedinitiatives • Build support for HIT adoption

OrganizationsthathaveusedthemodelhaveidentifiedsignificantfinancialbenefitsfromtheirHITinvestments.BannerHealth,oneofthelargestU.S.nonprofithealthcaresystems,foundthatitscomprehensive,HIT-enabledcaretransformationinitiativedeliveredanannualbottom-lineimpactofUSD1.6millionadjustedforcasemix.1

InteloffersprogramresourcestoassisthealthcareorganizationsinapplyingtheHITValueModelaspartofitsmissiontoremoveroadblockstotheeffectiveuse ofhealthcareinformationtechnology.ContactyourIntelrepresentativetolearnmoreandseeademonstration.

1Pre-taxcashfloworEarningsBeforeInterest,Taxes,DepreciationandAmortization(EBITDA) Savingsdidnotconsiderinfrastructurecosts.



�

Introduction

Information Technology for an Information-Based EnterpriseFrompatientrecordstoclinicalreferencematerials,healthcarerunsoninformation.ButwhileHITadoptionratesarerising,healthcarecontinuestolagotherinformation-intensiveindustriesinusingITtoachievestrategicbusinessobjectives.

Therearemanyreasonsforthis,including

culturalresistance,competingprioritiesanda

perceptionthatITdeploymentisfraughtwith

difficulties.Addingtothemixisalackofclear

informationonthecostsandbenefitsofHIT.

DoHITinvestmentsimprovethedeliveryofhigh-

quality,cost-efficienthealthcareservices

anddeliverfinancialbenefitstohospitals

andphysicians?

FordecisionmakerswhostillviewITasacost

centerratherthanavaluegenerator,thelackof

clearanswerstothisquestioncanleadto

delaysoravoidanceofHITinvestments.Faced

withachoiceoffundingrevenue-generating

medicalequipmentoranHITinitiativewhose

impactsseemuncertainandwhosedeployment

ofteninvolveshardworkandculturechange,many

understandablyinvestintheformer.Yet,given

risingdemandsonhealthcaresystemsaround

theworldandcompetitivepressuresonmany

U.S.hospitals,healthcareurgentlyneedsthe

improvementsHITcanenable.

Percent of Revenues Spent

on IT by Industry

Financial Services

Insurance

Consumer Services

Wholesale Trade

Business Services

Utilities

North American OverallPrimary Production

Retail

High Tech

Intermediate Mfg

Finished Goods Mfg

Chemicals and Petroleum

Hospitals

Physicians

10%8%6%4%2%0% 12%

Sources:LewinGroup,ForresterResearch



�

An Industry-Proven Approach to Discussing IT Value Intel’sDigitalHealthGroupiscollaboratingwithhealthcareleadersworldwidetoremoveroadblockstosuccessfuladoptionofhealthcareIT.Aspartofthatcommitment,we’resharingafreemodel,simpleyetpowerful,fordiscussingandmeasuringthevalueofHITinvestments.

TheIntelHITValueModelisbasedonanapproachdevelopedatIntelITInnovationCentersand

employedatIntelformorethanfiveyears.2OriginallyusedtoanalyzeIntel’sownITinvestment

strategies,theapproachhasbeenrefinedwithcompaniesandorganizationsfromfinance,manufacturing

andotherindustries,whichhaveusedittoplanITinvestmentsandevaluatethebenefitsofIT-

enabledtransformationinitiatives.

Mostrecently,clinicians,ITstaffandfinancialanalystsfromtheDigitalHealthGrouphaveworked

withglobalhealthcareleaderstoadaptthemodelforusebyorganizationssuchashospitals,physician

networks,governmentagenciesandministriesofhealth.Themodelhasbeenrefinedandtested

throughcollaborationswithhealthcarechieffinancialofficers(CFOs),chiefinformationofficers(CIOs),

chiefmedicalofficers(CMOs)andotherhealthcaredecisionmakers.

