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Financial Integrations Lead to Enhanced

Reporting and Operational Efficiency

Stacey McCreery

Executive Director, Finance

July 1, 2016

Background

Previously, the IU Health Statewide hospitals and physician groups had

maintained their own general ledger, with no correlation to the integrated

general ledger. Financial data for these hospitals was loaded into Lawson

at the company financial statement level only, which means only ending

balances by period were available after the close of each period. The most

significant challenge with this model was the lack of detailed data that was

readily available for purposes of crucial analyses.

Furthermore, the hospitals noted above were not utilizing IU Health’s

corporate electronic medical record (“EMR”) nor billing function. As a

result, if a patient was seen in Bedford Hospital, for example, and was

transferred to Methodist Hospital, that patient’s medical record would not

transfer seamlessly and from a billing perspective, the patient would

receive a bill from Bedford and Methodist Hospitals as opposed to one IU

Health bill.

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Consequences of Current Structure

• Inability to see data that would assist in being able to

identify opportunities for process and financial

improvement

• Inability to capitalize on efficiencies and economies of

scale

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Statewide Systems

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Greenway

McKesson

Goshen, Morgan

White

LaPorte

Goshen

Bedford, Tipton LaPorte, Starke, Tipton

LaPorte, Starke, Bedford

Bloomington, Paoli

LaPorte, Starke

Morgan Goshen

Resolution – Phased Approach

It was recommended that all of IU Health’s statewide hospitals be fully

integrated into all of IU Health’s primary systems. This can be achieved

effectively in the least costly manner by approaching this task through the

following phases:

Phase I: Map general ledger accounts down to the department

level and upload Accounts Payable detail into Lawson to

allow for flow to EPSi

Phase II: Financial Budgeting & Reporting (EPSi) Integration

Phase III: Business Systems Integration (Lawson, Kronos and

ImageNow)

Phase IV: Clinical and Billing Systems Integration (Cerner and

SMS/IDX)

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Scope

The following hospitals and associated physician and/or

ambulatory operations are within the scope of the project

• IU Health Bedford Hospital

• IU Health Bloomington Hospital

• IU Health Morgan

• IU Health Paoli Hospital

• IU Health Tipton Hospital

• IU Health White Memorial Hospital

• Southern Indiana Physician Groups

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Phase I

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It is recommended that an accounting until structure is built in Lawson for each

hospital in scope. It is also recommended that a more extensive mapping table be

constructed for conversion of departments and accounts.

Benefits of Phase I:

• The corporate office will have visibility to more detailed account information that is

not available today

• Having this detail will serve as a platform for future business systems integration

efforts

• Once data has been loaded into Lawson, data will feed to EPSi, where a host of

reports will be available to the hospitals that are not available today

Time Investment of Phase I:

It will take approximately nine (9) months to complete this phase

Financial Investment of Phase I:

Virtually zero ($0)

Phase II

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It is recommended that EPSi Budgeting be implemented at all nine statewide

hospitals. IU Health has an Enterprise License for EPSi, which allows for an infinite

number of IU Health users; as such, implementation of EPSi Budgeting at the

statewide hospitals will be financially beneficial to the system since many of the

hospitals in scope are currently paying licensing fees on their current budgeting

system.

Benefits of Phase II:

• Cost savings for statewide hospitals with respect to fees paid for licenses and

maintenance of their current system

• Once budgeting occurs in EPSi the first year, hospitals will be able to take

advantage of flex budgeting, which is not available to the hospitals today

• The system will be able to realize efficiencies and greater visibility to data to be

able to better manage the budgeting process from the beginning of the cycle to the

end

Phase II, cont’d

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Time Investment of Phase II:

It will take approximately twelve (12) months to complete this phase

Financial Investment of Phase II:

Please see Appendix A

Phase III

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It is recommended that all nine hospitals be fully integrated with key IU Health

Business Systems to include Lawson, Kronos and ImageNow. If this is achieved, the

system will realize an increase in operational efficiency and cost savings while also

providing increased quality and patient and employee satisfaction. Integration of the

Business Systems would align the following services: Accounting & Reporting,

Accounts Receivable, Accounts Payable, Capital Accounting, Tax Accounting, Payroll,

Human Resources and certain Information Services duties.

