CASE STUDY: Strategic IS Planning for the Hospital ED

Founded in 1900, Newcastle Hospital today is a 375-bed, not-for-profit community hospital that serves more than two hundred thousand residents of Newcastle County, New York. The hospital is approximately thirty miles from midtown Manhattan. It provides a full range of primary and secondary medical and surgical services and is an affiliate of one of the large New York City hospital systems for tertiary referrals and select residency programs. Newcastle Hospital has an independent governing body with 25 trustees, 604 active physicians, and 1,121 full-time equivalent (FTE) staff members. Revenues of approximately of $130 million per year come from 15,600 inpatient admissions, 71,000 outpatient visits, and 65,000 home care visits. Newcastle Hospital operates in a difficult environment characterized by relatively poor reimbursement and severe competition. There is one other acute care hospital in the county and a total of thirty-five others within a twenty-mile radius.

The sentinel event in the hospital's recent history occurred four years agoa six-month nursing strike that alienated the workforce, decimated public confidence, and directly cost at least $19.5 million, effectively eradicating the hospital's capital reserves. Most of the senior management was replaced after the strike. When hired, the new CEO and CFO uncovered extensive inaccuracies that resulted in a reduction of reported net assets by almost $30 million and the near-bankruptcy of the hospital. The new management restated financial statements, began resolving extensive litigation, and set out to reestablish immediate operations, future finances, and a long-term strategy. The new CEO states that "years of board and management neglect, plus the ravages of the strike complicated recovery, because standards, systems, and middle managers were universally absent or ineffective."

Among its many issues, the challenges within the hospital's emergency department (ED) are particularly important to the overall recovery effort. The ED is described by the hospital CEO as the organization's "financial, clinical, and public relations backbone." The ED sees 34,000 patients per year and admits 24 percent of them, constituting 51 percent of all inpatient admissions. In addition, the ED is a clinically distinguished Level II trauma center, with a long legacy of outcomes that compare favorably against regional, state, and national benchmarks. Finally, most community members have experience with the ED and consider it a proxy for the hospital as a whole, whether or not they have experienced an inpatient stay.

Currently, Newcastle ED patient satisfaction compared to patient satisfaction among peer organizations ranks at the 14th percentile in the Press Ganey New York State survey and the 5th percentile in national surveys. Since the start of the new millennium, three organized initiatives to improve these results (especially regarding walkouts and waiting times) have failed, even though two involved prestigious consultants. After the management change, the new CEO diagnosed two core barriers to overcoming the ED problems: first, inflexibility and unwillingness to change among the ED physician management group that had been in place for ten years, and, second, an almost complete absence of the data required to define, measure, and improve the ED's service performance. The first barrier was addressed via an RFP process that resulted in engaging a new physician management group two years ago.

Information Systems Challenge

The present IS challenge follows directly from Newcastle Hospital's overarching strategic objectives: "satisfying patients and staff," "supporting ourselves," and "getting better every day" (that is, improving performance). The ED as presently structured has ill-defined manual processes and no information system. The challenge is selecting an ED information system with an emphasis on informing, not just automating, key ED processes in order to support the overall strategic initiatives of the organization.

Several organizational and IT system factors that affect this IT challenge have been identified by the hospital CEO.

Organizational Factors

Undefined strategy. Newcastle Hospital operated without a formal strategic action plan and corresponding tactics until two years ago. As a result, systematic prioritization and measurement of institutional imperatives such as improving the ED did not occur.

Data integrity. Data throughout the hospital were undefined and unreliable. For example, two irreconcilable daily census reports made timely bed placement from the ED impossible.

Culture. "Looking good," that is, escaping accountability, was valued more highly than "doing good," that is, substantively improving performance. Serious problems in the ED were often masked or dismissed as anecdotes, even in the face of regulatory citations and six- to eight-hour waiting times. The previous ED contract had contained no quality standards, and the ED physicians claimed to be busy "saving lives" whenever their poor service performance was questioned.

IT System Factors

IT strategy. Paralleling the hospital, the IS department had no defined strategies, objectives, or processes. Alignment with hospital strategy and IT performance measurements were not considered. Although some progress has been made, this remains an area needing attention.

IT governance. There is no IT steering committee at either the board or management level. IT policies, service-level agreements, decision criteria, and user roles and responsibilities do not exist.

Functionality. The IT applications portfolio is missing critical elements (for example, order entry, case management, nursing documentation, radiology) that would greatly benefit the ED, even without a dedicated ED system. The hospital's core information system is three versions out-of-date and certain functions have been bypassed by users altogether.

IT infrastructure and architecture. The data center and most IT staff members are located twelve miles away from the hospital, isolating IT physically and culturally from users and patients. Software and networks have been arbitrarily and extensively customized over the years, without documentation, and inadequate hardware capacity has often been given as an excuse for not pursuing an ED system.

IT organization and resources. IT spending has been, on average, less than 1 percent of the hospital's budget and IT staff members have lacked essential training in critical applications and tools. Newcastle Hospital has been dependent on multiple IT vendors for a variety of implementation and operations support activities.

Discussion Questions

1.Outline the steps you would take to initiate a strategic planning process for improving the ED information system. How will you ensure that this plan is in alignment with the hospital's and department's overall strategic plans?

2.Multiple factors have contributed to the current state of the ED at Newcastle Hospital and are listed in the case. Which of these do you think will be the most difficult to overcome? Why?

3.The new CEO has good insight into the ED issues. Assuming that his assessment of the situation is accurate, discuss how his continued support could affect the outcome of any ED IS strategic plan.

4.Assume the CEO has appointed you to spearhead the ED IS strategic planning effort. What are the first steps you will take? Outline a general plan of action for the next three months. Indicate, by title, whom you would involve in the process. Explain your choices.