A year into its large-scale EHR implementation, the newly formed Hawaii Pacific Health system was experiencing some serious growing pains. In fact, it appeared that CIO Steve Robertson had an Epic failure on his hands. But instead of killing the project, he and his team reevaluated the situation and decided to focus on driving out waste. As a result, the organization got back on track. In this interview, Robertson talks about the organization’s seven-year Epic journey, their innovative ACO work, how he is leveraging in-house talent to optimize systems, and the core values that guide him. He also discusses micromanaging, what it’s really like to work in Hawaii, and the best advice he ever received.
- About Hawaii Pacific
- HPH’s 7-year Epic journey — “It was a lot of consolidation work.”
- From a $32 million to $57 million price tag
- Reducing bad debt — “We knew there was a lot of opportunity”
- Communication, trust & transparency
- Lingering legacy systems
- Cleaning out A/R “is like draining a swamp”
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When we looked at the total cost of doing it, we realized we couldn’t afford it. There was no real positive ROI — it was negative. So we made the choice to double-down, essentially, and install revenue cycle systems at the same time to get the efficiencies and improvements we were looking for.
We actually killed the project. We said, ‘We can’t afford this. We’re not going to do it.’ But we kept at it and kept reevaluating it, and rather than just focusing on reducing expenses, we started focusing more on how we can improve net revenue.
Our organization had pretty high trust in IT and the PMO ability and what we could achieve. It all comes down to communication, trust, and transparency.
You have this assumption that you can get off your legacy systems within a couple of years. That was just not the case. It was really critical that we continue to run those systems, not only to have constant access to the clinical records, but also to support all the cleanup work, which is massive.
When you’re cleaning out the accounts receivable, it’s kind of like draining a swamp. You really begin to get at the accounts that have aged for a reason — because they’re so difficult.
Gamble: Hi Steve, thank you so much for taking the time to speak with us today.
Robertson: My pleasure.
Gamble: Why don’t you tell me a little bit about Hawaii Pacific Health — I see that you have four hospitals, but tell me what you have in the way of ambulatory care, things like that.
Robertson: We’re the state’s largest private health system. We’ve got four hospitals and 49 outpatient centers. We’re located on multiple islands; our hospitals are located on Oahu and Kauai. So we’re primarily acute, but we do have a specialty women’s and children’s hospital on Oahu.
We also have three employed physician groups; one on Kauai and two on Oahu. So we really do provide primary and specialty care on the outpatient side. We have a common electronic health record that connects all of our systems and we’re Stage 6 across the board — one completely integrated system spanning ambulatory and inpatient. The total number of beds is 564, and annual total combined net patient revenue is about one billion dollars.
Gamble: You talked about having facilities on the different islands, so you’re pretty spread out geographically.
Robertson: We are. We’re on the most isolated part of the planet and our facilities are separated by hundreds of miles of ocean. So it’s kind of a unique environment. But most of our services are here on Oahu.
Gamble: Okay. And then just to give a little background, Hawaii Pacific Health came together as the result of a merger between three health systems, correct?
Robertson: That’s right, in early 2002/late 2001.
Gamble: Were you with the organization at the time?
Robertson: I was. I’d been previously with the Kapiolani Health Systems, joining in 1998.
Gamble: As far as the electronic record, the health system is on Epic, right?
Robertson: That’s right. We have the Epic Enterprise suite.
Gamble: How long has that been?
Robertson: We signed the contract originally in late 2002, so it’s about 10 years.
Gamble: It sounds like you’re a little bit ahead of the game on some of this stuff.
Robertson: Yes, we were among the first hospitals in the country to testify. We’ve been full up and running, really taking full advantage of our EHR over the past four years. I don’t know if you’ve read our Davies winning case studies, by chance?
Gamble: Yeah, and I wanted to talk to you a little bit more about that. But first, I wanted to get a little bit more background. Now as far as when the health system did go live on Epic, were the hospitals on different systems at that point?
Robertson: They were. I think any particular hospital has a few dozen applications that they support, but if you look at just major systems like billing systems, pharmacy systems, and radiology systems, there were 32 different systems among our four hospitals and clinics. So it was a lot of consolidation work. It was a mess.
Gamble: I’m picturing that as being pretty long process; a long, arduous process.
Robertson: It was. It was a seven-year project, and we phased it in over that period. We focused initially as much as we could on installing our revenue cycle system first and then layering on the clinical systems on top of that. And actually, this is laid out in one of the case studies, so I don’t want to repeat it unless you want me to. But just in big-picture terms, when we first made the decision to install an EMR, it was actually part of our initial merger charter that we would do this. When we looked at the total cost of doing it, we realized we couldn’t afford it. There was no real positive ROI — it was negative. And so we made the choice to double-down, essentially, and install revenue cycle systems at the same time to get the efficiencies and improvements we were looking for. And we’ve been able to get a nine percent positive return on investment. That’s excluding any stimulus money that we achieved.
Gamble: Can you walk through the case study a little bit just to give our readers a little bit background about it?
