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Network Information Services
Network Information Services

Rick Krohn
Information is power, and in healthcare information is a lightning rod of integration efforts. Ownership and control of information, user friendly information products, and information linkages among providers are absolutely vital to achieve productivity, cost, and quality goals, particularly under managed care. But due to the insular nature of physician (and hospital) systems, many of which serve primarily as billing systems, network planners face a formidable challenge in developing a network information services functionality. The fragmentation of medical data, historical lack of effective communications among providers, and the permeation of proprietary and legacy information systems, all conspire to frustrate the creation of a functional network information services capability. The challenge is to get ownership of provider data, integrate (and consolidate) information system operations, create a platform for provider information sharing and communications, and to use data as a contracting, risk management, medical management, and operations management tool.

The Information Systems Task Force

The process by which these goals are achieved proceeds from the creation of an inclusive network information systems task force whose goal is to identify issues and needs, assess current infrastructure, and select an appropriate method of achieving the short and long information services objectives of the network. The task force determines if the network will buy, build, or lease information system functionality, based on an evaluation of existing information resources and an inventory of current infrastructure. The network task force must also consider information system functionality in terms of present and prospective customer demand. This assessment of capabilities and requirements forms the basis of the information system development process.

To ensure that the needs of the network membership will be met, it is important that the network information system selection process be an inclusive process, representing the interests of the network Board, operations staff and the end users - the network physicians. The network information systems task force creates the forum for this exchange of ideas and the crafting of system requirements. The task force must bring into alignment a number of elements that determine the optimal system solution. System capabilities must be matched to system hardware configuration, which must be matched to capital limitations, etc. By choosing the right people and establishing a process defined by measurable, time sensitive results, the task force can navigate the labyrinth of information system issues and products to implement a product that meets the criteria of all network constituencies - the physicians, the network operations staff, and the network Board.

Assessing Current Information Management Capabilities and Requirements

There are a number of issues to consider in determining the information needs of the network. First, what types of information are required? Risk contracting will require at a minimum utiliza-tion and financial data. Medical management programs will require consolidated, user-friendly clinical information. Second, how will the network acquire this system? It can develop informa-tion capabilities internally, or purchase/lease from a vendor, or access through a partnership with another entity. Third, what system architecture will best serve the network members? The net-work must determine how information will be aggregated and disseminated among its' entire membership. Fourth, how will the system process information derived from diverse sources in di-verse forms, including physician offices and health care facilities. The network must be able to translate data derived from commercial billing and practice management systems, as well as legacy hospital and payer systems, into a commonly accessible, user friendly information repository. Fi-nally, how well will the system be positioned to accept upgrades and incremental replacement of components as healthcare information technology unfolds?

Health Care Information System Functions and Features

The progressive health care information system has evolved beyond billing and utilization management systems to incorporate an ever-expanding array of business and clinical information tools. The physician network must replicate these capabilities, not only to manage cost, risk, and utilization, but also to support network goals of quality and operating efficiencies. Typically, advanced health care network information systems include the following components.

Patient Financial and Administrative Systems - this includes patient scheduling, tracking, and referral management capabilities, matched with patient billing, collections, and accounts receivable functions. Data from this component flows into medical management and clinical data storage databases.

Decision Support Systems - these are of two types: financial and clinical decision support. Financial decision support systems are used to analyze costs at the patient, procedure, contract, pro-vider, and facility levels. They are also used to create budgetary analyses, and to formulate reimbursement for downstream payments. Clinical decision support systems are used to establish and measure the effectiveness of clinical protocols and guidelines, develop outcomes measures, and profile the clinical performance of individual providers.

Financial Management Systems - these are common accounting and financial analysis systems, including general accounting, cost accounting, payroll, fixed assets, and budgeting.

Managed Care Systems - these are systems that monitor managed care contracting arrangements, including capitation, case rates, carve outs, discounted fee, etc. The systems are used to track costs, utilization, and quality.

Practice Management Systems - these systems provide a variety of clinical and administrative support functions for physician practices, ranging from comprehensive practice management to retail services such as billing and utilization management.

Medical Management Systems - these systems streamline the information processing tasks of providers, and provide clinical diagnostic and treatment support through development of critical paths, protocols and guidelines, outcomes measures, demand and disease management programs, and patient satisfaction. (1)

Clearly, the capabilities of the network information system should be a reflection of network objectives, contracting arrangements, products and services, and evolving market requirements. The network task force must evaluate the practical application of information system features in rela-tion to the identified needs of the network customer base. Among the criteria to examine in evaluating system requirements are the following.

