The University of Pittsburgh Medical Center Makes Effective Use of IT The University of Pittsburgh Medical Center (www.upmc.com) is one of the countrys largest nonprofit healthcare organizations. Its revenues for fiscal year 2013 totaled more than $10 billion. UPMC operates more than 20 hospitals and 400 physician offices and outpatient sites in Pennsylvania. It is also one of the states largest health insurance plans. In its dual role of provider and payer, UPMC services more than 2 million customers. The center has implemented an aggressive approach to implementing and developing information technology to make healthcare more effective and efficient UPMCs IT organization performs several major roles. For example, it must improve the operations of the companys hospitals and health insurance plan, enhance patient care, and drive down the companys costs. In addition, it should be profitable for UPMC rather than function as a cost center. Finally, it has the mandate to develop unique technologies that the company can sell to other healthcare providers and insurers. UPMCs IT initiatives are developed at its Technology Development Center (TDC), a business incubator and laboratory located in Pittsburgh. The TDCs mission is to develop new healthcare technologies and then to provide resources for startup companies to develop these technologies. (A business incubator is an organization that speeds up the growth and success of startup and early-stage companies. Just a few of the services provided by incubators are help with business basics, marketing assistance, high-speed Internet access, help with accounting and financial management, and help with bank loans.) The TDC initially attempts to use off-the-shelf technology to meet the needs of its clinicians, insurance teams, and other business groups. (Off-the-shelf technology are products that are ready-made and available for sale to the public.) For example, it uses electronic health record (EHR) systems from Cerner (www.cerner.com) and Epic (www.epic.com). If it cannot find the technology it needs, then it will look to develop that technology, often in a joint venture with a large vendor. Another strategy is to purchase a stake in a startup, in which case it can influence the development process. One example of a technology that TDC is developing is a telemedicine system called Virtual Care Collaboration (VCC). VCC combines videoconferencing with medical records. The greatest obstacle to telemedicine is not the technology, but the business model. For example, health insurance plans often will not pay for telemedicine consultations, and licensing rules can prevent doctors from treating patients across state lines. To combat these problems and to provide impetus for the practice of telemedicine, the UPMC health plan and some other insurers are starting to cover telemedicine appointments. UPMCs IT group is also utilizing cloud computing, a system in which tasks are performed by networked computers in remote locations (the cloud)() Cloud computing presents problems for the healthcare industry because it typically requires patient data to leave the healthcare providers data centers. In early 2015, UPMC had more than 5 petabytes of data, and that volume was doubling every 18 months. These data include medical images, genomic data (data about the complete set of genetic information for each patient which is encoded in the patients chromosomes), and remote patient monitoring data. UPMC could not afford to spend tens of millions of dollars to build data centers with the capacity to store all of that data. Therefore, the center turned to the cloud. Specifically, it rents storage infrastructure from cloud computing vendors such as Amazon and IBM. UPMCs IT group is also creating a data warehouse that combines clinical, genomic, insurance, financial, and other information from more than 200 data sources. (...) This initiative ties into the aspect of the U.S. healthcare reform that intends to change how healthcare is delivered and paid for. Providers will be paid to keep a group of people for example, all the employees at a companyhealthy rather than treat them after they become ill. This arrangement creates a financial incentive for providers to increase their preventive care efforts and to minimize mishaps that lead to hospital readmissions. UPMC cannot accomplish its goals without analytics. Consider a recent UPMC study of the use of a particular catheter. The study revealed that the catheter was not used consistently, although on average it led to better outcomes. The study also found that the catheter was more expensive than other similar catheters. These findings led to the next analysis that examined which patients benefited from the catheter and under which circumstances. The findings were presented to doctors to help them make decisions about the use of the catheter. Ongoing projects include analyzing patients individual genomes so that health providers can personalize their treatments. UPMC has experienced some IT problems. For example, problems occurred in the implementation of electronic health records that were needed to comply with government mandates and financial incentives. As one example, new technologies allow physicians to cutand-paste electronic records. As a result, an in-hospital progress note that used to present the patients daily status in less than 1 page can now total 19 pages.

Questions

1. Describe the strategic advantages that IT provides to UPMC.

2. Which of Porters competitive strategies is UPMC employing? Support your answer.

3. Describe how UPMC illustrates effective businessIT alignment.