For David Tomlinson, there was perhaps no better prep course for the CIO role at Centegra than serving as VP of Operations for five years. The role enabled him to obtain valuable experience in change management and build the leadership skills he is leveraging to guide Centegra through an “Amazing Race” to implement McKesson’s Paragon and qualify for Meaningful Use within a short window of time. He recently spoke with healthsystemCIO.com about his strategy to make MU a reality, why his organization decided to outsource, how to structure a solid outsourcing agreement, the keys to successful relationships with executive leaders and vendor partners, and why today’s CIOs must be comfortable with taking risks.
- About Centegra Health
- Running an outsourced shop (Perot/Dell)
- Is outsourcing right for your organization?
- From VP of operations to CIO
- Structuring the contract — need to have foresight and flexibility
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We didn’t have a lot of strength in IT as far as the leadership. We had really great core skilled individuals that took care of the day-to-day functions. But we had purchased a lot of products that we may not have been maximizing, and we lacked the strategic plan and vision.
My background comes from a different lens. It is more about operations. It’s more about leadership and change management and choosing the right tools and the right technology to drive outcomes.
You want to find an organization that matches your culture and your values and mission, so that when you marry those two or come together in a partnership, you minimize some of the growing pains and you can move forward quicker.
Looking back, I would have built the contract more flexible for the future so that you’re not one-offing with different task orders and you’re not nickel and diming where you feel like you’re held hostage because they control all the resources. It’s looking five years ahead.
A lot of it is Leadership 101. Not only are you managing process and technology, but you’re managing people. It’s like a toothbrush — it’s a great tool, but you have to use it and use it properly and you need to use it at appropriate times throughout the day. Just having a toothbrush doesn’t do it for you.
Guerra: Good morning, David. Thank you for joining me to talk about your work at Centegra Health System.
Tomlinson: Good morning, great to be here.
Guerra: Why don’t you give us an overview first? Tell the readers and the listeners a little bit about Centegra — the components, the moving parts, and all the fun stuff under your purview, and we’ll go from there.
Tomlinson: Centegra Health System is a community-based health system that’s located in McHenry County, which is northwest of downtown Chicago. We serve a population of about 350,000 people. We have approximately 450 physicians that are on our medical staff. We are the largest employer in the county, with over 3,700 employees. In addition to our acute care hospitals, we have fitness centers, imaging centers, a variety of clinics. We have a physician practice with over a hundred physicians that serve the area. We are striving to become a destination system, if you will, in the Midwest. Our mission is to provide the quality healthcare services to the county with innovative and responsible use of all our resources to really promote the greater wellness of our county.
With our current strategic plan cycle, there are probably five key elements we focus on: physician alignment, clinical effectiveness, community health management, information technology — which is where I focus a lot of my time — and then financial viability. We do so trying to span across the entire continuum of care. We have two acute care hospitals, one in McHenry and one in Woodstock, and then we have things like immediate care centers — fitness centers, home health, things of that nature. We really view ourselves as the provider in McHenry County to provide all the care that our community members need. We view that as certainly a responsibility and a great opportunity to be engaged in our community.
Guerra: How many beds in each of the existing hospitals?
Tomlinson: As a system we have about 343. It fluctuates a little bit in terms of what we have staffed, but I think we’re licensed for greater than 350 beds. The hospital in McHenry is about 200 and then the Woodstock license is the remaining 150, between the acute care and the specialty hospital.
Guerra: What’s the plan for the new hospital? How many beds would it have?
Tomlinson: The new hospital would be 128 beds to begin with. The state of Illinois requires at least 100 beds to receive certificate of need. It will be a full functioning level 2 hospital, so we’ll have ORs and emergency departments, about 100 med-surg beds, and then you’ll have the OB and things of that nature.
Guerra: Let’s go through some of the components in terms of technology of the system. Let’s start back a little bit because I think this will be important for setting the stage with what you’re doing. I read about the Perot System deal. That was late 2008 — is that still in effect?
Tomlinson: Yeah. From an IT strategic plan, as you mentioned over four years ago, we embarked upon a process of outsourcing much of our information technology function throughout the organization — infrastructure, help desk, and even some strategic projects; virtually everything. And so at that stage we went through an RFP and we did award the business to Perot, who as you also probably are aware, was acquired by Dell. So that relationship still exists and now we work with Dell in kind of an ITO model. We do have a handful or a couple of handfuls of Centegra-retained associates and assets as far as human capital in the IT function, but a lot of what we do is partnered with Dell from that perspective.
