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•How to capture full
value
•from IT
•Presentation
•April, 2011
•CONFIDENTIAL AND PROPRIETARY
•Any use of this material without specific permission of McKinsey & Company is strictly
prohibited
•Agend
a
•Despite heavy investment IT, most
hospitals still face substantial issues and
low physician satisfaction
•However, well-managed IT can deliver major
productivity and quality improvements: Hear
about an inspiring real-life example
•The key is having the right tools and
processes to capture this value
•McKinsey&&Company
Company| 2
|1
•McKinsey
•Hospitals spend significant amounts on IT,
•in line with other industries
•ESTIMATES
•Percent
•Overall hospital budget
•13,300 hospitals = EUR 670 billion
•Non-IT2.9%
•cost
•IT spend for typical European hospitals
Percent
•40 45
•1
0
•1
0
•Depre
ciation1
•Infrastructure
cost
•PersonServices nel cost
•IT spend
EUR billions
•
•12.
5
•Clinica
l
applications2
•2
5
•HIS
2
•10
0
•Total
IT
spend
•8.3 1.9 1.9 2.4 4.9 19.4
•1 For hardware
•2 Including maintenance, customization, and license
fees
•SOURCE: Gartner; team analysis
•McKinsey & Company | 2
•However, IT projects often overrun cost and time projections and do not
•always capture full value
•Only 35% of projects are on budget1 ...
•Not
•> 50% over sure•6
budget 16
•15 - 50%
over budget
•3
5
•1
6
•Only 1 in 5 companies captures > 50%
of projected benefits
•On or
under
budget
•2
7
•< 15% over
budget
•... a mere 7% manage to stay on schedule1
•In
time
•7
•Realized staff
reduction
•Realized 50%
•or more of
projected benefits
•Measured business
benefits
30
70
100
21
79
100
100
18
82
•25 Slightly longer
•Much longer
•6
8
•1 Survey by Financial Executive International
•SOURCE: Financial Executive International; McKinsey McKinsey & Company | 3
•McKinsey & Company | 2
•Agend
a
•Despite heavy investment, most hospitals still
face substantial issues and low physician
satisfaction
•However, well-managed IT can deliver major
productivity and quality improvements: Hear
about an inspiring real-life example
•The key is having the right tools and processes
to capture this value
•McKinsey & Company | 4
CASE EXAMPLE: TORREVIEJA
•CASE
Some hospitals capture the value from IT as Hospital de
Torrevieja shows – hospital overview
• ▪ Medium-sized hospital (260 beds)
located at the east coast of Spain
•▪ Opened in October 2006
• ▪ In charge of service offered by the
Valencia regional government
• ▪ 10 surgeries spread in the area with
70 nurses plus other staff
• ▪ 105 primary care GPs with access
to the surgeries
•
•SOURCE: Hospital de Torreveija
•McKinsey & Company | 5
•CASE EXAMPLE: TORREVIEJA
•Some hospitals capture the value from IT as Hospital de
•Torrevieja shows – hospital overview
•Torrevieja Salud must maintain standards of excellence in two ways; on the grounds of
clinical quality, it has to be better than the rest, but in addition, it has to be sustainable
from the financial point of view.
•
•EUR 607 (payment per capita)
represents 72% over the
average price per capita in a
public hospital
EBIDTA
2010
: EUR
23.66 m
Sales
: EUR
145.81 m
: EUR
10.14 m
72%
•Source: Consellería de Sanidad
•
•Amortization + handback funds
("fondo de reversión")
±10%
over
turnover
•Asset finance + revolving fund
("fondo de maniobra")
±7% over
turnover
Own
resources
EBITDA/
sales
: 16.23%
•
•
•Expected profit margin over
turnover
EBITDA/own :
resources
233%
•55%
•5%
•Half of the
cost!!
