A Profitability and Cost Management Strategy for Healthcare Providers

A Profitability and Cost Management Strategy for
Healthcare Providers

March 2013

Our Speakers

William Bercik, Director of Healthcare, Oracle

William has over 25 years’ experience in the healthcare industry
and specialized in enterprise applications and technology solutions
since 1992. Mr. Bercik provides specialist product expertise and
develops and executes solution strategies for the healthcare
market. Prior to joining Oracle, Mr. Bercik was a former Chief
Financial Officer of a 350 bed acute care hospital. .

Tony Coffman, Director Oracle EPM, Perficient

Tony has over 7 years of ERP/BI experience in addition to his 9+
years of Oracle EPM expertise within Healthcare, Oil & Gas and
Manufacturing. Tony’s areas of focus are in Program
Management/Strategy, Hyperion Planning, Hyperion
HFM, Hyperion Essbase/BI, and Master Data Management.

2

About Perficient

Perficient is a leading information technology consulting firm serving clients
throughout North America.

We help clients implement business-driven technology solutions that integrate
business processes, improve worker productivity, increase customer loyalty and create
a more agile enterprise to better respond to new business opportunities.

3

Perficient Profile

• Founded in 1997

• Public, NASDAQ: PRFT

• 2012 revenue of $327 million

• Major market locations throughout North America
• Atlanta, Austin, Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Dallas, Denver, Detroit, Fairfax,
Houston, Indianapolis, Los Angeles, Minneapolis, New Orleans, Philadelphia, San Francisco, Northern
California, Southern California, St. Louis and Toronto

• Global delivery centers in China, Europe and India

• ~2,000 colleagues

• Dedicated solution practices

• ~85% repeat business rate

• Alliance partnerships with major technology vendors

• Multiple vendor/industry technology and growth awards

4

Market Position

Key Differentiators

As compared to local boutiques:
Project size, Breadth of Expertise

• Bring solutions expertise & capital
• Deep technology expertise
• Disciplined project execution
• Scale to handle large projects

As compared to large integrators:
• Highly experienced consultants
• Local and national delivery model
Depth of Expertise, Efficiency & Value, • Collaborative, not take-over
Client Importance
• Better value

5

Our Solutions Expertise

Business Solutions Technology Solutions
• Business Intelligence • Business Integration/SOA
• Business Process Management • Cloud Services
• Customer Experience and CRM • Commerce
• Enterprise Performance Management • Content Management
• Enterprise Resource Planning • Custom Application Development
• Experience Design (XD) • Education
• Management Consulting • Information Management
• Mobile Platforms
• Platform Integration
• Portal & Social

6

Healthcare Solutions

As a leading provider of services in the healthcare industry, Perficient has delivered both strategic consulting and advanced technology solutions
to many of the top provider, payor, life science and government healthcare organizations.

Perficient Technology Solutions
• Top tier partners of IBM, Microsoft and Oracle
• Healthcare Analytics / Business Intelligence
• Enterprise Performance Management solutions
• Master Data Management solutions
• Portal design and development
• Multi-Sourcing solutions

Perficient Consulting Services
• Business value assessment/financial sustainability modeling
• Requirements analysis/product selection
• Architecture planning and platform selection
• Custom solution design and development
• Implementation services
• Usability testing and user-centered design
• Consumer readiness assessments (PEMM)
• ICD-10/5010 conversion
• Technology enabled process improvement
• Business integration
• Process/workflow design
• Enterprise Application Integration (EAI)

7

Oracle-Perficient Partnership

8

Oracle EPM

11+ Year Relationship
Working closely with Oracle product management to provide feedback for
software enhancements

Oracle Platinum Partner/Authorized Reseller
Certified on the latest Oracle product platforms and technologies, as well
as implementation and migration best practices.

Oracle Certified Education Partner
Certified to deliver the official Oracle course curriculum to customers via
onsite training classes. Perficient owns and operates one of the national
Oracle training facilities listed on the Oracle website

Oracle BI/EPM Specialized Partner
Certified by Oracle to deliver and sell the Oracle BI and EPM applications.