ThispaperoffersanoverviewoftheIntelHITValueModel.Asetoffreeresourcesbasedonthe

model,alongwithadvisoryservices,areavailabletoorganizationsthatwanttoconductacustomized

analysis.Byofferingapractical,reusableframeworktofosterdiscussionandmeasurementofthevalue

ofITinvestments,wehopetoenablehospitals,physicianpractices,andhealthcaresystems

toacceleratethesuccessfuladoptionofHIT-enabledchangeinitiatives.

2FormoreabouttheIntelITInnovationandResearchCenters,seehttp://www.intel.com/technology/techresearch/itresearch/. ForfurtherdiscussionofthebusinessvalueofIT,seethewhitepaperMeasuring IT Success at the Bottom Line at http://www.intel.com/it/pdf/measuring-it-success-at-the-bottom-line.pdfandDavidSward’s Measuring the Business Value of Information Technology (IntelPress,2006,http://www.intel.com/intelpress/sum_bvm.htm).

Healthcare IT investments

should address core

objectives focused on

improving the delivery

of high-quality, efficient

healthcare services.



�

ITinvestmentscanhelpbusinessesgain

acompetitiveadvantageandempower

governmentsandnonprofitstobetterfulfill

theircoremissions.Inotherindustries,successful

ITinvestmentshaveimprovedbusinesssuccess

andprofitabilityby:

• Enablingmanufacturerstodesignmore

innovativeproductsandbringthemtomarket

fasterandatlowercost.

• Allowingretailerstoincreasesalesby

betterunderstandingandpredictingconsumer

preferences,optimizingtheirproductmix,

keepingproductsinstockandprovidinga

compellingshoppingexperience.

• Makingitpossibleforinvestmentbanks

toincreaserevenuesbyintroducingmore

sophisticatedfinancialinstrumentsatlowerrisk.

• Helpinggovernmentsincreasecitizen

satisfactionandmakeoptimumuseoftax

dollarsbydeliveringservicesmoreefficiently

andeconomically.

Forhealthcare,ITinvestmentsshouldaddress

coreobjectivesfocusedonimprovinghigh-

quality,efficienthealthcareservices.TheIntel

HITValueModeldefinessevenvaluedials:

broadcategoriesofbenefitsthroughwhich

HITinvestments,deployedaspartofcompre-

hensive,wellimplementedinitiatives,candeliver

strategicvalue.

• Patient safety.Medicalerrorshave

beenidentifiedasasignificantproblemwith

seriousclinicalandeconomicconsequences.

Investmentsinelectronicmedicalrecords

(EMRs),computerizedproviderorderentry

(CPOE),mobilepointofcare(MPOC)andother

solutions,alongwithclinicalworkflowredesign,

canreducetheriskofadverseeventsand

therebyinthiscontextworktoimprove

patientsafetybyenablingaccesstoaccurate,

timelyinformationwhenandwhereitis

neededtoenhanceclinicaldecisionmaking.

• Quality of care.High-qualityhealthcare

deliverstherightservicesattherighttime

andintherightwaytoachieveoptimalresults.

HITinvestmentscanhelpimprovethe

efficiencyofhealthcareservices,allow

colleaguestocollaboratemoreeffectively

inrealtime,andincreaseadherenceto

clinicalprotocols.Bysavingtimeforbusy

professionals,HITinvestmentscanenable

clinicianstospendmoretimewiththe

patient.Whenthesefactorsarecombined,

patientsatisfactioncanincrease.

Delivering Strategic ValueTheIntelHITValueModelstartsfromIntel’scorebeliefthatallITinvestmentsarebusinessinvestmentsthatshouldsupportstrategicprioritiesanddeliverasustainableadvantagetothecompanyororganization.ITshouldbeseenfromtheperspectiveofvalueratherthanasacostcenter,andITinvestmentsshouldbeevaluatedintermsofhowwelltheyhelpthecompany,agencyorotherorganizationmeetcriticalbusinessobjectives.Whatevertheindustry,ITsolutionsandservicesshouldhelporganizationsmeetbusinessneedsandchallenges,generatebusinesscostsavingsandbenefits (notsimplyITcostsavings),andimproverevenuesormarketposition.

The Value Model helps

organizations answer

two questions: What core

organizational objectives

do we want to achieve, and

how will we know when

we’ve achieved them?



