North Highland's Fletcher Lance and Ricardo Martinex HIMSS 2015 presentation on "Maximizing Healthcare IT Investments"

1. Proprietary & Confidential1
The North Highland Company
Fletcher Lance, Managing Director
Ricardo Martinez, MD, FACEP, Chief Medical Officer
April 13, 2015
Maximizing Healthcare
IT Investments

2. Today’s Agenda
• Where we are Today
• ROI Challenges
• ROI Opportunities
• Putting it all Together
• Our Healthcare IT ROI Methodology

3. Proprietary & Confidential3
IMPLEMENT ELEVATE OPTIMIZE DIFFERENTIATE
Replace
Paper Folder
with Electronic
Make It The
New Norm
Rethink The
Ecosystem
Deploy More
Sophisticated
Methods
Version 1.0 Version 3.0
We are
here
Where are we on the Journey to Healthcare IT
ROI?
The only way to make sure spending is meaningful is to define and
measure ROI. Most organizations are in the early stage of this life cycle.

4. Proprietary & Confidential4
Why are we so concerned?
We have spent more on Healthcare IT
in the last 5 years than in the last
20 years
Many large providers received $200M+
from the Federal government for Meaningful Use (MU)
Federal government has spent
$25B+
on electronic health records for
physicians and hospitals
In the last 5 years…
As healthcare spending is sky rocketing, measuring IT ROI is critical

5. Proprietary & Confidential5
Why is it so difficult to measure?
Did we set organizational objectives before the flood of Meaningful Use dollars?
Did we understand business needs of the organization?
Were IT departments staffed for enormous growth in IT spend and expectations?
Did we prepare for the explosion, variety, or format of the data?
Did the Meaningful Use requirements generate ROI?
Data resides in multiple systems serving different needs

6. Proprietary & Confidential6
What do we need to overcome?
Volume of data in
systems
80% of EHR recorded
data is unstructured
Meaningful Use was not a
business or IT strategy
This era of healthcare IT
is Version 1
Data resides in multiple systems serving different needs in different formats
0
5
10
15
20
25
30
35
40
45
50
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Data in zettabytes (ZB)
Source: Oracle 2012

7. Proprietary & Confidential7
2 Petabytes = All U.S. academic research libraries
20PETABYTE
1 =
4 drawer filing cabinets
filled with text
MILLION
A sense of scale
Data–if not understood and analyzed properly–can pose challenges to
achieving the defined ROI

8. Proprietary & Confidential8
5%
63%“When data and stories
are used together, they
resonate with audiences
on both an intellectual
and emotional level.”
Jennifer L. Aaker
STATISTICS STORY
Accounting Census Data
Quality Scores
MORS
Predictive Analytics
Population Health
Physician Engagement
Patient Engagement
Meaningful data
Analysis of the meaningful data yields desired results

9. Proprietary & Confidential9
ROI considerations
• Consumerism
• Aging population
• Chronic Disease
• Shortage staff
Improved Patient Care and Clinical
Efficiency
Cost Reduction and Revenue
Enhancements
Administrative Efficiency Physician Engagement and Adoption
Key ROI considerations can be grouped under four quadrants

10. Proprietary & Confidential10
Physicians vs. Non-Physicians
Understanding physicians requires understanding how physicians think
Logical
Reasoning
Use of
Science
Evidence-
Based
Thinking
Deduction
Focus on
Observation
Detail
Oriented
Sherlock
Holmes

11. Proprietary & Confidential11
Implementation and IT
spend aligned to
business objectives
ROI metrics dashboard
Unified view of multiple
data sources
BI and Analytics to
improve patient care,
reduce costs and
Improve operations
Cloud based hosting
alternative
Healthcare IT will not achieve desired ROI without direct linkage to the
enterprise/ business goals and objectives
Enterprise Strategy
Enterprise Business
Requirements
Collaborative Business
and IT Planning
The Strategic Big Five
Patient safety
Operational efficiency
Clinical excellence and
waste reduction
Financial performance
Patient engagement and
satisfaction
The Big Five need
Definition
Clear organizational
objectives that support the
enterprise strategy
List of what we can afford
Specific business
requirements that can be co-
developed between business
and IT
Requirements need to be
measureable with specific
timeframes for delivery
Develop framework to
evaluate and prioritize
the business needs
and IT Investment
Create a total cost of
ownership model
(TCO)
Engage executives to
understand the
prioritization framework
and total cost of
ownership of options
Develop ROI metrics
with direct and indirect
benefits
Value
How do we put it all together?

12. Proprietary & Confidential12
Constructing Healthcare IT ROI
Strategy
Define
problem
and identify
objectives
Identify
alternatives
Develop an
analytic
framework
for cost/
benefits
Analyze
costs-TCO;
direct &
indirect
costs
Analyze
benefit-
direct/
indirect,
short/ long-
term

13. Proprietary & Confidential13
Healthcare IT ROI Methodology
Identify strategic
needs and objectives
of the organization
Develop the shared
vision and goals
between the business
and IT
Build a clear rationale
for change
Establish a shared
governance
framework between
business and IT
Prioritize business
objectives with
business
requirements
Define a ROI goal
and establish
metrics
Identify solution
alternatives
Build a TCO model
Understand the
clinical, operational,
financial and patient
data needs
Consider TCO
alternatives
Build a Business
Intelligence and
analytical framework
Integrate data sources
into BI and analytics
framework
Analyze ROI metrics,
revenue growth, cost
reductions
Measure clinical
improvements,
operational
efficiencies, waste
reductions and
patient safety
Track customer
satisfaction and
patient engagement
and health outcomes
Analyze trends and
forecast
Create analytics
dashboard for ROI
metrics
Create reports
Monitor costs, direct
and indirect benefits
Identify
objectives
Evaluate
alternatives
Develop
analytic
framework
Create
Dashboards
Analyze
data
Envision Execute Enhance
NH ROI methodology helps ensure desired results for a healthcare
organization or, if not, allows for a quick course change

14. Proprietary & Confidential14
Healthcare IT ROI Dashboard–a Start
29%
38%
24%
9%
Ongoing Costs
SW Maint
HW Maint
Staff
Other
-2,000,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
1 2 3 4 5
Cumulative Cost
Cumulative Benefit
Net Position
Summary Financial Results
Steady-State Annual Benefit: $2,102,139
Steady-State Annual Costs: $294,420 │Initial Costs: $1,519,175
Net Present Value (5 years @ 5%): $10,083,894
Benefit and Cost Contribution
Cumulative Financial Effect
51%
29%
17%
3%
Initial Costs
Software
Hardware
Revenues
Other
28%
10%
9%
2%
4%
47%
Benefits
Coding
Personnel
Transcription
Supplies
Capacity
Resources

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