9

Select Healthcare Clients

10

Case Study 1

CHALLENGE

• Budget cycle lasting 6-8 months

• Consolidated financial statements
required 24-48 hrs
• Ranked #6 Pediatric Hospital by USNWR
• Operating target negotiations began after
• 1.7B Revenue, 6500+ Employees the budget was finalized
• Leader in Neonatology, Pediatric
Cardiology, Oncology EPM SOLUTION

• “Integrated Delivery System” includes: • Phase I – Core Planning application for
•Texas Children’s Health Plan IDS, replacING Peoplesoft EPM / Excel.
•Texas Children’s Pediatric Associates Implemented top-down revenue, margin
•Texas Children’s Health Centers targets. Deployed enterprise-wide,
•Texas Children’s Women’s Specialists
driver-based budgeting for revenue,
salary, opex. Calendar year forecast
updated monthly and self-service
management reporting.

• Phase II – Planning application for TCPA.
Driver-based revenue model.

11

Case Study 1

EFFICIENCY
METRIC BEFORE AFTER
GAINS
Variance Budget vs. Target First Pass First Pass 77%
(First Pass) $90M $20M

Prep Time (Operating Targets) 12 Hrs 2 Hrs 83%

Consolidate Data 24 Hrs 15 Min 99%

Budget Season 8 Months 4 Months 50%

Cost Avoidance (3 Staff) $225K $0 100%

12

Case Study 2

CHALLENGE
• Multiple GL systems including Oracle EBS, Lawson,
Yardi, MAS 200, McKesson, Peachtree, and Great
Plains. Meditech EMR.

• Offline databases and XL models for IC elims,
account reconciliation, and ETL

• Hyperion Enterprise reaching end-of-life
Christus Health is a Catholic, not-for-profit
health system comprised of almost 350
SOLUTION
services and facilities including more than • Replace Enterprise/Ledgerlink with Hyperion
50 hospitals and long-term care facilities.
• Financial Management and Financial Data Quality
Ranked among the top ten Catholic health Management
systems in the United States by size, the
• Created financial reporting packages/SV
Christus Health system in North America
includes facilities in eight US states and
Mexico. BENEFITS
• Common, rationalized financial master data

• Automated business logic and performance metrics
via HFM rules

• Robust web-based architecture for reporting and
analysis

13

Transforming Healthcare
With Oracle’s Decision
Support Solution

WILLIAM BERCIK
Director, Healthcare North America

14 Copyright © 2012, Oracle and/or its affiliates. All rights reserved.

Safe Harbor Statement

The following is intended to outline our general
product direction. It is intended for information
purposes only, and may not be incorporated into any
contract. It is not a commitment to deliver any
material, code, or functionality, and should not be
relied upon in making purchasing decisions.
The development, release, and timing of any
features or functionality described for Oracle’s
products remains at the sole discretion of Oracle.


Performance Management Excellence:
The Next Competitive Edge
Competitive
Advantage

Link strategies to plans and
execution,
EPM
Monitor financial and Historical, Current and Forward
operational results against
goals, and apply analytics to
MANAGEMENT EXCELLENCE
Drive enterprise-wide
performance
improvement.

Transactional Systems
Historical and Current Data

OPERATIONAL EXCELLENCE

Time


Defining a Business Decision Support System
• A fully integrated business and clinical repository
• Gives executives and managers the tools to:
• control cost
• increase quality
• improve productivity
• achieve successful clinical outcomes
• manage change
• plan strategically in an increasingly competitive
and volatile health care environment

Business Decision Support Systems Clinical Decision Support Systems

• Retrospective and prospective
• Real-time access
(planning) view
EDW • Care process and results
• Merges clinical and financial
orientation
information


Need for Profitability & Cost Management in Healthcare


DSS is Key to Enterprise Management Reporting

Executive Quality Physician/Clinical
End Users Financial Managed Care
Team Management Management
Information Information
Information Information Information

Value Delivered Views Views Views Views Views

 Presentation, Personalization Enterprise Portal
(Provides a single, secure and integrated point
 Access / Authorization of access to reports, content, and applications)