�

• Patient access.Overcrowdingandlong

wait-timescanincreasepatients’frustration

andanxietyanddecreasetheirsatisfaction

withthehealthcaresystem.HITcanhelp

improveaccesstocarebystreamlining

previouslyinefficientprocessesandincreasing

clinicianandstaffproductivity.HITinvestments

thatimproveassettrackingcanoptimizebed

utilizationandenhanceuseofotherscarce

resources.Patient-facingwebportalscan

improvepatients’abilitytointeractefficiently

withthehealthcaresystem,againimproving

bothpatientsatisfactionandsystemefficiency.

• Physician and staff productivity.Many

countriesandregionsfacepervasiveshortages

ofhighlyskilledhealthcareworkers,intandem

withrisingdemandsforcareduetoagingpopu-

lationsandgrowingratesofchronicdiseases.

HITinvestmentscancontributetoproductivity

improvementsbyreducinginefficiencies—for

example,enablingallclinicianstoeasilyaccess

informationatthepointofneedratherthan

havingtohuntforthepatient’schart.

• Physician and staff satisfaction. HIT-

richclinicalenvironmentscanimproveprovider

satisfactionbyoptimizingworkflowsanden-

ablingclinicianstospendlesstimechasingpaper

andmoretimecaringforpeople—thereasonthey

wentintohealthcareinthefirstplace.

• Revenue enhancement. HIT-enabled

efficienciescanincreasethevolumeof

patientsseenandproceduresperformed,

improveresourceutilization,improvecharge

captureandstreamlinethebillingcycle—all

ofwhichcangenerateincreasedrevenues.

• Cost optimization. The rising cost of

healthcareisaglobalconcernthatthreatens

bothprofit-basedandnot-for-profithealth

systems.Laborwagesandbenefitsarea

significantexpenseforhealthcareproviders,

andonethatcanbeimprovedbyenhancing

productivity,asoutlinedabove.Withbetter

care,itbecomespossibletolowerthecosts

associatedwithmedicalerrorsandliability.

Higher-quality,more-efficientcarecanalso

reduceaveragelengthofstay,whichmay

provideapositiveimpactdependingoncase

mixandpaymentmodel.Betterutilization

ofexpensiveresourcessuchasdiagnostic

equipmentandsurgerysuitescangenerate

significantcostsavings.Forintegratedhealthcare

networks,electronicmedicalrecordsandother

HITsolutionscanenableeconomiesofscale

acrossthesystem.Finally,themovetoadigital

environmentcangeneratesignificantsavingson

formsmanagementcosts,aswellasfloorspace

andhandlingcostsforrecordsstorage.

Chart



�

The Intel HIT Value Model addresses this

challengebyassociatingeachvaluedialwitha

setofobservable,quantifiable,operationalmetrics

calledkeyperformanceindicators(KPIs).For

example,improvementsinthevaluedialofpatient

safetymaybeseenbytrackingtheperformance

indicatorsofnumbersofadversedrugevents

(ADEs),surgicalerrors,andtransfusionerrors.

Whenusedformanagerialpurposes,manyperfor-

manceindicatorscanbeappliedtomultiplevalue

dials.Forinstance,areductioninaveragelength

ofstayisaprimarymetricforqualityofcare.It

mayalsoreflectimprovementsinefficiency—tests

andproceduresareperformedinamoretimely

fashionandresultsarereportedmorequicklyina

digitalhospitalenvironment—andpatientsafety—a

shorterstaymeanslessexposuretoerrors.Italso

hasintrinsicvaluetopatients.Yet,fordetermining

thefinancialvalueandbottom-lineimpact,itis

importantthateachvaluedialbecounted

onlyonce.

Eachkeyperformanceindicatorisusuallyderived

fromanunderlyingcalculation.Thatcalculation

generallyhasmultiplevariablesthatarebuilton

datathathospitalstypicallycollecttotrackper-

formance,suchasbasicoperationaldata,financial

metrics,andclinicalmetrics.Theymayalsoinclude

throughputdataandotherinformationgenerated

bynewlydeployedHITsolutions.

