Jake Dorst, VP & CIO, Meritus Health
When Jake Dorst started as CIO at Meritus Health in late 2011, he came in with a pocketful of ideas. But he was soon hit with a reality check — a three-year wait for the Meditech upgrade that would hinder the process of attesting to stage 2. That simply wouldn’t do, so he and his team implemented a system that would help integrate ED and inpatient records. In this interview, Dorst talks about his ACO plans, his mobile device strategy, his motto when it comes to vendor management, and why job descriptions are never set in stone. He also discusses hiring a PR pro to help physicians ease into the electronic world, how he hopes completing his MBA will make him a better CIO, and how Meritus has benefited from employing a professional negotiator.
Chapter 4
- Population health on the radar
- Total patient revenue — “a beta test”
- Working with VPS to reduce vendor prices
- “IT folks aren’t natural-born negotiators”
- Nutanix’s converged infrastructure — “No more forklift upgrades”
- Educating the staff on vendor management
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We’re on a capitated model — after a certain amount of dollars, we are cut off. So we’ve been incentivized to reduce our charges and run leaner and keep our outcomes up. So far, it’s been working.
It’s a bit schizophrenic because the hospital itself has gone away from the pay-per-procedure, but the physicians are still incented that way.
It’s a big savings for us initially, and it’s going to save us a lot of money going down the road by being able to get away from forklift upgrades and the expensive SAN equipment that we’re currently on.
You would never negotiate a house that way or a car. You don’t call a car dealer a year before buying a car and say, ‘I’ve got 70 grand that I’m going to come in to spend next year. Could you line something up for me?’ It’s just not done that way.
You don’t hear the vendors say, ‘We’re sorry about that. We’re going to knock our prices off 4 percent.’ You have to play the hand you’re dealt, so saving money is going to be a huge part of it in the next 10 years.
Gamble: When you talk about things like patient engagement, I can see that definitely as being an area where you want to reach out to people at other organizations and see what’s working for them, because that is something that can be really challenging, as I’m sure you know.
Dorst: Yes. I’ve got some good ideas, and that’s where we’re going to be looking next year with our patient portal and Meaningful Use 2. We’re in talks right now about going down the ACO road and what population health is going to mean to us in the future, so all of those things go hand-in-hand.
Gamble: Is that something you see more as a down-the-road project?
Dorst: Well, if you mean in the next eight months, then yeah. We’re putting out an RFP right now for some population health software for some of the players out there — the Humedicas of the world, Aetna and their product that they’ve bundled up, and the Premier group. So we’re going to see what appeals to us and what we think. As a facility that sees 83 percent of its county’s residents, we’re in a unique position to actually have the ability to affect people’s lives a lot more than a Southside or somebody like that that’s got a mixed population.
Gamble: We’re seeing so much more emphasis now on being able to do things like reduce readmissions and just make sure that the patient is actually followed up with other facilities. Looking at payment reform, it’s all really interesting stuff.
Dorst: Right. I’m not sure if you’re aware of not, but Meritus is on a program called TPR, which is Total Patient Revenue. I like to refer to it as a beta test for the new changes in healthcare as far as reimbursement is concerned. We’re on a capitated model — after a certain amount of dollars, we are cut off. So we’ve been incentivized to reduce our charges and run leaner and keep our outcomes up. So far, it’s been working. We’ve got a pretty recent report that shows we’ve reduced our charge per case about 5.5 percent, so we’re definitely incentivized to make the hospital run smoother and more efficiently. It appears to be working.
Gamble: How long has Meritus been involved with that?
Dorst: It’s been about two years. I think we’re coming up on three. It was kind of like a beta test, so we’re going to give it a three-year run and then we’ll reexamine the results — which are looking pretty good — to see if they want to continue down that road in Maryland.
Gamble: That’s really interesting.
Dorst: I think we’re one of nine hospitals in the state that are doing this.
Gamble: It’ll be really interesting to see how that goes, because I’m sure there are a lot of organizations that are looking for better ways to control spending.
Dorst: Yeah, and I forget who said it — might have been my CFO — but it’s a bit schizophrenic because the hospital itself has gone away from the pay-per-procedure, but the physicians are still incented that way. So one of the big challenges going forward, and I think something that could make it even more successful, is that once we move the outcomes to pay-for-performance, the hospital and the physicians will be aligned or incented the same way, and I think you’ll probably see a lot of big wins there.
Gamble: I’ve heard one person say that it’s like trying to keep each of your legs in a different boat. It’s a balance between two worlds.
Dorst: Exactly. That’s a good analogy. I want to use that one.
Gamble: I wish I could remember who to credit it to, but oh well. Okay, so it sounds like you guys really have a lot of interesting things going on. Is there anything else that we didn’t touch on?
Dorst: Well, there’s the backend issue too. When I came in, I did a full network assessment and we looked at a lot of how the network was set up here. As an organization, we employed a professional negotiator that has helped us recover some overspend and has really helped us going forward. He’s probably saved us about a half a million dollars this year. My CEO and my CFO recently returned from a trip to Phoenix to participate in a healthcare roundtable, and the second thing on the list was employing a professional negotiator as one of the ways that hospitals can save money. We’ve done that here, and it’s actually worked out pretty well. The money that we’ve saved has allowed us to accelerate our network refresh plan so we’re moving to the Cisco Nexus platform, which we’re hoping is going to reduce a lot of our complexity that we’ve got right now with our core.