Online Analytical Processing Business Intelligence
 Pre-Defined Data Cubes (Provides reporting and analytic capabilities
 Pre-Defined Reporting across varying levels of granularity and timeliness
(e.g., historical, operational, predictive and what-if analysis)

 Data Consolidation
Data Aggregation and Storage
 Historical data (Comprises the data repository of historical details
and summary transaction data)

 Data Extraction
Data Integration
 Data Cleansing (Comprises the processing engine to collect, cleanse,
 Data Loading transform, and aggregate data from different sources)

 Data Sources, Real time data Data Acquisition Revenue Decision
(Comprises internal, external, reference, CIS ERP
 Certain operational reports Cycle Support
and shared sources of data)

 Hardware, Software
 Network Infrastructure
(Comprises the infrastructure platform
 Operations to host, maintain and operate the BI solution)


Decision Support Systems Help Answer Critical Questions
Strategy  In what services do I make money? Lose money? Why?
Development
 How do my hospitals services compare across the health system?
 How can I optimize service location? Should I consolidate services?

Capital  What services should I invest capital? What financial return can I expect?
Allocation  What incremental ancillary capacity will be affected by additional capital purchases?

Revenue Cycle
Management  What impact to my bottom line will a rate change create? Can I afford to sign this managed care
contract?
 What types, how much and where are my denials originating?
 Are my payors paying correctly? Timely?
 Can I compare my payors profitability and score them?
 Am I charging for all the services I am performing?

Operations
 What is my profitability across service lines by hospital?
Improvement
 Where should I focus my cost reduction initiatives? How do I track success?
 Why are costs for X service increasing, is it labor, supplies or physician practices? How can we
decrease these costs?
 Are patient care processes following protocols? Why not? Is it physician or patient complexity driven?


Hyperion Financial Decision Support Solution
Decision Support Analytics tightly integrates cost accounting, contract modeling, patient analytics and
performance management through budgeting, flexible variance reporting and productivity management to
support data driven decision making and advanced decision tools for forecasting and planning.

Decision Support Analytics

Cost
Accounting

Flex Variance Forecasting /
Contract
Reporting/ Modeling /
Productivity Planning Modeling

Patient
Analytics


Key Product Capabilities for Cost Accounting
Function
Hyperion Financial Decision Support Product will include all of the basic and industry standard capabilities seen in other
products along with a series of key differentiators that will take the tool to the next level and provide hospitals with a
competitive advantage

Cost Accounting Differentiator
 Integration of cost accounting with patient
analytics, budgeting, and contract modeling
ties clinical quality and performance  Ability to use documented activities or supplies for
management costing purposes even if they are not charged to the
 Cost data is critical for planning , forecasting patient
and monitoring function needed to be Industry Standard  Time based standards built from clinical system
competitive data capture, e.g., average time per Radiology
exam, Recovery Room hours per patient
 Actual hours attributed to costing activities through
the clinical system interface
 Unlimited sub categories for costing
 Automated reconciliation between GL amounts,
 Flexibility to move dollars across cost centers or inventory, and charge based cost items, e.g.,
accounts
Basic implants, pacemakers, etc.
 Automated integration of source system data, thus  Ability to link capital items to specific procedures
eliminating the need for extracts and spread non-clinical items in a different way
 Ability to define Other Operating Revenue as (e.g., evenly)
contra-expenses and link to specific account(s) to  Predefined costing structures that can be easily
 Default RVUs using charge, even, or sum of offset
other cost types as the RVU customized but reduce implementation and
 Process alerts to identify new cost centers, maintenance efforts
 Ability to load existing RVUs accounts, job codes  Ability to cost labor data based on day of week
 Fixed & variable classifications  Automated update of product listing from the  Change RVU values mid-year for actual costs
 Job Code detail for labor charge master with an alert that costing activities
 Indirect allocation process need to occur
 Costs associated with chargeable activity