Guerra: That’s interesting. I just interviewed Carolyn Byerly at Stanford. She’s actually retiring, but they had done the same thing. They outsourced to Perot with a big strategic decision that when she came in she said we have to get this place up to speed in a sense, and it was going to take a lot longer to do it internally than to outsource it. It wasn’t cheap, but that wasn’t the point. I don’t know how many organizations are doing this, but it makes for a unique CIO role. How do you think your role may be different than the CIO that has an internal staff? Is there a different skill set? Is this very attractive to you, and might this not be attractive to some other CIOs? What’s unique about this set-up from a CIO point of view?
Tomlinson: Well, that’s a very interesting question. We could probably spend a fair amount of time on it. I must comment a little bit first about how I found myself in the current role. I’ve been with Centegra — this is my seventh winter. We’re surviving the seventh winter up here. It’s a great organization. I came here as the administrative fellow and have always kind of been more on the operation side. Prior to this role, I was the vice president of Operations and supported all of our clinical services — surgery, medical imaging, pharmacy, lab, all of our supply chains, and a handful of other responsibilities. I did that for about five years.
The last year of that, I was asked to kind of wear two hats. One was the CIO hat and the other was vice president of Operations. At that point in the game, we were kind of transitioning from Perot to Dell and we were trying to get through that transition as well as insure what the right model was for Centegra as far as leading our IT. I don’t want to be terribly negative, but we didn’t have a lot of strength in IT as far as the leadership. We had really great core skilled individuals that took care of the day-to-day functions. But we had purchased a lot of products that we may not have been maximizing, and we lacked the strategic plan and vision.
Again, this is going back about four or five years ago. Then, over the process of when we contracted with Perot, we received some consultant help. I personally was not involved with it directly, other than peripherally as an operations leader. There was a strategic plan that suggested we consider outsourcing, and as we went through the due diligence and went through the different interviews, we aligned very nicely with our cultures with Perot, and so then we embarked in the strategy to have this service. A lot of our leadership internally was supported by an executive, but basically all the IT function was supported and run by our partner. Since then we’ve made some additions to the model and I think we’re in a very good situation right now.
The actual system CIO position has been created over the last two years. I was asked to fulfill that role and was pulled out of operations, which has been an interesting experience for me personally. It’s been a great challenge, but my background, as you can imagine, comes from a different lens. It is more about operations. It’s more about leadership and change management and choosing the right tools and the right technology to drive outcomes. I do not have the technical background or the programming background that some traditional CIOs may have.It’s more of a business or administrative type background with a heavy dose of data and outcomes and operations.
It’s been quite a fun process of building the right structure for Centegra. And so now if you look at the structure as it exists today, I serve as senior vice president and CIO for the health system. We have a chief medical information officer, who is a physician, obviously, and that individual practices and serves an administrative component of his job. He is a Centegra associate. And then we have a variety of different Centegra-retained assets working in the IT team. We have our informatics team which is across all disciplines. We have a director of IT. And then we have our partnership with Dell, and I group that into a couple of buckets.
We have an account executive who has been just excellent for us and then they have the delivery manager, the application support and management services, and a project management arm — things of that nature.
We’ve got a good matrix relationship now, but I am supported directly by the CEO. Over the last year, we’ve structured IT to be right where it needs to be for what we need to do for the organization. It’s tied very closely into our strategic plan. The visibility is very high with our board and we’re moving forward. Now granted we’ve had some struggles over the last four or five years with some projects, and we find ourselves ahead of the game in some respects when you look at the HIMSS analytical, the ERAM model, and the different stages. And then we also find ourselves behind when it comes to implementing a fully functioning EMR to meet Meaningful Use Stage 1. We’re kind of knee-deep in that project and we have about 112 days to get that all done. I don’t know if I even answered your original question.
Guerra: It was very good information. Just refresh my memory or clarify for me — were you in IT when the recommendation came to outsource to Perot?
Tomlinson: No. At that time, five years ago, I was serving as vice president in operations. I certainly was aware of what was going on, but I was not responsible for IT at the time.