Eligibility and enrollment. The network must be able to independently track patient eligibility and payer enrollment data. Particularly for risk contracting purposes, the network must be able to audit payer member covered lives and confirm retro adjustments, determine applicable deductibles and co-pays, and monitor risk pool performance. The individual covered services of each contract must also be matched to each plan member, to determine out-of-plan patient accountability.

Claims processing and claims adjudication. Early to mid stage managed care markets call for claims processing systems to track accounts payable, accounts receivable, eligibility discrepancies, bad debt, and collections. Advanced practice management systems allow physician organizations to manage both fee-for-service claims processing and capitation reporting.

Mixed Contract Management. The provider must have the ability to maintain contract databases, calculate reimbursement, monitor contract performance, implement financial terms, and forecast the profitability of new contracts. Once contracts are negotiated, automating terms for withholds, risk sharing, IBNR reporting are important for managing the overall profitability for each contract. Capitation involves managing referrals and authorizations, tracking and paying "out-of-network" claims, reimbursing subcontractors, and monitoring provider performance. The network must be able to accurately assess and manage risk associated with age/gender/acuity factors, and implement corrective measures when clinical or operating inefficiencies interfere with the profit-ability of network contracts.

Medical Management. The network must have the ability to credential and report on the practice characteristics of each member. The network must have the ability to develop and report variable and fixed costs at the provider and case level. These costs must then be meshed with resource utilization data in order for the network to be able to measure profitability, establish pricing, and manage productivity. These processes must do more than simply track utilization -they must also serve an entire range of disciplines, including case management, demand and disease management, outcomes management, personnel management (including Credentialing), patient satisfaction, clinical reengineering, wellness and preventive programs.

Financial and Clinical Report Generating Component. The organization's information system must generate standardized management information reports concerning referrals, patient encounter rates, peer performance and clinical efficiency, profitability of capitated contracts, and cost ac-counting system reports. An accounting and financial management component consistent with any business must be introduced. Standardized clinical management reports document the pro-ductivity of physicians and provide the basis for performance-based compensation.

Internet/Intranet Communications Component. The Internet is being employed in the health in-dustry to serve as an information highway among practitioners and health care consumers, but is also being used to create proprietary information networks between providers through private Intranets and more accessible Extranets. Extranets, employing the Wide Area Network technology, can be used to link health care providers and consumers. Health care organizations are also using the Internet to create health information Web sites, patient education programs, telemedicine, and professional information exchanges. The potential uses of this "virtual integration" technology in health care are only now beginning to be explored. Evolving information technologies are creating opportunities to establish lower cost, wide access provider organizations. Providers are increasingly exploring the power of the Internet to retrieve professional resources that provide information on issues related to healthcare restructuring, clinical excellence and provider integration. Joining forces with other related organizations or vendors in a "virtual partnership" can help the network stand out as a sophisticated leader within the medical community region while also fulfilling important functions such as customer service, community, patient and media relations, and enhanced communication with employers, physicians and patients.

Human Resources. It is absolutely critical to recruit and empower experienced management and staff resources. The challenge of introducing network information capabilities is an ambitious one best left to seasoned professionals (2)

The Information Systems Selection Process

Having completed an assessment of current capabilities and identified needs, the network in-formation system task force must proceed to a structured information system selection process. The process can be intimidating - there are literally hundreds of products to choose from - most with a baseline of shared capabilities, each claiming to have distinctive features that make their product superior. It is the responsibility of the network information system task force to narrow the search and review the qualifications of a targeted pool of hardware and software vendors. It may be prudent to employ qualified consultants to facilitate the process to identify needs, prepare the RFI, evaluate vendors, and assist in contract negotiations.

Inevitably, the assessment of current hardware and software capabilities will reveal a multitude of system compatibility and interface issues, since many existing systems are proprietary, inflexi-ble, or simply stale technology. The winning system solution must be one that bridges these gaps in network connectivity, by introducing a network wide interface solution, or establishing an af-fordable system wide computing platform, or providing access to a fully developed, market tested network information management product. Because today' s open architecture allows for the selection of hardware and software from different vendors to satisfy specific needs, it is probably undesirable to commit to a single vendor. A sample timeframe for the information system selection process might be as follows:

Months 1-3: form task force, develop requirement lists, conduct assessment of existing information resources, conduct inventory of existing information systems.

Months 3-4: Prepare request for proposal (RFP), pre qualify vendors, develop target vendor list.

Month 5: Distribute RFI; Collate responses.

Month 6-7: Select finalists and conduct due diligence.