Table1listsrepresentativeperformanceindicators

andmeasurementsforthesevenvaluedials.The

indicatorsthatIntelsuggestsareastartingpoint.

Manyotherperformanceindicatorscanbeused,

andindeed,someofthemostsignificantbenefits

fromusingtheValueModelariseinthediscus-

sionsofwhatperformanceindicatorsaremost

relevanttospecificHIT-enabledprojects,aswell

astoorganizationalgoalsandculture.

Forexample,staffproductivitygainscanbe

measuredintermsofcliniciantimespentproviding

directpatientcareornumberofpatientsseen.

Seeinghighernumbersofpatientscanmean

greaterpatientaccessandincreasedprovider

revenue,butspendingmoretimewithpatients

mayresultinbetterqualityofcareandincreased

satisfactionforprovidersandpatients.There

arenorightanswers,butthediscussionofsuch

issuescanhelpanyhospital,practiceorother

organizationclarifyitsobjectivesandachieve

greaterconsensusaboutthem.Thegoalis

toreachasetofobjective,standardized

metricsthatmaptothegoalsofthegiven

hospitalororganization.

A Framework for Value Dials and Key Performance IndicatorsTheIntelHITValueModelhelpsorganizationsanswertwoquestions:whatcoreorganizationalobjectivesdowewanttoachieve,andhowwillweknowwhenwe’veachievedthem?Thevaluedialsareastartingpointforspecifyingwhatyouwanttoachieve.Buthowdoyoumeaningfullymeasurechangesineacharea?

Some of the most

significant benefits arise

in the discussions of what

performance indicators are

most relevant.



�

Value DialsSample Key

Performance IndicatorsMeasurements

Patientsafety Adversedrugevents Percentagechangeinnumberper

1,000doses

AdmissionswithanAdverseDrug

Event(ADE)

Changeinnumberofadmissions

Incidents of surgical errors Percentagechange-estimated

cost of surgical error

Transfusion errors Percentagechange-estimated

cost of transfusion errors

Malpracticeexpenses Malpracticeexpensesasapercent-

ageofpracticerevenue

Qualityofcare Reducedlengthofstay Percentagechangeintheaverage

lengthofstayindays

DiagnosisRelatedGroupassociated

lengthsofstay

Percentagechangeinlengthofstay

indays

Physiciantimewithpatients Percentagechangeintime;

additionalintrinsicvaluetopatient

isnotmeasurable

RegisteredNursetimewithpatients Percentagechangeintime

Certainaverseoutcomes Percentagechangeofadverse

outcomes

Complicationmeasures Percentagechangeincomplications

Hospital acquired infection rates Percentage change in infections

Recognizedaccreditation Certificationachievedthrough

useofITsolutions,suchas

JCIA accreditation

Patient access Responsetimetopatientinquiries Percentagechangeintime

Waitingtimesforelectivesurgery Percentagechangeintime

Waitingtimesforoutpatient

appointments

Percentagechangeintime

Responsetimeforbilling Percentagechangeintime

Labresultsreportwaittime Percentagechangeintime

Onlineviewingandself-

management

Availability

Onlineprescriptionrenewal Availability

Online scheduling Availability

Chronicdiseaseself-management Availability

Availabilityofpreventivecaresuchas

vaccinationsandscreening

Availability

Increasednumberofconsultations

perday

Percentage change or actual delta

increase

Table 1. Value Dials with

Representative Key

Performance Indicators

continued on page 8



8

Value DialsSample Key

Performance IndicatorsMeasurements

Staffproductivity Increasedfacetimewithpatients Percentage change of actual delta