Guerra: I’m just wondering about the dynamic of an IT department. Maybe they’re not told directly; maybe it’s essentially that communication comes at a higher level. Basically, there’s a meeting of the minds with the consulting group that’s coming and here’s where we need to go, and say after they’re done with their study they say, ‘you need to have somebody else do this.’ That’s essentially what it is, and if you’re in IT I wonder how you take that well and not let too much ego in the way. It’s hard to hear if somebody’s telling you, ‘hey, can we do this? You better outsource it.’ How does that get absorbed by an organization and taken the right way?
Tomlinson: Obviously it takes a fair amount of collaboration and open communication and sharing; being transparent with some of the assessment and some of the reasons in advance. I am certain there had been some transition. I do not recall the state in which we were when we were actually considering it. I do believe that we had some transition of some of the leadership of our IT at the time. But I can tell you it was of grave importance to Centegra to make sure that that transition was communicated right, and more importantly, deployed correctly. I would be happy to tell you right now that the team that exists today is identical with the exception of some of the leaders as it was then.
The legacy Centegra individuals — if that makes sense — still exist and we have four of the leaders that stayed, and basically a lot of the team stayed. And frankly,it’s given them opportunities to progress and have exposure to a much larger IT organization where they can continue to grow and learn and get training and perhaps move on a career path that would be more beneficial to them versus just a homegrown shop where there’s definitely a ceiling. So yeah, I’m certain it was sensitive but seeing the fruit of that decision and then where we’ve been able to get to and where we’re going I think overall it’s viewed as a very positive thing. As with any type of outsourcing scenario, there are struggles and there are concerns. However, with a great strategy and change management approach, it can be received very well.
From my perspective at the time, I knew the people. I worked with the people and I saw the different outsources. At Centegra, operationally there’s a lot of outsources where we found great benefit where we get people that are specialized in things. Another area that I lead currently is our biomedical engineering department, and we’re coming up on our third year of outsourcing that service as well. We had a very high performing team and we were concerned about them and their development and so when we outsourced, we were good and trying to get better, and we certainly did, rather than struggling and needing to get better, which was probably the category that I put our IT at that stage. Granted this is from me four or five years ago not being in the trenches, but that’s my perception at the time.
Guerra: Is there any advice you can give fellow CIOs for how they might know if the type of arrangement you have with Perot/Dell is right for their organization?
Tomlinson: I’ll certainly give you my two cents. It may be worth that to some and not to others, but it starts first with the direction and the strategy and your core value sets and what you’re trying to do. If there’s not a good sense of confidence and maybe even a track record of outcomes of achieving those goals, then it probably warrants some consideration once those goals and outcomes are defined, because those types of relationships can infuse talent and resources that some health systems may or may not have access to, and so it can be a great accelerator of change if need be. But also, if not managed correctly, it can set you back for quite some time as well.
I would say to the extent which certain goals or directions need to be achieved and if the internal resources can get that organization there or have gotten the outcomes to have confidence in that, then you’re probably not looking to do that. Again, it’s hard to say globally, but it’s strategic and it depends on the direction. Certainly if that’s a consideration, then you want to find an organization that matches your culture and your values and mission, if you will, so that when you marry those two or come together in a partnership, you minimize some of the growing pains and you can move forward quicker.
You don’t want to ever scrimp on the planning and the due diligence and the transparency with those that you’re leading, because it does change their life. But we focused on our associates at the time and they’re still here and still they feel like they’re part of the Centegra team. Again, our culture and our strategy of the organization have lent that type of relationship to be successful just because it’s part of our DNA.
Guerra: What about crafting the actual relationship with the outsourcer — and specifically what I’m thinking about is, I know you have to get things into writing, but how much can you get into writing? Because you’re never going to get everything into writing, and at some point you’re going to have to rely on good faith of those involved that things are going to be worked out fairly and in an honest and open way. I wonder, can you poison the relationship at the beginning by trying to nail everything down in writing, or is that really important to do?
Tomlinson: This is coming from my perception and observations at the time and then now dealing with it and cleaning up some of those things over the last couple of years as I’ve been working in this role. I think, yes, contracting is always a fun process to go through. It’s a necessary evil, and that’s why organizations have their attorneys and there are just some things that have to happen and you have to get through.