•
•SOURCE: Hospital de Torreveija
•McKinsey & Company | 6
CASE EXAMPLE: TORREVIEJA
•CASE
New database provides better access to information
for staff and patients
• ▪ Complete electronic
medical record database
• ▪ Designed in-house and thus
very user friendly
•▪ Microsoft powered
• ▪ Interfaces easily to
other databases
•SOURCE: Hospital de Torreveija McKinsey & Company | 7
•CASE EXAMPLE: TORREVIEJA
•Florence – information access
•Example: transparency of waiting times
• ▪ Sending the word "Urgencias" to
25013 the user receives the SMS
indicating the waiting times in different
centers of primary care, up to eight,
and the waiting time of slight
emergencies in the hospital. Only one
emergency entrance
• ▪ This solution was awarded the prize
for the best idea of sanitary management by the most prestigious sanitary
newspaper in Spain
• ▪ The result is that we passed from
attending 19.5 - 3.5% of slight
emergencies in the hospital. Unique
rate in Spain
•SOURCE: Hospital de Torreveija McKinsey & Company | 9
•CASE EXAMPLE: TORREVIEJA
•Florence – clinical management
•
• ▪ Reducing clinical
variability and
ordering process
• ▪ Managing and
control demand
• ▪ Helping the
doctors to best
clinical and costefficient decisions
for surgical
proposals or
diagnostic tests
•SOURCE: Hospital de Torreveija McKinsey & Company | 1 0
•CASE EXAMPLE: TORREVIEJA
•Florence – clinical management: tangible results of 25% reduction in
•waiting list
•PATIENTS INCLUDED IN THE WAITING LIST FOR MAJOR SURGERY
•25
%
•SOURCE: Hospital de Torreveija
•McKinsey & Company | 1 1
•CASE EXAMPLE: TORREVIEJA
•Florence – healthcare portal "Portal de Salud"
•What does the portal offers
•▪ Administrative services
•Interactive tool to communicate with the
hospital. One more way to carry out tasks that
traditionally were carried out with admission
personnel, from his home, avoiding traveling
and waiting
•▪ My health information
•Available medical records integrated with
Florence all the information introduced by the
patient, is immediately available for the doctor,
responsible for his process
•The portal meets the laws of data protection,
uses protocols SSL to encode the
communications
•SOURCE: Hospital de Torreveija McKinsey & Company | 1 3
•▪ My clinical processes
•To interact with your doctor from home during
the monitoring of patients in chronic processes,
the system creates automatic alerts for the
patient (nonfulfillment of program) or for doctor
or nurse (health parameters deviation)
•CASE EXAMPLE: TORREVIEJA
•Florence – IT plan
•SOURCE: Hospital de Torreveija McKinsey & Company | 1 3
•CASE EXAMPLE: TORREVIEJA
•Florence – the implementation
•SOURCE: Hospital de Torreveija
•McKinsey & Company | 1 4
•Agend
a
•Despite heavy investment, most hospitals still
face substantial issues and low physician
satisfaction
•However, well-managed IT can deliver major
productivity and quality improvements
•The key is having the right tools and
processes to capture this value
•McKinsey & Company | 1 5
•With our toolbox, we can help you to address the value question at any
•point in the life cycle
•Hospital wide
operating model
design
•Leveraging the full
value opportunity?
•Securing HIS
solution
delivery
•Successful in
delivering value?
•Ensuring value
capture throughout the project life
cycle
•Progra
m
setup
•Valu
e
•Establish
high aspiration
•Program
setup and
planning
•SOURCE: McKinsey McKinsey & Company | 1 7
•Design
for value
based on
HIS
•standar
d
•Solution
design
and build
•Ensure
value
delivery
within
•1 year
•Manage
•for life cycle
value
•Implemen •Oper
-tation and -ation
rollout
•Tim
e
•What changes, if
any, are required?
•Solution
design and
build
•Implemen
tation and
rollout
•Questions for discussion
• ▪ Where do you see the main IT
impact (today and in the future)?
• ▪ Where are your main barriers to
capturing full value from IT?
• ▪ What do you need to overcome
those barriers?
•SOURCE: McKinsey McKinsey & Company | 1 7