Robertson: When we first looked at deploying the EHR, we were looking to spend $32 million, but being right at the heels of our merger, we hadn’t really seen the economies of scale that we were hoping for. We were actually losing money in the first year of the merger, and that’s not particularly unusual. I think we were losing about $34 million at that point, and we actually killed the project. We said, ‘We can’t afford this. We’re not going to do it.’ But we kept at it and kept reevaluating it, and rather than just focusing on reducing expenses, such as reducing transcription, consolidating IT systems, or retiring legacy systems, we started focusing more on how we can improve net revenue. If we could reduce our bad debt; if we could reduce our administrative adjustments; if we could do a better job of insuring that we’re getting charges entered for the services that were being provided, we knew there was a lot of opportunity.
At that time, it was published in HFMA that 2 to 5 percent of revenue cycle activities are inefficient, and they cost companies that type of margin. So we knew if we could improve that, we can actually go from a negative 2 percent, or whatever that margin was at the time, up to 3 percent. We went back and took a look at the opportunities, did some assessments, and we decided that maybe spending $32 million isn’t the right idea. We’ll commit ourselves to spending $57 million, which is a shocker for the system. It’s amazing that we were able to do that and make a good sales pitch out of it, but we succeeded. The board of directors fully supported our approach. And we have a formal project management office, so not only did we have an assignment to ensure that the projects were phased in and were successful, but we had separate project managers focused on driving the return on investment.
The goal was to drive as much transparency and accountability as we could through work cues, by individual names, so that we could show how we were performing in reducing costs for billing or medical records, coding backlogs, and all those things that really had huge impacts on actually getting paid for a claim through the revenue cycle process, and we started seeing those results.
We actually drove down our cost to collect — pre-implementation it was 2.5 percent, which wasn’t really too bad, but now we’re right at a little less than 1.5 percent. That drive downward in cost is probably our single biggest savings that we achieved, at least for efficiency. We were able to do that because rather than operating on seven different billing systems spanning four hospitals and three different physician practices, we were able to consolidate it and actually relocate the staff so that they all operated on the same platform from the same location. It wasn’t quite so critical for us to have those billers immediately in the hospitals, because one of the things that becomes a real problem is the paper chase that occurs between medical records, the billing office, and the clinical areas. By being 100 percent electronic, all that information is immediately available online. So the 10-year ROI for that was about 9 percent and with ARRA, it was significantly higher.
Gamble: You talked about how it was originally a $32-million project and you went to $57 million, and you talked said a tough sell to the board. I’m sure that that’s putting it mildly. How were you able to sell this — to convince them that this was the way to go?
Robertson: It might be a little bit misleading, but the sell wasn’t that hard. In hindsight you kind of marvel that, ‘Wow, we were able to do that.’ I can remember one intense moment where we were asking for that kind of variance, but our organization had pretty high trust in IT and the PMO ability and what we could achieve. So it all comes down to communication, trust, and transparency.
Gamble: I’m sure that everyone wanted to see this project succeed, and rather than having to scrap this and go with something else, everyone knew that there was a lot of cost involved, but obviously a lot of benefit.
Robertson: Right. When you look at the benefits, everybody realized what the benefits were, but most of those benefits, you can’t really put costs of savings on. You can’t really put it in somebody’s budget, right? I think there was always concern that we’re here to do our mission in providing better quality of care, and we all know that an EMR is going to get us there, but can we afford this and are we really going to be able to succeed at it? Early on when we were looking at the return on investment calculations, it was incredibly complex. It was so sensitive to the assumptions that it was hard to really be a believer, so we took the stance of, if you can’t directly measure it doesn’t count. And of course, it was intense. The first three years it didn’t go very well, but into the fourth year we really began to see those results.
Gamble: I’m sure that you realized that it was going to take a couple of years before you started seeing some returns, and I’d think the more you can establish that, the better off you are.
Robertson: Yes, that’s true. Another thing that’s always kind of a surprise — it’s probably not a surprise for a lot of people — but you have this assumption that you can get off your legacy systems within a couple of years. That was just not the case. It was really critical that we continue to run those systems, not only to have constant access to the clinical records, but also to support all the cleanup work, which is massive, just in accounts receivable. Being able to work the credit balances and being able to close out the accounts is an enormous effort.
Gamble: I’m sure. Now at this point, are you done with all the legacy systems?
Robertson: I think we still have a couple that are sort of plugged in, barely, but most of them are shut down. One of the consequences too is when you’re cleaning out the accounts receivable, it’s kind of like draining a swamp. You really begin to get at the accounts that have aged for a reason — because they’re so difficult. With A/R, the thumb rule that we started to apply was expect your accounts receivable to climb by 50 percent and take about a year to get back down to where it should be. I know it sounds like I’m focusing on the finance side as opposed to the quality and the clinical improvements we’ve had, and I probably should talk about that journey as well.
Gamble: Right, but that’s such a huge part of it, obviously.
Robertson: Oh yes. Actually, at the end of the third year the project, in addition to my CIO responsibilities, the CEO made me responsible for all of our revenue cycle areas as well. My responsibilities today include patient accounting on the inpatient and ambulatory professional billing side, in addition to medical records and registration. It’s that concept of one neck to choke.
Gamble: That’s a great way of putting it. But it makes a lot of sense, because revenue cycle is so closely tied with what you would consider clinical or IT projects.