Benefits of Phase III:

• Shared services departments will be able to provide full support to the hospitals

within the system

• Hospital data will be fully visible down to the transaction level, which will further

enhance the benefits realized in Phase I

• Cost savings through the elimination of maintenance on hospitals’ current system

contracts/licenses, elimination of secondary auditor, elimination of tax services

provided by a third party, etc

Phase III, cont’d

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Time Investment of Phase III:

It will take approximately nine (9) to fifteen (15) months to complete this phase

Financial Investment of Phase III:

Please see Appendix A

Phase IV

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It is recommended that the hospitals in scope integrate into IU Health’s Cerner and

billing functions through SMS and IDX. If this is achieved, patients would be able to

move very seamlessly throughout IU Health.

Benefits of Phase IV:

• The corporate office will have visibility to more detailed account information that is

not available today

• Having this detail will serve as a platform for future business systems integration

efforts

• Once data has been loaded into Lawson, data will feed to EPSi, where a host of

reports will be available to the hospitals that are not available today

Time Investment of Phase IV:

It will take approximately twelve (12) to eighteen (18) months to complete this phase

Financial Investment of Phase IV:

Please see Appendix A

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Benefits of Further Integration

• Financial Position and Opportunity

• Quality Metrics and Improvement

• Technology - Streamlined Models of Care

• Market Share

• Consumer Perception

• Physician Engagement

• Cost Efficiency

• Leveraging Enterprise Licensing

• Data Analytics

• Supply Chain Vendor Pressure/Negotiations

Integration Timing

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Integration Timing

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Activity Small Hospital Large Hospital

Map Chart of Accounts One month One month

Business Systems

Integration (including EPSi)

12 -15 Months

(Multiple hospitals can run

concurrently)

12 - 15 Months

(Multiple hospitals can run

concurrently)

EMR and Patient

Accounting Integration

10 – 15 Months

(Multiple hospitals can run

concurrently)

15 – 18 Months

(Multiple hospitals can run

concurrently)

Supply Chain Operations

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Supply Chain Operations

Savings – Inventory Costs The Supply Chain Operations team was also working to implement

the following Value Analysis Teams:

• Receiving

• Supplies & Distribution

• O.R./SIMS

• Linen

The goal of these teams is to develop metrics to monitor and

implement at each facility. These metrics will include inventory

turns, fill rates, supply costs per adjusted patient day, etc.

In order to accurately track progress and ensure efforts are being

fully enforced, the Supply Chain Operations team is forced to rely

upon reports from the facilities; Lawson integration will make

implementation and ongoing monitor much more efficient.

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Supply Chain Operations, cont’d

Other Benefits

• Data Warehouse

– Hospitals’ data will be integrated into IU Health’s Data

Warehouse which will allow for historical trending analyses,

clinical data integration and a more granular look at spending

detail

• Lawson Business Intelligence (LBI)

– As hospitals’ data will be integrated into Lawson, users will be

able to take advantage of LBI, which allows for real-time data

monitoring, proactive data corrections and visibility to

opportunities for improvement

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Supply Chain Operations, cont’d

• Lawson Smart Office

– As hospitals’ data will be integrated into Lawson, users will be

able to monitor data at the transactional level real time on

one screen vs. needing to toggle among several screens to

appropriately monitor and maintain information

Appendix

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Matters to Consider

• Cost/Benefit analysis for integration of critical access

hospitals

• Site visits with management and staff

• Integrated software packages currently in place

• Effects of integrating billing systems after business systems

• Availability of resources

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Next Steps

• Refine timeline

• Engage stakeholders

• Evaluate matters that should be considered

• Compile high-level milestones project plan

Assumptions: Costs of Full

Integration – Ongoing Operations

• Cost Impact

– Additional staff will be required to support operations

– Local staff

• Software maintenance and upgrade costs will need to be determined

• Data archiving costs will need to be determined for legacy systems

• Data migration costs and process will need to be determined

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Assumptions: Cost Savings of Full

Integration – Ongoing Operations

• Cost Savings

– Reductions in cost with condensed staffing models

– Elimination of maintenance contracts/license (i.e.

Lawson, Insights, Cerner, Kronos)

– Elimination of secondary auditor

– Elimination of tax services provided by third party

– Elimination of cost reporting provided by third party

– Elimination of managing multiple unique systems

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