Health cure is centralised IT

26 Jun 2003

For onlookers from the technology sector, the Brennan and Prospectus Reports into the health service have barely scratched the surface when it comes to reforming the system. One senior software company executive told it was a “no-brainer” that the implementation of money-saving technology would equal more beds

The dependence on paperwork prompted Accenture’s strategy manager Seamus Mulconry to describe it as “trying to manage a 21st century health service with 19th century technology”. As the crisis deepens, it is the administrators who have increasingly come under fire. Unfairly so, according to Mulconry: “They can only work with what they have. They don’t have access to the tools and technologies they need to do the job.”

The stark fact is that information technology in the health service has been grossly under-funded. “The annual budget is about 0.5pc of turnover,” says Dennis Doherty, director of The Health Boards Executive (HeBe). “That figure is very low. The standard would be around 2.5pc and in the US it can be as high as 3pc.”

Working at the coalface is Tony Carroll, director of ICT (information and communications technology) services at Eastern Health Shared Services (EHSS). “It has basically been under-funded, but we have to demonstrate that we can provide value for money in relation to the investments that are being made. Maybe this is where the Department of Finance gets tetchy. It sees the money going into a big black hole,” he says.

The lack of financial accountability comes down to the way the Department of Health has handled its ICT budget. Until recently, the 11 health boards, as well as the numerous voluntary hospitals and agencies, were pursuing their own agendas, drawing up a shopping list and going directly to the department for funding. Typically, the annual budget for ICT would be around €30m to be shared out among them. “There weren’t any drivers for agencies to work together,” says Carroll, “so it was about who shouts the loudest.”

The result has been a patchwork of disparate IT systems, with each board struggling to integrate them within its own organisation, let alone think about connecting them to somebody else’s. Worse still, in a culture that is more about competition than collaboration, health boards frequently adopt the same technologies without sharing the experience, “constantly reinventing the wheel” as one insider puts it.

The solution, which is touched on in the new reports, is shared services, a business concept finding more favour in the commercial world as well as with the revamped NHS (National Health Survey) in the UK. Within a large and disparate organisation, a shared services body operates with defined objectives and a budget, gaining greater leverage on everything from human resource strategies to the implementation of new technologies. The payback is saving money through greater efficiency — no more reinventing the wheel.

Having a shared services organisation for Ireland’s health service is not entirely out of the blue. The EHSS was set up in March 2000, largely to avoid triplicating back office duties when the original Eastern Health Board was split into three. “While we’re not formally described by the health service as a shared service pilot we are the only one operating,” says its chief officer, Valerie Judge.

“What the new reports support is a shared services approach to back office administration, the famous administrative burden of the health system. The different authority structures that have been talked about could facilitate shared services, but any new approach has to be reached through consensus and that’s difficult in any environment,” says Judge, acknowledging that changing the system’s working culture will be difficult.

“In a commercial organisation you have someone in charge and accountable. It’s time for the health service to evolve into a structure that would provide that kind of leadership,” she continues.

The new national plan is that the 11 boards should be rationalised to four, but Judge argues that the numbers are less important than the technology that connects them.

“The number of boards is less important than how they communicate with each other. Within the new health service executive, the back office administrative functions should be under one management. So countrywide there is a solid best in class, economy of scale approach,” she explains.

Judge says she has demonstrable benefits from the work of her organisation and the leverage it brings to everything from procurement of drugs to the rollout of technologies.

“At a time when there is a global shortage of a meningitis vaccine, for example, we saved €2m over what was paid last year. In changing the way we do business and through our adoption of technology, we reduced the cost base in the EHSS this year against 2002 by 15pc — a saving of €1.1m,” she recalls.

Oracle Ireland is one of the biggest IT suppliers to the health sector and despite enjoying the benefits of selling database and financial solutions to the different boards and agencies, the company is another advocate of the shared services approach, not least because it was one of Ireland’s first exponents of the practice.

“Look at our own organisation and the success we’ve had in Ireland with our own shared services division,” says Oracle sales and marketing director, Phil Codd. “We’ve amalgamated 32 countries’ operations from across Europe. Consolidation is key in our experience. Now, health boards, hospitals and agencies such as the medical payments boards are starting to look at how they can better manage their data.”

The rewards for consolidation are vast, according to Codd. In the UK, Oracle has been working with the NHS on pulling together its disparate human resource solutions that handle 1.2 million employees across a multitude of different hospitals and agencies. Oracle estimates that the process of consolidation has led to a cost savings of £400m sterling. Ireland, with its 80,000 health service employees, could also make significant savings.

Microsoft’s senior group manager, Harry Largey, is even more forthright about the money that the Irish health system could save. “If they were to make some commonality decisions on the implementation of IT infrastructure, we reckon they could make a 35pc cost saving,” he says. The commonality issues are, according to Largey, about having singular contracts for the provision of services and for the provision of technology, hardware or software.

“If they standardise decisions that could apply across the whole sector, this would allow the service to focus its entrepreneurial skills on delivering the local requirements,” he adds. “Rather than build everything as a variable, take some decisions centrally and then focus on specific local customer issues.”

The good news is that the process of centralisation and consolidation has already begun. There is now an agreement between HeBe and the Department of Health that all investment in the future should be in the context of enterprise-wide solutions.
“SAP financials and its human resource package, for example, had begun to be installed prior to the policy decision but was extended to become the enterprise approach,” says Doherty of HeBe. But it’s not simply an exercise in saving money through central purchasing, as he explains: “We see the advantages as being much bigger in terms of having a commonality right across the delivery system. This has been one of the greatest weaknesses to date.”

While Doherty is leading the drive to national consolidation he is reluctant to extrapolate short-term benefits. “We can’t deliver a modern health service if we continue to under-invest in ICT. Because we have under-invested we’re not even in a position to quantify what the advantages would be. Historically we have been spending so little that we need to catch up very quickly,” he says.

He does, however, cite an area such as e-procurement as ripe for a return on investment: “It would require significant capital, but the dividend is enormous with an ICT-enabled procurement approach. It doesn’t require a central organisation of any size to do anything other than the cataloguing, the negotiations and the contracting at a national level. Individual hospitals can then draw off that. It could be distributed to as many purchasing centres as you decide to have.”

Charlie McCreevy TD has already made it clear that the Department of Finance has not got an open chequebook for health reform. How do the interested parties expect to find the extra money for technology?

“For the Department of Health there is a delivery issue,” says Doherty. “It has to look at the best way it can go about catching up, be it investing up front or paying over a period of time and exploring strategic alliances and public private partnerships.”

Judge also acknowledges the scale of the challenge. “The new reports say there will be one national financial system, one national human resource approach, but the problem is how you implement them. The difficulty with any large multi-business user organisation is do you take out everything that’s there and go with the new or do you let what’s there work away and put in the new somewhere else?”

She goes on to make a convincing argument for the lessons learnt by the EHSS that it’s not just about technology. “We’ve learnt a huge amount in the past three years in terms of leveraging best value from ICT, but also on the business and cultural side on how to manage the back office in a very different way,” she says.

This is a touchy subject. Talk of health sector reform, particularly with new technologies, inevitably sparks speculation on job cuts. But it is not inevitable, argues Judge. “You automate the mundane and move people up the value chain. Use of electronic funds transfer and online reporting, for example, save time and free up people for more interesting tasks,” she adds.

The debate is just beginning. What is apparent to many, but by no means everyone, is the significant contribution that ICT can make to the reform of the health sector. Directors of its information systems are currently working on a national health information strategy with a view to publishing an action plan in August. Among many reports and unprecedented analysis, it could well prove to be the defining document.

By Ian Campbell