University of Minnesota Information Technology in Healthcare Medical

University of Minnesota Information Technology in Healthcare Medical Industry Leadership Institute Course: MILI/PUBH 6562 Fall Semester B, 2014 Stephen T. Parente, Ph. D. Carlson School of Management Department of Finance sparente@umn. edu

Health IT Overview • • • Why a Course in Health IT? Course Objectives Health Information Systems Overview Health IT Clients Logistics: Readings, Labs, Exams & WWW Small group discussion

Who is this course designed for? • Future managers – Provider – Insurer – Technology (medical & related) – Consulting • Clinicians intending to manage a health IT system in the future.

New Market Forces in Play for Health IT • Emphasis on quality of care – overuse – misuse – underuse • The Internet & consumerism • Managed care under attack • Government price controls have outlived their usefulness

Who cares about Health IT? • • Fortune 500 Businesses Venture Capitalists Managed care & insurers Providers Government Researchers Consumers (future patients)

Why a Course in Health IT? World has changed in health care: • Health reform (1993 -94, version 6. 0) gave rise to accountability • Emphasis on having the ‘right’ information for informed decisions: – consumers – providers – businesses & government

Wouldn’t a Management Information System Course Do? • Isn’t it just another application of computers? • Can’t I just insert the word ‘patient’ instead of ‘customer’ and ‘physician’ instead of vendor in a software package and be done with it? • Aren’t there people I can just hire to do this stuff?

No, Yes (but it will cost you) • Health informatics is an interdisciplinary product combining several fields: – Computer Science – Electrical Engineering – Medicine, Nursing and Allied Health – Management & finance – Risk and insurance – Economics, Epidemiology & Statistics

The Problems of ‘Cutting & Pasting’ MIS to Health Care - 1 • • 16, 000+ unique diagnoses, 10, 000+ unique procedures and 20, 000+ unique drugs used in combination to produce one ‘widget’.

The Problems of ‘Cutting & Pasting’ MIS to Health Care - 2 • Clients (patients) without full information about what they want to buy, why they want it and how they will pay for it. • Individual providers at the top of the social and political spectrum able to ‘craft’ products specific to each client.

So You Want to Just Buy a Health MIS From a Vendor, Huh? • How do you know what your buying? • How will you know the importance of one million dollar feature from another? • How long will the technology meet your needs? • What are the indirect cost of transitioning to the new system?

Health IT in 2014 Includes - 1 • • Automated time & attendance/HR Bar coding systems Claims auditing/analysis software Claims processors/clearinghouses Clinical software Computer-based patient records Data repositories

Health IT in 2014 Includes - 2 • • • Data security Decision support systems Digital dictation/transcription systems Documents management Financial/billing/patient accounting systems Hardware/peripheral devices Home health care software Hospital/health care information systems Interface engines/integration tools

Health IT in 2014 Includes - 3 • • • Internet/e-commerce Laboratory information systems Meaningful Use Certification Vendors Materials management/supply ordering software Outcomes/utilization review software Outsourcing services Radiology systems Patient ID/smart cards Pharmacy information systems

Health IT in 2014 Includes - 4 • • • Practice management software Scheduling software Systems integrators Telecommunications/networking Telemedicine/teleradiology systems Wireless devices/networks

Fundamental Aims of Course • Know the Technology: Recognize the potential and limitations of Health IT. • Buy Smart: Make informed IT purchase and development decisions • Effectively Use & Systematically Evaluate: Continuous planning, implementation, evaluation of Health IT.

Primary Course Topics – 1 • Health IT Overview – Systems & technology – Health IT Demands of Managers • Health IT architecture – Hardware – Data structure – Life-support applications – Decision-support applications

The Health IT Pyramid Decision Support Software Life Support Software Clinical & Financial Data Hardware

Primary Course Topics – 2 • Health IT application case studies • Design and evaluating heath IT – Security – Confidentiality • Future health IT innovations

Skill Set Provided by Course -1 • Describe the basic the hardware of information technology. • Understand the basic data structures present in heath care. • Identify software applications used to manage health care. • Describe the principal clients of health information systems.

Skill Set Provided by Course -2 • Evaluate an information system using basic systems theory and evaluation skills. • Communicate to a systems analyst ad-hoc programming instructions. • Discuss health information technology legal and ethical issues.