increase

Reducedtimespentdoing

administrativework

Percentage change of actual delta

increase

Reducednumberofstepstoperforma

specifictaskormedicalprocedure

Actual delta change

Reducedtimetoperformaspecific

taskormedicalprocedure

Timechange

Clinicalstaffturnover Percentagechangeinturnover

Staff satisfaction Physicianreferrals Percentage change in referrals

Hoursofovertimeworked Percentagechangeinovertimework

Internalsatisfactionsurveyscores Percentage change in scores indicat-

ing change satisfaction

Patientvolume Percentagechangeinvolume

Revenueenhancement Bedturnspermonth Percentagechangeinbedturns

Lengthofstay Percentage change in length

ofstay

DaysinAccountsReceivable Changeindaysspentwaiting

forpayment

Numberofelectivesurgeries

perweek

Percentage change

Unitcostofdiagnostics

andtreatment

Actual cost change

Costoptimization Administrativecostof

healthcaresystem

Actual cost change

Inventorycost Changeincostofinventoryinstock,

including drugs and other supplies

Costperpatientday Percentage change

Table 1. Value Dials with

Representative Key

Performance Indicators

(continued)



�

Quantifiable, Monetizable Benefits TheHITBusinessValueModelemphasizesquantifiablebenefitsthatproduceafinancialimpact,somanyperformanceindicatorsalsohaveanassociatedmonetaryvalue.Forexample,theperformanceindicatorofimprovedavoidanceofadversedrugeventscanbemeasuredintermsofthenumberofADEalertsresultingintherapychangesforaweightedaverageofthenumberofacuteadmissions.ThefinancialbenefitcanbedeterminedbyfactoringintheaveragecostperADE.

ForanygivenHITinvestment,anorganizationcanidentifykeyperformanceindicatorsforthevalue

driversthataninvestmentisintendedtoaddress,determineacurrentbaseline,andmeasureimprovements

againstthisbaseline.Resultscanbeadjustedforcasemixandreimbursementmodel,todetermine

financialeffectsmoreprecisely.

HITinvestmentsproducemanybenefitsthatarenotquantifiable,andmanyquantifiablebenefitsmaynot

bemonetizable—thatis,theymaynothaveameasurablefinancialimpact.Forinstance,manyclinicianswho

workinHIT-enabledenvironmentssaytheclinician-patientrelationshipisenhancedbecauseclinicians

candelivermoreefficient,responsivecareandspendmoretimeatthebedside.However,animprovement

intherelationshipwouldbedifficulttoquantify,anditwouldbeevenhardertoassignadollarvalueto

suchimprovements.Inotherwords,timespentwithpatientscanbemeasuredbutnoteasilymonetized.

Bycontrast,overtimeexpenditurecanbemeasured,andthefinancialimpactcanbeclearlyidentified.

Employeesatisfactionisquantifiable;improvednurseretentionismonetizable.

NotallHITbenefitsarequantifiableormonetizable.TheIntelHITValueModelfocusesonquantifiable

benefitsthathaveameasurablefinancialimpact.

Monetizable

Quantifiable

All Benefits

Overtime expediture

Time spent with patients

Clinician-patient relationship

The Value Model focuses

on quantifiable benefits

that produce a measurable

financial impact.



�0

The Value Model’s ValueByhelpinghospitalexecutivesandotherdecisionmakersdiscussandmeasurethevalueofHITinvestments,theIntelHITValueModelcanassistinturninginformationtechnologybenefitsintoareality.Usingthemodelcangenerateinsightsthatdelivervaluethroughouttheprojectlifecycle:

• Align HIT investments with strategic

goals.ByemphasizingIT’scontributionto

achievingcoreclinicalandbusinessobjectives,

theValueModelhelpshospitals,governments

andotherstakeholdersuseHITinvestmentsto

driveimprovementstohealthcarequality,cost,

andaccessibility.

• Improve IT investment strategies.

Makingmoredata-driveninvestmentdecisions

helpsreduceinvestmentrisksandidentify

whichinvestmentsarelikelytodelivermaximum

value.Theinformationandinsightgainedcan

beusedtobuildthebusinesscaseforHIT

investmentsandsecurefunding.

• Enhance project planning.Duringproject

planning,theHITValueModelcanfacilitatethe

processofdiscussingandclarifyingintended

outcomesandexploringwaysofmeasuring

them.Understandinglikelyoutcomescanhelp

toevaluatecompetinginvestmentprioritiesand

gaininsightsintowhichprojectsoroutcomes

aremorelikelytoaddressyourobjectives.