Core Functions Advanced Functions
Designed with newer tools and capabilities


Key Product Capabilities for Patient Analytics

Patient Analytics
Differentiator
 Integrates cost accounting, finance,
contract modeling and planning
 Provides the core set of demographic,
coding, utilization, outcomes, billing and
collection data Industry Standard
 Highly flexible and easy to use reporting tools
coupled with advanced BI tools
 Integration of physician and other provider data
 Drillable Service Line Profit and Loss, DRG/MDC, including: charges, cost and outcomes
Basic Payor and Physician Reports  Physician contribution, ACO performance and care
 Summarization of department cost routine function continuum quality and cost
(i.e. Lab, Rad, OR) for cross facility comparisons  Patient & Physician Level Activity Based P & L
and benchmarking  Geographic representations and visualizations
 Readmission analysis and reporting (service maps)
 Quality and outcomes reporting  Integration with clinical data warehouse, data
 Integration of modeled/expected revenue, mining and automated data quality check (i.e.
payment experience and other sources of revenue coding errors, lost charges, billing edits)
(i.e. Medicare settlements) for net revenue  Automated reporting of clinical quality measures
 Cost analysis by DRG, Payor and Physicians including data mining, manual data fields and
throughout the revenue cycle
 Reporting by clinical population groups, tracking
 Integrated reconciliation reports between patient
demographic data and services provided  System driven alerts to indicate unmapped data for
data, cost accounting and GL
 Routine demographic, coding and billing data standard and customized (user specific) grouping
 Clinical grouping and event assignment based on tables for all fields
fields
routine billing and coding data  Integrated coding and grouping tools
 User defined population groups based on all
 Extension to encounter record (user defined fields)
data feeds
with description and grouping
 Standard and user specific grouping tables for
all fields (i.e. MS DRG, Payor/Plan Codes,
Age, Zip Codes, etc.



Key Product Capabilities for Budgeting and Flexible
Variance Analysis Function

Budgeting and Flexible Variance Analysis
 Integration of cost accounting with
patient analytics, and contract modeling
enhances and informs the planning and Differentiator
budgeting process
 Budgeting and Flexible Variance
Analysis are critical parts of the planning  Automated direct care staffing requirements by day
and monitoring of performance and key of week, skill level and activity projections
initiatives  Smart modeling that creates scenarios to maximize
Industry Standard revenue, cost and productivity
 Automated modeling of cases based on best
practice rather than average for all patients in that
sector (e.g., service line)
 Ability to generate pricing strategies to maximize
 Patient centered revenue, variable cost and net revenue and minimize overall price increases
chargeable volume projections integrated with GL
 Trend analyses that compares modeled scenarios
and labor budgets
Basic to prior year actual
 Multi-year planning with an ability to apply  Models summarized to facilitate comparison to
changes from a point going forward or only to a external benchmarks
particular year
 Supply flex variance down to the account or product
 Flexed variable job codes and accounts based on level
 Comparison of budget to actual projected activity levels  Labor flex variance at the job code level with
 Flex based on budgeted time and actual  Integrated reporting that combines product level breakdowns by day of week or shift
volumes detail impact on accounts or job codes  Rolling twelve months analyses
 Separate worked time from non-worked time  Customizable rollup structures to support patient
such as vacation, sick and holiday level forecasting
 Flex variance by various breakdowns of
variable cost categories
 Service line variance against budget



Key Product Capabilities for Productivity Management
Function
Productivity Management
 Integration of clinical activities, utilization,
cost and outcomes ties staffing decisions
to clinical out comes and service cost Differentiator
 Standard cost and expected time services
(RVUs) built for cost accounting can be
leveraged to understand labor resource
 Productivity by shift, day of week, resource level
demands  Actual time spent by resource accumulated from
Industry Standard clinical systems and integrated into decision support
productivity tool
 Activity based productivity not limited to chargeable
items
 Productivity statistics automatically imported from
billing, clinical, departmental or any combination,
 Productivity by subsets of direct patient care job not limited to what is used for costing
code groupings (e.g., RN vs. Aide)
 Charge-based productivity analyses
Basic  Integration of external agency time
 Ability to exclude earning codes from productive
time, e.g., orientation
 Capability to monitor productivity for non-patient
 Comparison of budget to actual care or chargeable areas, e.g., laundry, food
 Flex based on budgeted time and actual service, etc.
volumes
 Separate worked time from non-worked time
such as vacation, sick and holiday



