Inside IT

Dan Mendelson
Erik Johnson

One of the most immediate challenges for senior healthcare finance executives is the Affordable Care Act's mandate to find better ways to coordinate patient care, improve health outcomes, and manage costs.

To address this urgency, a strong healthcare IT (HIT) system will be needed. And CFOs and their staffs will need to decide what elements and functions are necessary in HIT systems to facilitate the goal of providing high-quality care at affordable costs.

Effective HIT allows providers to implement evidence-based care practices, capture and aggregate data on a variety of short-term and long-term outcomes, better coordinate care across different levels and practices, and provide an analytical foundation for ongoing improvement. Additionally, HIT facilitates better tracking of patients across the care continuum and provides the ability to examine relationships between interventions and outcomes.

To ensure that the HIT infrastructure is durable and appropriate, CFOs should advocate for HIT systems that are both transactional and analytical. The systems should be able to capture data using a standardized approach and share data across different types of providers and care settings. And they should have an analytical platform that provides the capabilities needed to measure successes and define avenues for improvement. The choice of systems is thus a highly strategic endeavor, and senior finance executives should be involved.

HIT and Data Capture

The electronic health record (EHR) should not only be ready to receive and distribute timely information for point-of-care decision making, but also be structured in a way that it can easily inform an analytical platform, such as a data warehouse. The system needs to display the full, current state of a patient's records so that redundant or unnecessary testing is minimized. Moreover, the system should have the ability to aggregate information about patients and determine where gaps in care among certain groups of patients may be occurring. In capturing the data, the system should be able to group patients into discrete populations so providers can review the outcomes and determine where care coordination could be improved.

These capabilities become relevant to CFOs and other top management because they are the lynchpin of quality, patient safety, and ultimately payment. Hospital quality improvement and patient safety programs are charged with helping organizations deliver safer, higher-quality care that results in improved outcomes. The programs are also responsible for ensuring compliance with the various quality reporting requirements. The Centers for Medicare & Medicaid Services (CMS) Hospital Compare resource and the Joint Commission Core Measures are examples of quality reporting tools that can affect payment and public perception. These efforts rely on data to measure baseline metrics and plot progress over time. Requirements to capture and report data back to CMS and the Joint Commission can provide hospitals with a better sense of where they rank in terms of specific treatments and outcomes compared with other hospitals and work to improve practice patterns and performance.

HIT and Data Sharing

Equally critical, independent and unrelated providers should be able to share data across sites of care. The electronic transmission of patient data from one site and set of providers to the next in the care continuum is far more reliable than paper charts, patient memory, or the informal relationships between providers. Moreover, when patients are referred to specialists or admitted to a hospital, the information system should support the primary care physician in the coordination of care, ensuring that duplicate tests and unnecessary treatments are avoided and that appropriate follow-up care is conducted.

In a similar vein, as people increasingly use the Internet for news, information, and social networking, patient demand to use the Internet to access their medical history, communicate with providers, and manage their health also is growing. The information infrastructure should provide patients with educational resources, self-management support, and a portal in which patients and providers are able to communicate with one another. Patient portals are becoming increasingly important in encouraging patients to better manage their own care-a critical business imperative for senior hospital executives under the new world of care management and performance-based contracting.

HIT and Financial Risk

Strong HIT systems will be necessary for hospital management to understand and contract for risk of all types. Healthcare providers, in general, have lagged other industries in the development of data warehouses and analytical capabilities that enable ongoing inquiry into performance. Such platforms depend on transactional systems, such as EHRs and data exchange, for timely and accurate data feeds. By enabling patient records to be complete, easing communication between providers and patients, and informing care and treatments across a variety of settings and providers, a successful HIT system will have the ability to use the resulting vast array of information to measure and report on the quality of care and ultimately enable CFOs to develop reports that will help hospitals contract with physicians based on their performance.

By measuring and reporting health outcomes longitudinally, providers-both hospitals and physicians-can determine where care can be improved, where costs can be lowered, and how the patient experience can be enhanced. An effective HIT system facilitates better tracking of patients across the care continuum and better understanding of relationships between interventions and outcomes. This ability leads to greater efficiency and effectiveness.

While adopting an HIT system is necessary to compete in the ever-changing healthcare landscape, it does not come without its challenges. The system is expensive to create and relies on a true commitment from patients, payers, and providers to work. But as James Ferguson, executive director for HIT strategy and policy for Kaiser Permanente, has stated, "Despite the challenges, meaningful use [of HIT] will really improve health. It will create more engaged and informed patients, provide more complete data for clinical decision making, and provide the ability to make the right thing easy to do." Perhaps even more compelling for CFOs, these systems will be necessary to contract the way the government and payers will want to contract-on the basis of outcomes.

Dan Mendelson is CEO and founder, Avalere Health LLC, Washington, D.C. (

Erik Johnson is senior vice president, Avalere Health LLC, Washington, D.C. (


Publication Date: Wednesday, June 01, 2011

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