• Improve project management.Defining

acurrentbaselineandspecifyingthebenefits

soughthelpsclarifyexpectationsandenable

moreeffectiveprojectmanagement.Mea-

surementofexpectedandachievedbenefits

providesthebasisforananalyticalapproachto

evaluatingpilotstudiesandfullimplementation,

andunderstandingtheirimpact.Istheproject

deliveringtheexpectedresults?Areyouseeing

unanticipatedbenefits?Themodelwon’ttell

youwhytheresultsoccurred,buthavinga

clearerpicturecanprovideastartingpointfor

fruitfuldiscussionoverhow

tooptimizechanges.

• Inform and educate. Enlisting the support

ofcliniciansiscriticaltosuccessfulHITadoption.

Ifthemodelshowsthatpilotprogramsorinitial,

limited-scopedeploymentsdemonstrateobjec-

tive,measurableimprovements,cliniciansand

otherendusersarelikelytoacceptthechange

morewillingly.

• Build on your success.HITdeploymentis

aprocessofcontinuousimprovement.Insights

andinformationgleanedfromusingtheValue

Modelcanprovevaluableincommunicating

yoursuccesses—togenerateprideinwhat’s

beenaccomplishedandbuildsupportfor

subsequentprojects.

The Intel HIT Value

Model starts from Intel’s

core belief that all IT

investments are business

investments that should

support strategic priorities

and deliver a sustainable

advantage to the

organization. IT should be

seen as a value rather than

a cost center.



��

Evaluating Care Transformation at Banner Health BannerHealth,aUSD3.3billioncompanyheadquarteredinPhoenix,Arizona,usedtheIntelHITValueModeltoevaluatetheimpactofacomprehensivecaretransformationinitiative.BannerHealthfirstimplementedcaretransformationattheopeningofanewhospital,172-bedBannerEstrellaMedicalCenter,inFebruary2005.OneofthelargestU.S.nonprofithealthcaresystems,BannerHealthoperates20hospitalsinsevenstates,andisintheprocessofreplicatingcaretransformationacrossitsnetworkoffacilitiesbytheendof2008.

CaretransformationisthenameBannerHealthhasgivenitsholisticchangeinitiative.Todevelopthe

initiative,BannerHealthbroughttogether300cliniciansfromacrosstheirorganizationtodesignnew

workflowsandestablishstandardized,evidence-basedordersets.Supportingthenewworkflowsand

ordersetsareHITinvestmentsincludingEMRs,CPOE,decision-supportsoftware,andpicturearchiving

andcommunicationssystems(PACS),aswellaswirelessnetworks,andIntel®technology-basednurses’

workstations,tabletPCs,andservers.

Technologyalonedoesn’tproducetransformation.BannerHealthbuiltthesuccessofitsinitiativethrough

strongorganizationalleadershipatmultiplelevels,deepclinicianinvolvement,anddetailedattentiontothe

complexinterplaybetweentechnologies,culturalreadiness,andclinicalworkpractices.

BannerHealth’scaretransformationcombineselementsofevidence-basedbestpractices,culturechange,workflowredesign,andhealthcareinformationtechnologiesacrossallstakeholdersinthepatientcareexperiencetoachieveanoptimalhealthoutcome.

Culture

Technology

Rapid CycleWork Redesign

Evidence-BasedBest Practices

CareTransformation

Standardization

Banner Health used the

Intel HIT Value Model

to identify 10 key

performance indicators

that together produced

an annual bottom-line

impact of USD1.6 million

adjusted for case mix.



��

BannerHealthworkedwithIntelandCerner,twoofitskeysuppliersandtrustedadvisors,toapplythe

IntelHITValueModel.Sincewecouldn’tdoabeforeandaftercomparisonwithanewfacility,wecreated

abaselinevirtualhospitalthatwasaweightedaverageofeightBannerhospitalsandanalyzedthe10key

performanceindicatorslistedinTable2.These10indicatorsproducedUSD1.6millioninannualbottom-line

impactadjustedforcasemix.3Inaddition,whilepatientsatisfactionwasnotoneoftheperformance

indicators,itisworthnotingthatBannerEstrellaopenedtopatientsatisfactionratingsthatarethe

highestinBanner’s20-hospitalnetwork.Table3showsfinancial,operationalandotherdatausedto

determinethechanges,alongwiththecalculationsperformed.