Enterprise Performance Management

COMMON REPORTING AND INTERACTION

Strategy Management Planning & Forecasting
• Long Range Planning • Net Revenue
• Operations and Administrative Expense
Management

Financial & Operational BI Profitability and Cost
• Market Margin Analysis Management
• Payer Margin Analysis • Service Level Margins
• Labor Productivity • Patient Margins
• Encounter Margins

ORACLE BUSINESS INTELLIGENCE ENTERPRISE EDITION
Data quality and consistent dimensions

Data Supply Patient PeopleSoft Files/Excel/XML Business
Warehouse Chain Accounting Process


Oracle’s Enterprise Performance Management
Sets a new bar in cost accounting, modeling & planning


Oracle Hyperion Profitability & Cost Mgmt
What is HPCM?

HPCM enhances business performance by using drivers to create a better
understanding of cost and profitability, empowers users with visibility and flexibility,
and improves decision making.


Oracle Healthcare Analytics & DSS Overview
System Architecture
Security App Exchange
Clinical
Systems Patient Cohort
Analytics
Clinical
Systems Operating Room Reporting
(EMR 1) Essbase Analytics
Tools Ad Hoc
Query
Exec
Oracle
Clinical Oracle Healthcare Smart View
Extract Interface Healthcare
Systems
Analytics Data Warehouse Enterprise
(EMR 2) Tables
Data Integration Foundation Data Marts Performance Crystal Ball
Management Admin
Workspace
Clinical Planning
Systems
(EMR 3) Cost Accounting OLAP
Profitability
Data Mining
Financial Common Reference Data and Integration Services Clinician

Systems OLAP Cubes
Predictive
Analytics
Custom Applications
Administrative
Systems Optimization Researcher

Partner Applications
Research
Systems

Enterprise Healthcare
Data Integration Data Warehouse Model Financial, Clinical Analytics & Reporting

Oracle Data Integrator Oracle Database and Essbase Server EPM Shared Services Oracle Business Intelligence Foundation


Potential Hospital Cost flow
Application of Services to Patient Episodes


Benefits of HPCM
Business User-Driven Profitability Modeling Application


Case Study: University of Pittsburgh Medical Centers

Company Overview Benefits & Value Achieved

 UPMC is comprised of a network of 20 Hospitals,  Improve assignment of costs based on the actual
International Specialty Hospitals and an Insurance drivers of expenses
division with over $10B in revenue  Determine a better understanding of the profitability
 They are the #1 employer in Western PA with of departments, patients and other relevant
headquarters in Pittsburgh dimensions (hospital, physician, etc)
 Need to perform analysis by hospital department and  Automated generation of Customer and Product
service and to drill down to individual patient cost Profitability data collection and reports
detail  Support of standardized hospital costing
 Additionally, analysis needed to support standardized
 Provided flexible model structure to allow for growth
hospital costing and provide underlying cost detail for
other payer-provider initiatives


REPORTING AND ANALYSIS


Start the Analysis - Financial Summaries


Reporting and Analysis
on Encounter Margin Models

Market Margin
Analysis

• Volumes
• Acuity

Encounter/
Service
Profit Data

• Gross Revenue
• Net Revenue
• Direct Costs
• Indirect Costs
• Profit

Physician Margin
Analysis


Balance Scorecard – KPI Alerts


Margin by Department
 By Encounter


Drill to Encounter


Metrics by Payer


Rev, Costs, and Patient Days by Physician


Encounter Revenue, Cost, & Margin by Payer


Patient P&L


Visibility and Traceability into Cost Sources


TONY COFFMAN
Tony.coffman@perficient.com Work: 713.554.4021

WILLIAM BERCIK
William.bercik@oracle.com Cell: 404.353.6851


A Profitability and Cost Management Strategy for Healthcare Providers

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