HEC132 - Surviving SAP Implementation in a Hospital - Management Assignment Help

Assignment Task

Surviving SAP Implementation in a Hospital 
Case1 prepared by Juanita CAJIAO2 and Enrique RAMÍREZ3 
Despite the potential benefits of electronic information management, including increased patient  safety and more cost-effective health care delivery, few countries report the adoption of electronic  systems for managing hospital information. On January 1, 2011, the Valle del Lili Foundation  (VLF), a university hospital in Cali, Colombia, switched from paper to electronic documents to  manage medical records (MR) and all related clinical and administrative procedures. The VLF,  which reported revenues of US$200 million in 2014, is ranked the third best hospital in Latin  America and the best in Colombia. The hospital made the ambitious decision to simultaneously  implement electronic medical records (EMR), computerized physician order entry (CPOE), and  enterprise resource planning (ERP). The new system is now fully operational. Marcela Granados,  chief medical director (CMD) at VLF, was tasked by the board of directors with analyzing the IT implementation process and documenting the main reasons for its success. While reflecting on this  task, Granados concluded that one thing was certain: SAP implementation was a major turning point in VLF’s history.  
The Valle del Lili Foundation 
The Valle del Lili Foundation is a private non-profit organization founded in 1982 to deliver  tertiary medical care. The VLF was the brainchild of two cardiologists from Cali who identified  the need for a regional healthcare institution to deliver specialized care to medically complex cases  and critically ill patients. They were later joined by Vicente Borrero, a public health physician,  who has been CEO since 1986. Bringing together regional civic and political leaders and donors,  they collected the necessary funds to launch the project. Initially focused on cardiology cases, they gradually expanded their service offer. Today, VLF offers clinical care in more than sixty medical  specialties (See Exhibits 1 and 2 for statistical highlights and staffing information) and serves as a teaching hospital, where ICESI University medical students receive training. 
Structure and Operation of Colombia’s Healthcare Industry 
The functional and financial structure of Colombia’s health system is complex. Law 100 (1993)  launched a major reform of the country’s healthcare industry. This law identified the system’s  stakeholders and established their responsibilities. These included private health insurers, known  as Health Promotion Organizations (HPO),1 which are responsible for enrolling members and  managing the system’s available resources. Other important players are the Care Delivery 
Organizations (CDO), including hospitals, which are responsible for providing services to HPO  members. Under this scheme, insurance companies contract services with hospitals (in this case  VLF) through managed care agreements and decide which CDO will care for their members. This  is an important feature of the Colombian system because it means that HPOs, not doctors, decide  where patients are treated. By December 2013, 58% of VLF billing went to HPOs (see Exhibit 3);  the rest went to prepaid medical organizations, other companies, and private patients. Law 100 also  created the Obligatory Health Plan (OHP), which stipulates the health-care services, surgeries,  procedures, hospital services, and medications that HPO members are entitled to. The OHP also  provides a reference price list for the industry, used when negotiating health-care contracts between  insurers and CDOs. 
The VLF Medical Staff  
VLF is a hierarchical, top-down hospital composed of medical units, each headed by a specialist  physician. The CEO, the CMD, the chief nursing officer, the chief administrative officer, and the  heads of the medical units form the physicians’ medical council and are responsible for  communicating all senior management decisions to their units. 
Although physicians are not directly employed by VLF, they comply with the policies of the  medical directorate and the physicians’ executive council regarding quality and patient safety issues, the terms agreed to by VLF and insurers, and standard administrative procedures. Physicians  are paid according to the number of patients they see, charging at the rates established by the  insurance contracts; VLF takes a 20% cut to cover administrative expenses. Approximately 20% of total VLF billing is for medical fees. Additionally, all doctor-patient contact takes place within  VLF facilities; full-time medical staff are not permitted to see patients or deliver clinical services outside VLF. Given the hospital’s high occupancy rates, doctors don’t need to go elsewhere to find  patients. 
Marcela Granados, a critical care physician who holds an MBA from ICESI University, has been  head of the intensive care unit (ICU) since it opened at VLF in 1992 and CMD since 2012. She explained: “This type of relationship – with full-time doctors – is a cornerstone of the integrated  medical care offered round the clock at VLF. Given the nature of the patients we serve, there are  always medical specialists scheduled to be either on hand or on call. At VLF, doctors find  everything they need to practise good medicine: technical resources, high standards, a group of  highly skilled specialist physicians, nursing and assistive personnel, and many patients. They find  it all here; there is no need to go anywhere else.” 
This governance structure is not common in Colombia, where physicians usually work as  independent contractors at hospitals – often at several institutions simultaneously. This limits the  influence that hospital administration can have over medical staff since it has no official authority  over them. 