Key Performance Indicators Metric description Economic Impact2

Avoidanceofadversedrug

events(ADEs)

Therapychangesper1,000acute

admissions

84.3%more

ADEcostavoidanceper1,000acute

admissions

84.3%higher

Reductioninmedicationrelated

claims

Medicationrelatedclaimsper1,000

acuteadmissions

21.9%fewer3

Costofmedicallyrelatedclaimsper

1,000acuteadmissions

71.8%lower3

Increase in nurse retention Nursesleavingvoluntarilywithinthe

firstyear

15.8%fewer

Nursereplacementcostavoidance 15.8%lower

Reductioninpatientsleaving

EDwithouttreatment

EDvisitorstreatedpermonth 1.8%more

Revenuepermonthfromtreatingmore

EDvisitors

1.8%higher

Overtimereduction Overtimeexpenditureper1,000admis-

sions

5.3%lower

Pharmacycostreduction Drugexpenditureper1,000admissions 17.8%lower3

Formselimination Formexpenditureper1,000admissions 41.6%lower

Reductioninpaperdocument

storage costs

Documentstoragecostsper1,000

admissions

95.6%lower

ReductioninAccounts

Receivablecycle

DaysinpatientA/R 2.2%fewer

Table 2. Changes to Key Performance Indicators at Banner Estrella Medical Center1

3Pre-taxcashfloworEarningsBeforeInterest,Taxes,DepreciationandAmortization(EBITDA).Forafullerdiscussion ofcaretransformationatBannerHealth,seetheIntelcasestudy:Healing Environment, Proven Value: IT-enabled care transformation at Banner Estrella Enhances Patient Care and Nets a USD 1.6 million annual impact.

1ComparedtoameanofeightotherBannerHealthfacilitiesthathadnotfullyimplementedcaretransformation. 2AnnualizedimpactextrapolatedfromdataforJanuary–June2006. 3Adjustedforcasemix.



��

Key Performance

IndicatorsData Calculations

Avoidanceofadverse

drugevents

• NumberofADEalerts

resultingintherapychanges

• Numberofacuteadmissions

Totalbenefit:Total#ofADEalert-triggered

therapychanges*averagecostperADE

Incrementalbenefit1:(#ofADEalert-

triggeredtherapychangesperacute

admissionatBEMC–mean#ofADE

alert-triggeredtherapychangesperacute

admission)*#ofacuteadmissionsatBEMC*

averagecostperADE

Reductioninmedically

relatedclaims

• Totalmedicationerror-

relatedclaimscosts

• Totalnumberofacute

admissions

(Meanmedicationerror-relatedclaimscost/

acuteadms–BEMCmedicationerror-related

claimscost/acuteadms)*#ofacute

admissionsatBEMC

Increase in nurse

retention

• Estimatedvoluntarynurse

turnoverpercentage

• Numberofnurseswith

<1yearofservice

• Totalnumberofnurses

leavingwith<1yearof

service

• Estimatedcostofnurse

replacement

(Meanvoluntarynurseturnoverofnew

nurses(<1yearofservice)–BEMCnew

nurseturnover)*averagereplacementcost

per nurse

Table 3. Financial Impact at Banner Estrella Medical Center

continued on page ��

1IncrementalbenefitisthebenefitresultingfromcartransformationandfromthehigherlevelofCPOEadoptionat BEMCthanathospitalsincludedinthevirtualhospital.