Method of Evaluation • Take-home Final exam: 45% • Laboratory & class participation: 30% • Mid-term examination (11/11) 25%

Course Labs • #1: Identifying a vendor-supplied application • #2: Communicating to a programmer • #3: Build or buy a new health IT system

Office Hours • Room 3 -279, CSOM, 3 pm to 5 pm, Tuesday • By appointment is best. • Email jahaupt@umn. edu to schedule time outside office hours. • Phone & e-mail info: – sparente@umn. edu – 612 -624 -1391

The Course Readings • Three sources for readings: – The course web site: • http: //hsinetwork. ehealthecon. com/ithc 2012. html • Links to online articles are provided. – Handouts • Readings are vital to discussion and exams.

Online Modules • Provides a Hybrid Online Course • Goal is to describe key concepts at students on pace. • Will reduce required class time and optimize guest speaker / case examples. • New for 2014, but based on 10 years of experience from other courses. • Feedback welcome – Segments to add – Segments to modify – Awesome Videos to make a point punch. s.

Course Notes • Also available from the course web site: – http: //hsinetwork. ehealthecon. com/ithc 2014. html • Click on lecture to download notes. I will try to make notes available one day before lecture.

E-Mail Distribution List • Distribution list will be generated to: – Immerse you in the subject with health IT news briefings, & webinars. – Inform class guest speakers and scheduling changes. – Clarify assignments – Introduce you to themorningconsult. com

Small Group Exercise 1. What types of health care organizations will there be in 2019? 2. What types of information do their C-level leadership need to make decisions? 3. How will the data/information be furnished?

Exercise from This Week’s Readings • Read tech trends article • For each of your THREE FAVORITE trends, identify a direct causal relationship between the technology trend and: – Improved productivity • More services, holding constant resources. • Better Health outcomes – Improved financial performance • More efficient • New sources of revenue

Present Homework as an Executive Memo • Ideally one to two pages long with 5 paragraphs. – Intro paragraph • What are you looking at: State key question/issue or problem • What’s the punch line – Body • What was your approach/process to answer the question. • Describe your results in more detail. – Concluding paragraph • • Restate punch line Explain why it matters What are the caveats/limitations of what you said Talk about next steps or issues to follow-up

Health IT Online Module 1. 1

Fundamental Information Systems Theory • Data: raw facts and figures collected as part of the normal functioning of a business, clinical encounter or research experiment. • Information: data processed in a formal, intelligent way to obtain results directly useful to managers and analysts.

Systems Theory Basics • Objects: component parts of a system. • Attributes: characteristics of an object. See it in motion: INPUT to OUTPUT, through a conversion process.

Input to Output Health care examples? ? ? Conversion Process Input Output

Management Decisions & Information Systems Two type of approaches:

Management Decisions & Information Systems Two type of approaches: • PURELY RATIONAL: All information must be considered before a decision is made. • NONRATIONAL: Every situation is different. Must consider: – – Social Political Environment “Feel people out” What approach should managers use?

The Role of the Computer • The computer is a tool. • The computer is not a Health IT product. • A Health IT Business Plan should NOT specify the purchase of a computer as a key goal (unless it is the foundation for the rest of the plan).

Health IT Online Module 1. 2

The Management Information Cycle • • • Goals and Objectives Estimate demand Allocate resources to meet demand Control Quality of Performance Evaluate Results Re-establish Goals and Objectives

Is This a Good Mantra for a Health Data Manager? • If it’s not measurable, it’s not manageable. • If it’s not manageable, it’s not meaningful. • If it’s not meaningful, don’t do it. Health examples? ? Health exceptions? ?

Three Types of Systems Relevant to Health Care • Mechanical • Human Systems • Human-machine systems Health examples from each?

Systems Objectives in a Health Care Setting • • Medical/health outcomes assessment Cost control Utilization analysis and demand estimation Program planning & evaluation Simplification of an external process Clinical research Education

Health IT Online Module 1. 3

Meet the Health IT Clients – 1 • Providers: Physicians, hospitals, nurses and allied health professionals who need information to improve clinical quality, get reimbursed and compete. • Manufacturers: Pharmaceutical, biotechnology and medical device manufacturers who need IT for clinical trials and well as costeffectiveness evaluations.

Meet the Health IT Clients – 2 • Insurers & health plans: Public and private insurers who need information to manage providers, insure risk, and stay solvent. • Government, researchers & consultants: Building IT infrastructure for biomedical research, health policy evaluation and public health surveillance/response.