We are also using a product that saved us a bunch of money with our SAN environment. We had money in our SAN environment to increase our storage, and we also had money in the budget for servers, and so we found a product called Nutanix that basically converges all of that into one. It’s modular converge computing — a couple of guys from Google started it. Basically, your storage, your memory, your processor, and your compute is all in one 2U package, and it’s modular. They are about 10 terabytes per module, fully redundant — 20 terabytes raw. So there are no more forklift upgrades and I can add 10 terabytes at a time at will, and the system is smart enough to basically absorb that new storage space and memory and processor, and make it available to the entire system. It’s a big savings for us initially, and it’s going to save us a lot of money going down the road by being able to get away from forklift upgrades and the expensive SAN equipment that we’re currently on.
Gamble: When you talked about the professional negotiator, how specifically does it help you save money? Who are they negotiating with for the most part — vendors?
Dorst: Yes. It was an education for us to talk with them. The guy’s name is Scott Robins and his company is called Virtual Procurement Services. He came in and his pitch was, ‘I’ll save you money. The first one’s free and then I’ll take 40 percent of whatever you can’t negotiate after that.’ The goal was to basically get your vendor or your VAR or whoever you’re dealing with down to the lowest price that you can negotiate, and then hand it over to Scott and he will take it out. He’s got some proprietary ways and software that he can use to find out real-time what others have paid for that similar solution and take it back to the vendor. He’s quickly becoming my highest paid vendor, actually, because he’s saved us so much.
IT folks in general are not natural-born negotiators, so a lot of times you’ll tell your vendor beforehand, ‘here’s my budget number. I’ve got half a million dollars to spend on SAN next year,’ and low and behold, next year the vendor comes in and it’s $499,000. It came in under budget. So that whole mentality, which I never thought was wrong, now that I see the savings that he’s getting us, and it makes sense. You would never negotiate a house that way or a car. You don’t call a car dealer a year before buying a car and say, ‘I’ve got 70 grand that I’m going to come in to spend next year. Could you line something up for me?’ It’s just not done that way.
So it was an eye-opener. I actually had him come out and kind of give our whole department the rules of the road about taking lunches and what that means with vendors and deal registration and those types of things to make sure that we weren’t shooting ourselves in the foot before we even got to the bargaining table. Just the experience of dealing with them and understanding better — the education in itself has been very good for our entire staff.
Gamble: That’s interesting, and it really goes to show that the CIO role has evolved so much in that this isn’t just an IT person. This is somebody who has to be able to really understand the budgets and things like negotiating. It’s interesting to see how it’s evolved.
Dorst: Yes, it’s much more business and strategy than it was five years ago.
Gamble: I hadn’t heard of that before, so that’s pretty enlightening.
Dorst: Well, it’s kind of morphing into where now our CFO is seeing where he us money and asking if does other stuff. So now Ray Grahe, our CFO, is saying let’s see if he can help us in other areas, because sales is sales. It doesn’t have to be IT; it’s understanding how to negotiate properly. So really it could be chairs or desks or whatever — it’s just finding the best deal.
Gamble: Oh yeah, sure. You hear something like that and it makes you really think about where you could be saving money. That’s huge right now.
Dorst: Right, and that’s why I said that the whole network core refresh that we did would not have happened last year had we not saved the money that Scott saved us. We accelerated that whole project by 12 months.
Gamble: You almost wish there could just be one price that you pay, but that’s not the game.
Dorst: No, it’s not and then you look on the stock market and you see Dell making double-digit profit margins. They’re not losing money.
Gamble: No.
Dorst: Not so much Dell anymore, but you look at the Ciscos and the EMCs of the world. Their profit margins are very large.
Gamble: Yeah, and you have to do whatever you can to try to cut your budget and use that money in other areas that need it.
Dorst: Exactly. You want to stay budget-neutral. The other thing is that the vendors are not affected by cuts in the federal budget, but hospitals are, so we’re looking at a 3 percent or 4 percent or whatever the number’s going to be. And you don’t hear the vendors say, ‘We’re sorry about that. We’re going to knock our prices off 4 percent.’ You have to play the hand you’re dealt, so saving money is going to be a huge part of it in the next 10 years.
Gamble: Oh yeah.
Dorst: Did you go to HIMSS this year?
Gamble: I did go, yes.
Dorst: So there is obviously no shortage of money down there for those booths. There is plenty of money being passed around there.
Gamble: Exactly, that was one of my thoughts about HIMSS too.
Dorst: And you wonder why healthcare is so expensive.
Gamble: Oh yeah. How much does Bill Clinton charge for public speaking?
Dorst: Exactly.
Gamble: Okay, well I don’t want to take up too much more of your time, but I really appreciate this. I really enjoyed speaking with you.
Dorst: Thank you, I enjoyed talking to you too and thanks for giving Meritus the opportunity to put our initiatives out there. We appreciate the recognition from healthsystemCIO.com taking an interest in our new initiatives here.
Gamble: I hope we can touch base a little bit down the road.
Dorst: Sounds good, Kate. I appreciate it.
Gamble: Thank you so much.
Dorst: Thank you.
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