But I think what’s important is the people. And I think the lesson Centegra learned is the importance of having the right people and establishing and maintaining the right relationships with your partners and ensuring there’s open dialogue and transparency and that you agree in advance of the service-level metrics, which at the time probably seemed perfect, but as you know and as I have learned, IT changes so quickly.Expectations change dramatically, for consumers or physicians or those at the associate level — individuals that you’re trying to serve. That changes all the time, whether it be access to wireless network for patients or physicians with mobile devices, you name it. It’s just constantly changing, and so you need to have a relationship that can build upon and work through the contract.
The contract is good and oftentimes is only referred to when things are not going so well. And so my methodology is thatthe contract is good — it’s a starting point. But you need to have things built in the contract that enable you to modify, as mutually agreed upon, that would be beneficial for both companies, and then have those discussions and be open with those executives that you’re working with. The extent that you can do that will be the extent of your ability to be agile and flexible to change.
For example, we’re coming up in our fifth year of the contract. We have a long-term contract and it’s going to become necessary that Centegra is able to change some service-level metrics and even perhaps some of the structure of our application support. We change systems and we replace systems as we continue to grow. All of that needs to be built into a flexibility. So looking back, I would have built the contract and agreement more flexible for the future so that you’re not one-offing with different task orders and you’re not nickel and diming where you feel like you’re held hostage because they control all the resources. It’s looking five years ahead or four and a half years or whatever it is.
I’d look at the structure — how organizations manage and outsource. That’s been I think my biggest learning, because I’ve been put into a situation and have had some repair and fence-mending to do. That’s been done, so there’s a good lesson that I’ve learned there, and then certainly how do you plan for growth and how does it look. Any long-term contract requires as much foresight as you can but then flexibility to deal with it in the future.
Guerra: It’s very interesting, the nickel-and-dime element. As a customer, you have a sense of what you should incur a charge for and what you should not, and so if you want a different report or you want something a little faster, then you’re thinking, ‘come on, this is just reasonable.’ And all of the sudden you’re told, ‘well if you want that, there’s going to be this cost attached to it.’ Is that the dynamic? Is there a meeting of the minds in terms of what should incur a charge? And now you want to renegotiate and you certainly don’t want to be told, ‘you’ve got a contract; we’re not renegotiating until it’s up because you’re probably not going to re-up when it’s up.’ But it’s a contract. Anytime we want to renegotiate a contract we’re asking to redo the deal. There are so many interesting dynamics going on. Just weigh in on any of that you want to.
Tomlinson: Yeah, you’ve hit it and that’s why the relationship is key in my opinion, and the transparency. Because if you think about it the spirit of the original ITO contract, in our sense, was to basically be our IT function at the hospital. So inherent with that — both positive and negative — is that if we want to improve, then we should improve. If we want to grow, we’re going to grow. Because there is a contract and certain terms and conditions created depending upon the speed and the frequency of changes or growth, there are limited resources. And so you have to get into the contract again.
I must say that in the two years that I have been working with Dell, the problem of connecting with them and having open dialogue has never been an issue. It has been very collaborative and very refreshing that we can sit down and have the conversations and struggle with one another, if you will, on whether what we’re talking about falls in the scope of our contract, in the spirit of the scope, or is this truly incremental out of the contract. I would say that it’s been a good partnership and I don’t feel like we’ve been held hostage to that and I don’t think they’ve been unreasonable, and I hope that they won’t feel that we’ve been unreasonable either. We all have to cover what our best interests are.
So that exists, but again, there’s some art and tact on the relationships with the executives and the other leaders with whomever you’re partnering. A lot of that, I think, falls on my shoulders and my relationships with our team, with the local business leaders, on what outcomes do we truly need. Unfortunately, we live in a world of scarce resources and so where do we devote the resources to get the best outcome? I view that as a role of a CIO certainly, and then more importantly, to act as a change agent.
So a lot of it is Leadership 101 in my opinion. Not only are you managing process and technology, but you’re managing people. It’s like a toothbrush — it’s a great tool, but you have to use it and use it properly and you need to use it at appropriate times throughout the day. Just having a toothbrush doesn’t do it for you. It requires people and healthcare is a service given to people, by people, all across the continuum.
I talk about relationships and that’s been the key and being able to articulate and share your concerns and then have the data that support it and get smart on whatever the issues are at play when it comes to our contract.
Chapter 2 Coming Soon…