Health IT Online Module 1. 4

The Value Proposition of Health IT • • • What is information demand? How much information is needed? Finding the value of information Inventorying data resources One-time health IT demand scenarios On-going health IT demand scenarios

What are the Goals of Information Technology? • Make life easier – Easier to obtain products & services • Improve quality of life • Save Money – Labor-savings $$$ – Less costly mistakes • Make Money – Focused Marketing

Economics as an IT Lense • Definition of Economics: – The study of the allocation of scarce resources among competing ends. • Tools of Economists: – Theory – Econometrics & data – Institutional Knowledge

Economic Theory of IT • Good work by: Erik Brynjolfsson and Lorin Hitt (2000) from MIT Sloan School • Three Different Measure’s of IT Value: – Productivity – Profit – Consumer Welfare

Unique Features of Health IT Economics • Standard assumption is that IT can not yield profits only reduce costs. • Assumption is not true if an industry has high barriers to entry. • Health care has many barriers to entry, so providers & insurers should buy IT not just as a tool to control cost but to profit as well.

Econometric Application - 1 Productivity • Define an output in health care: – Mortality is crude but undisputed. – Improved health outcomes (can be highly subjective in health care) • Define an input: – Health IT Investment (# of workstations) – Labor (# of FTEs)

Econometric Application - 2 Profitability • Measure profits & IT investment and analyze. • Some early results: – Hospital’s who invested in IT can have improve their profit margins by about 40%. – Study is being refined to identify whether IT drives the profits, or profits motivate IT investment.

Impact of IT on Hospital Profits Over Time

Econometric Application - 3 Consumer Surplus • Consumer surplus is derived from consumers purchasing a good at a market price lower than what they would have been willing to pay. • IT is full of these examples in the PC market today. What about Health IT? • Want to plot a demand curve to measure CS: – Could obtain data from insurers and providers to see whether consumer surplus exists. – May need a patient survey for Internet applications related to health.

Evaluation of Individual IT Systems • Examples: – Hospital ER – Managed care plan disease management system – Distance learning services for continuing medical education. – OTHERS? • Which economic goals are they systems seeking to fulfill?

Health IT Online Module 1. 5

What is the ‘Value’ of Information? • Hard to Express……. • A proxy valuation is the ‘opportunity cost’ of not having the information. • Opportunity cost is defined as the cost you would pay to obtain one unit of information in exchange for one unit of another good. • Health example: An insurer not having a diabetes care tracking system by 2014 will lead to employer with 5, 000 beneficiaries to leave the plan, which would decrease profits/surplus by $25 million.

• What can you do with different databases with the same unit of observation? • ‘Merge’ them to create combined information and possibly calculate new information.

Lessons Learned by Redesigning -1 • Organize around outcomes, not tasks. • Have those who use the output of the process perform the process. • Subsume information-processing work into the real work that produces information.

Lessons Learned by Redesigning -2 • Treat geographically dispersed resources as though they were centralized • Link parallel activities instead of integrating their results. • Put the decision point where the work is performed and build control in the process. • Capture information once at the source.

Principals of Information Resource Management • Information is an essential organizational resource. • Obtain top executive support for information systems planning and management. • Develop a strategic vision and plan.

Health IS Categories

Health IT Online Module 1. 6

Inventorying Data Resources - 1 • • • Internal to the Organization (see previous). Available from partner organizations. Available from government agencies. Available from the private sector. Data needs to be collected Primary vs. Secondary Data

What are the Data Elements of Interest? • • • Charges Payment Cost Service use Vital statistic Diagnosis Outcomes Demographics Provider of Service Treatment Used

What is the Unit of Observation? • • State County Health plan Group Practice Hospital Physician Patient Second x, seen by Patient Smith

Work Through Ongoing Scenarios • An health insurer wants to aggressively manage diabetic enrollees with a phone tracking system. • A hospital wants to implement a new human resource management system to integrate residents with hospitalists to reduce ‘July errors”.

Work Through Ongoing Scenarios • A pharmaceutical company needs to evaluate the cost-effectiveness of their existing products. • A patient with moderate to severe asthma wants to improve the quality of their care. • A large group practice wants to reward its most productive members.

Work Through One-Time Only Scenarios • Two hospitals want to merge. • A Medicare Part D carrier needs to identify which regions to possibly exit in two years of poor profits. • A managed care plan needs a new panel of exclusive low cost/high performance physicians to establish contracts with.