Month 8: Conduct final product analysis and select vendor.

Month 9: Negotiate and finalize contract.

The task force should meet weekly throughout the selection process. At each meeting, it should review progress on short-term goals, determine whether target dates are being met, and review the steps that remain. Task force members may have different "wish lists" of features, which can serve as checklists for scoring each vendor' s system. The process is a resource intensive one, par-ticularly during the due diligence phase when task force members may be asked to travel to multi-ple out of town locations to " kick the tires" of the finalists. Task force members should be chosen with this consideration in mind.

Success Factors of Information Systems Development

This chapter has outlined the characteristics and selection process of network information systems. To take the discussion one step further, there are several criteria that contribute to the success of the network information system, during the planning, implementation, and operational phases of information system development.

Clearly Defined, Measurable Goals

The network information system development process must proceed from common goals and expectations, clearly articulated responsibilities, and must be monitored to ensure that checkpoints are met and tasks are occurring on time and on target.

Collaborative Leadership

The network information systems task force must be a representative body, inclusive of the system management, system operators, and system end users. To this end their should be representation by the network Board, network senior management, network information systems operations staff resources (internal or leased), and physician/provider customers. By involving all constituencies, the network will gain rapid recognition of the value it is delivering through information services.

Product Relevance

The network information systems development process must unfold with a constant eye towards current and emergent customer needs. The information product of the network should support the mission and goals of the network, become a key strategic resource, and evolve into a marquee capability of the organization. It must also answer a market need and contribute to the clinical and operating efficiency of the network membership.

Customer Focus

The information system should be user friendly and responsive to end user suggestions for im-provement. Customer education, training, and satisfaction surveys are key components of maintaining this linkage between system operators and system users.

CQI (Continuous Quality Improvement)

The network information system development process is not turnkey - it is ongoing. The approach should emphasize the relationship between reengineering of operational processes and supporting information systems. New technologies, new functional accountabilities, and new clinical activities should be reflected in the CQI program.(3)

The Community Health Information Network (CHIN)

CHINs (Community Health Information Networks) are perhaps the highest aspiration of a truly comprehensive health care information system, linking physicians, hospitals, payers, and government in a non-competitive, seamless information network sharing clinical, administrative, financial, and educational information. CHIN networks are of two varieties; enterprise networks which link the elements of a single organization; and community networks, which link independent organizations within a common geographic region. In it's fullest realization, the CHIN demonstrates the following characteristics:

The ability to share clinical, financial, and administrative information with seamless connectivity;

The open, non exclusive participation of all elements of the health care continuum;

The ability to accumulate and house data in the public trust;

A separate organization to conduct the CHIN functionalities.

The ideal of the CHIN has yet to be realized on a national scale, but the concept holds promise for regional physician networks and their alliance partners. Physician networks can establish a CHIN that broad-based connectivity to clinical, financial, and administrative transactions, as well as communications connectivity among providers. This type of CHIN framework can be established between the physician network, its' affiliates and alliance partners, and contractual partners. (4).

The flood of new information technologies and information sharing capabilities being tailored specifically to the Internet offer a wealth of new networking opportunities to physicians. Virtual networks, thin client networks, information clearinghouses, professional and consumer health in-formation, wireless access, are all features of the emerging health care information paradigm. Quicker transmission, ease of use, and greater accessibility of Internet based applications are pro-viding the foundation for an explosion of physician integration and the next generation of physician information networking.

1. DeLuca, Joseph, "The CEO's Guide to Health Care Information Systems", American Hospital Publishing, American Hospital Association, 1996, pp.9-22.
2. Goldstein, Douglas, and Krohn, Richard, "Defining Information Requirements for Advanced Physician Organizations, Capitation and Medical Practice, Aspen Publishers, Volume 3, Number 10, April 1997, Gaithersburg, MD, pp. 6-7.
3. DeLuca, Joseph, . The CEO's Guide to Health Care Information Systems", American Hospital Publishing, American Hospital Association, 1996, pp.84-85.
4. Garets, David, "Health Care Information and Technology Management", Managing Integration and Operations, Thompson Publishing, NY, NY, 1996, Tab 1133, pp.78-79.


Richard Krohn is a member and contributor of HealthBond. View his expert page on HealthBond.

Richard Krohn is President of HealthSense. Krohn is a widely-published managed care expert as well as a dynamic speaker providing in-depth, practical and timely information on topics such as managed care contracting, strategic positioning for provider organizations, building new provider alliances, reengineering practice operations, developing market driven products, and creating equitable physician compensation plans.

November 16, 2000

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