��

Key Performance

IndicatorsData Calculations

Reductioninpatients

leavingEDwithout

treatment

• AveragemonthlyEDvisits

• AverageLWOTs

• AveragenetOPrevenue

BEMCIncremental#oftreatedpatients

(Mean%EDLWOTsofTotalVisitors–BEMC

%EDLWOTsofTotalVisitors)*netrevenue

peroutpatientvisit

Overtimereduction • Totalovertimeexpenditure

• Totalnumberofadmissions

(Meanovertimeexps/admission–BEMC

overtimeexps/admission)*#ofadmissions

at BEMC

Pharmacycostreduction • Totalpharmacycost


• Casemixindex

MeanCMIadjustedpharmacyexps/adms

–BEMCCMIadjustedpharmacyexps/adms)*

#ofadmissionsatBEMC

Formscostreduction • Totalformcost


(Meanformexps/adms–BEMCformexps/

adms)*#ofadmissionsatBEMC

Documentstoragecosts

reduction

• Totaldocumentstorageand

retrievalcost


(Meandocumentstorage/retrievalcostper

admission–BEMCdocumentstorage/re-

trievalcostperadmission)*total#ofBEMC

admissions

ReductioninAccounts

Receivablecycle

• DaysinAR

• NetpatientAR

ValueoffewerdaysinA/R(182/Daysin

A/RBE)*(NetPatientA/RBE)*(1+costof

capital)^(DaysinA/Rsaved/365)-1)

Table 3. Financial Impact at Banner Estrella Medical Center (continued)



��

Free Resources to Build Your Success HITinvestments—aspartofwellimplementedinitiativessupportedbyinteroperable,standards-basedsolutions—canpositivelyimpactcorehealthcareobjectivessuchasqualityofcare,patientsafety,andproviderproductivity.Theycanalsodelivermeasurable,bottomlinevalue.ButinaneraofconstrainedITresources,HITmustcompetewithotherinvestmentpriorities,andmultipleHIT-enabledinitiativesmaycompetewitheachother.TheIntelHITValueModelprovidesapractical,industry-provenapproachthatCIOs,CFOs,CMOs,andotherhealthcaredecisionmakerscanusetounderstandandevaluatethepotentialandactualimpactofHIT-enabledinitiatives, andtherebyaccelerateprogresstowardachievingthebenefitsofhealthcareIT.

InteloffersasetoffreeresourcesbasedontheHITValueModel,aswellasadvisoryservicestoorganizationsthatwanttoconductacustomizedanalysis.Wecanalsosharebestpracticesonwaystousehealthcareinformationtechnologytoachievecorehealthcareobjectives.PleasecontactyourIntelrepresentativetoseeademonstrationoftheIntelHITValueModel.

Learn MoreIntel Healthcare Solutions:

http://www.intel.com/healthcare/healthit/hospitals.htm

About the Authors AsdirectorforHealthcareITfortheIntelDigitalHealthGroup,BenWilsonisresponsiblefordrivingIntelhealthinformationtechnologystrategyforhealthcareproviders.Hehasover18yearsofhealthcareexperienceinmarketing,consulting,productmanagement,andtechnology.HeholdsMBAandMastersinPublicHealth(MPH)degreesfromtheUniversityofCalifornia,Berkeley.

JimAthanasiouisaseniorstrategicfinancespecialistintheIntelDigitalHealthGroup,providingstrategicfinancialanalysistoacceleratedeploymentofhealthcareITandsupportdevelopmentofinnovativeproductsfordigitalhealth.Inpreviouspositions atIntel,hehasmanagedthebudgetofanITgroupspendingUSD200millionannuallyandaUSD6billionannualCPUbusiness.HehasaBSinmanagerialeconomicsfromtheUniversityofCalifornia,Davis.

The Intel HIT Value Model

provides a practical,

industry-proven approach

to help evaluate the

potential and actual impact

of HIT-enabled initiatives.

http://www.intel.com/healthcare/healthit/hospitals.htm

Copyright © 2007 Intel Corporation. All rights reserved. Intel,

the Intel logo, Intel. Leap ahead., and the Intel. Leap ahead.

logo, are trademarks or registered trademarks of Intel

Corporation or its subsidiaries in the United States

and other countries. 08/0�/SM/CMD/XX ��-00�

healthcare intel it 443835 443835

Education

discussing andmeasuringthebenefitsofhitinvestments

practical approach

white paper

estimated cost

intel hit

cost

care

intel