Patient Care Delivery before IT Implementation 
A patient can enter VLF in one of four ways: ER, outpatient services, ambulatory procedures (diagnostic or other), or surgery. A patient may be admitted through the ER, be referred for surgery, be sent to recovery, be transferred to the ICU, be sent to a hospital floor unit, and finally be  discharged. While in the hospital, the patient may have been treated by a group of specialists in  medicine or other disciplines such as nursing, respiratory therapy, nutrition, physiotherapy, and  pharmacy. The patient may have been given various diagnostic tests and received specialized  medical treatment such as chemotherapy, radiation therapy, and cardiac rehabilitation. Patients generally pass through many hands during their stay at VLF, requiring close coordination between  administrative and patient care personnel. This coordination is based on medical records (MR) containing the record of every medical and clinical procedure performed and all supplies1 and  medicines used. 
An example of one patient’s journey will help put this in perspective. By December 2010, there  was an average of 1,000 surgical cases per month. Each case required the coordination of many  steps prior to, during, and after surgery with a schedule made up of three shifts. High quality  standards were met at all times, but it was not easy to coordinate the work of everyone involved:  surgeons, anesthesiologists, medical equipment preparers, assistants, operating room (OR) supply  store staff, and clerical staff such as those in charge of detailed billing reports. First, the surgeon  issued a medical order with a specific surgical procedure to be approved by the patient’s insurer  and another medical order to schedule an appointment for the pre-anesthesia evaluation. Once the  insurer had authorized the procedure, the patient met with an anesthesiologist, whose consent for the surgery was required. The surgeon then asked the operating rooms to schedule the surgery and  drew up a list of the instruments and supplies required for that specific procedure. These requests were handwritten on a form sent to the chief OR nurse, who added the case to an Excel spreadsheet  and informed the OR supply store and sterilization centre of the items needed to prepare the case  cart. 
On the day of the surgery, the operating room clerk would admit the patient, ensuring that all  administrative documents were in order, especially the insurer authorization. A nurse would then  assist the patient and check their paper chart, particularly the signed informed consent form and  the pre-anesthesia evaluation. When the patient was ready, they would be sent to the operating 
room with the results of diagnostic tests attached to their chart. Once the surgical procedure was  over, in addition to the notes made by the surgeon, four forms had to be completed and attached to  the patient’s chart. One was the anesthesiologist’s report sheet: on one side was the pre-anesthesia evaluation and, on the other, the patient’s vital signs during surgery. Another was the report of the  case cart technician, recording the equipment and supplies used. Third was the report of the  instrument technician. Fourth was the log of supplies and medicines used, which was sent to the  operating room supply store to be entered in the inventory system and charged to the patient’s bill.  Supplies and medicines that were not used during the surgery had to be restocked by operating  room clerks. 
After surgery, the patient was taken to a recovery room and nurses began reviewing the relevant  information. Another form was then completed, recording the patient’s progress during recovery.  This was also attached to the paper chart. When authorized by the surgeon, the patient was either  hospitalized or discharged. This system worked in the surgical wards, but with so many forms to  be completed and so many preliminary steps, confusion sometimes led to delays, making it  necessary to reschedule cases. Inefficient procedures created extra work, and delays negatively  impacted efficient room turnover and the surgeons’ schedule. 
María del Carmen Valencia, chief OR nurse, who has worked at VLF since 1994, explained: “In  some cases, the pre-anesthesia evaluation or informed consent was not attached to the patient’s  chart, or necessary supplies were not provided, sometimes because the surgeon’s or  anesthesiologist’s instruments and supplies list was incomplete. This was a drain on everyone, because surgery could not begin until everything was in order.” 
Medical Records and Medical Orders 
MR are clinical documents containing information about patients and their clinical course; they are  created by healthcare staff while patients are under their care. MR thus contain information  essential to both patient care and administrative procedures and must be managed and stored in  such a way as to ensure the confidentiality of information and the physical integrity of the records.  In Colombia, medical records are legal documents. 
In the case of VLF, all professionals who dealt with a patient made a note of the procedures done.  All these notes were made on paper or, in the case of the epicrisis,1 dictated by the attending  physician into a recording machine and then transcribed by one of a pool of secretaries. The transcription was then printed out and attached to the patient’s chart. This procedure had several implications for the quality and availability of the information contained in the MR. Doctors aren’t  known for their legible handwriting, secretaries can make transcription errors, and documents can  be lost, mislaid, or filed with the wrong MR. Sometimes a patient’s chart is required by different  departments at the same time, affecting its availability. A critical care physician who has worked  in the adult ICU since 2007 explained this situation: “In the ICU, there was this paper form on  which different team members of the unit worked – doctors, anesthesiologists, nurses,  physiotherapists; and sometimes we all needed that paper form at the same time. In addition, it was  possible that the chart was in another unit, or that it was being audited by the insurance company.” 
An ER physician who has worked at VLF for five years added: “Sometimes a patient arriving in the ER could not remember what their physician had said, or what medications he was taking. In  the case of a VLF patient, all of that was written on the patient’s MR, but it took some time for us  to get the patient’s chart and review the necessary information.” 
Medical orders provide additional information to that found in medical records. These are the  instructions from attending or consulting physicians on the course of action to be taken. Physicians  use medical orders to request diagnostic tests, stipulate outpatient procedures, prescribe drugs,  order surgery or hospitalization, and terminate the treatment and discharge the patient. Various 
health professionals then carry out the physician’s orders. Doctors would handwrite orders either  directly on the patient’s chart or on a separate form, and the professionals who carried them out  needed to see the physical chart. An order could involve several people, as in the case of medicines,  for example, which involved the pharmacy that dispensed the drugs, the nurses who administered  them, and the billing clerk who invoiced customers. 
Betty Gomez, nurse and chief nursing officer, has worked for VLF since 1987. She explained:  “When a nurse administered the medications ordered by an attending physician, she would make a  note on the pink nursing form. In the case of inpatients, they would use blue ink in the morning,  green ink in the afternoon, and red ink on the night shift. These sheets were then attached to the  charts. We wanted traceability of pharmacy-related procedures, but this was time consuming and  not always reliable.” 
Although there are no official statistics on preventable medical errors in Colombia, studies of this  subject have been conducted in the United States. The results are disturbing: a 2000 study by the  Institute of Medicine concluded that, in the United States, more people die from human error in  hospitals than in car accidents. Among the problems that commonly occur during the course of  providing healthcare are adverse drug events: preventable injuries resulting from improper order  processing, dispensing, or administration of drugs. 
Jaime Garcia, a physician who has worked at VLF since 2010, explained: “Illegible handwriting  on medical orders was one cause of adverse drug events, but it was not the only one. The person transmitting the order might confuse the names of similar medications, or trailing zeros might make the dosage unclear. But one of the biggest risks was drug-drug interactions. With the kind of  patients we handle, and the involvement of several specialists, unforeseen or unwanted reactions  could take place between the drugs prescribed by different specialists.” 
There was also the possibility of duplicate orders for diagnostic tests, which could impact patient  safety – in addition to the needless discomfort of undergoing them and the extra costs for insurers. 
Parallel to medical care are administrative procedures, which are governed by regulations. 
Insurance contract guidelines and billing. Under Colombia’s health funding system, insurers have  agreements with CDOs (such as VLF) for the healthcare of their members. The hospital’s Insurance  contract department was in charge of negotiating and managing contracts with insurance  companies. Because it handled some 70,000 billing items, tracking them manually was an  enormous challenge. The department knew there could be problems with allocating the costs of  services delivered and thus negotiating reimbursement terms with insurers. “We were not always  certain whether VLF was profiting or losing with some procedures,” explained Danny Moreano,  head of insurance contract management and chief operating room physician. 
The terms of managed care contracts sometimes differ, making it difficult to standardize patient  admission procedures and charges for clinical procedures and supplies and medicines used while  providing services. Billing clerks thus had to memorize the contract terms or look them up in hard copy manuals. 
More than half of VLF billing is to HPOs, which must comply with conditions laid out in the OHP  manual. Any procedures not included in the OHP manual require prior authorization from the  insurer along with a report from the treating physician explaining the need for the procedure and/or  medication. In addition, any contact with the patient must be recorded in detail in the MR. Any  failure to comply with these conditions endangers the reimbursement and timely payment to VLF. 
All fees charged to patients, whether they be for supplies, drugs, procedures, equipment use, room  fees, or doctors’ fees, had to be typed into the billing system. But this did not always happen.  Valencia, chief OR nurse, explains: “Although the required supplies and medications were pre ordered, the surgeon or anesthesiologist would sometimes request additional supplies during the  surgery. The nurse assistant would go to the operating room supply store, request what was needed, and say, ‘I’ll get you the written form in a minute.’ But with over 1,000 surgeries per month,  emergencies, and the pressure for rapid room turnover, some charges may not have been entered  into the system for billing purposes.” The billing manager explained the impact of this situation:  “Billing clerks were never sure whether they could close the patient’s account or if there were still  pending charges to be entered. They would try to contact people by telephone, but those people  were not always available; after the account had been closed, they sometimes got calls telling them  there were still pending charges; all this delayed the process even further.” 
Insurers had bills reviewed by medical auditors and required documentation of all fees charged to  patients’ accounts. This meant that documents had to be manually collected, organized, and  attached to invoices. In addition to requiring physical space to organize an average of 43,000  monthly hard-copy bills, this manual procedure affected the timing of invoicing, which had a major  impact on VLF’s cash flow. The head of billing and accounts receivable explained: “It was time  consuming to track bills to know whether they had been finalized, were in the billing department  for prior medical auditing, or had already been sent to insurers. Invoice processing was equally difficult – tracking every invoice to establish whether they had annotations, had been returned, had  debit notes, or had already been paid.” 

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