Sponsored by Oracle Healthcare
To optimize organization performance within the constantly shifting healthcare landscape, many insurers, hospitals, and health systems are turning to the latest technologies, including cloud-based offerings that have the potential to reduce costs while supporting best practices. Yet leaving behind on-premise technology in favor of remote-hosted solutions can be a daunting prospect, and organizations should carefully plan before embarking on such initiatives. This action brief, sponsored by Oracle Healthcare, delves into some key things to consider when moving to the cloud and discusses valuable strategies for enabling a smooth transition.
The Drivers Behind Change
There are several factors pushing healthcare organizations to leave behind their brick-and-mortar solutions and embrace the cloud. Given the current volatility of health care, insurers, hospitals, and health systems are seeking ways to be more agile and flexible while maintaining reliability and consistency. To keep pace with change, organizations are recognizing the value of rethinking their operating models.
Remote-hosted technology also allows organizations to better utilize staffing resources. “Because we can leave the care and feeding of a solution to our vendor, we are able to refocus our internal team’s skills on how to optimize the tool for our specific organization,” says Fred Banner, CIO for Shore Memorial Hospital in Somers Point, New Jersey. “Since we adopted our cloud-based enterprise resource planning [ERP)] tool, for example, we’ve been able to right size our support team, allocating them to different objectives that further organizational growth.”
At the same time, as a result of technology’s rapid evolution, payers and providers may be working with outdated programs, and some organizations are in a situation where it’s time to upgrade. Before taking this step, they want to be sure the new choice will carry them into the next generation rather than just bringing forward the same old issues found in previous programs.
Consolidation is another driver. With the robust mergers and acquisitions market that exists right now, there are many insurers, hospitals, and health systems looking to standardize business practices and technologies across a multifaceted enterprise, and the cloud offers a possible path forward. Although selecting one of the organization’s existing programs and converting every other entity to that one may be an easier short-term fix, it is often better in the long-run to choose a solution that meets the needs of the entire organization, even if it means onboarding a totally new cloud-based platform.
The Advantages of the Cloud
Cloud-based solutions offer benefits on many levels. One of the most basic is they eliminate the need for an organization to purchase, support, and maintain hardware and software, which can be costly and resource intensive. “When you embrace cloud-based technology, you remove infrastructure from the facility and the cost equation,” says Tom Borgula, director at Blue Cross Blue Shield of Michigan (BCBSM). “This can make an organization more nimble as it tries to meet the demands of its business.”
Upgrades also are more cost efficient and streamlined in the cloud. “Part of the reason we moved our ERP solution is that we struggled with the complexities of upgrading our on-premise system, and the frequency of the upgrades became onerous,” says Banner. “A cloud-based solution facilitates predictable and well-managed upgrades. Not only does this enable a lower total cost of ownership, but that cost is predictable month-over-month, quarter-over-quarter, and year-over-year as defined in the contract. This has been helpful as we wrestle with tight budgets and search for ways to better anticipate costs.”
The cloud also lets healthcare organizations incorporate innovative technologies faster—something that is hard with an on-premise solution. “Although you can upgrade a server-based system, the process can be quite expensive, time consuming, and cumbersome—especially if the tool has been highly customized over the years,” says BCBSM’s Borgula. “However, with a cloud-based solution, you can cost-effectively adopt new functionalities every six months. If you get in the cadence of taking advantage of these functionalities, you can see some real cost benefits come into play.”
Conversely, when organizations remain committed to on-premise solutions, they can sometimes miss key business opportunities. “If changing an organization’s infrastructure has a high cost, an upgrade might get turned down by finance due to budget issues,” says Borgula. “At that point, strategies that the business should adopt may get shelved or delayed, which can handicap the organization over time. For example, if a health system is engaged in a mergers and acquisitions effort, but it is difficult and expensive to flip the backend accounting technology, then it will be hard, if not impossible, to efficiently onboard and offboard acquisitions. In response, the organization may opt to cobble together different solutions to save costs, which will limit the entity in the future. Or it may choose to pass on an opportunity because of the large price tag associated with getting the technology in line. In these scenarios, not only does the brick-and-mortar solution fail to enable a good business strategy, it actually acts as a detriment to the organization’s long-term success.”
Laying the Groundwork for a Smooth Migration
When leaving behind on-premise solutions, organizations should have a well-considered strategy in place before making the move. Without upfront work, the implementation process may be more complicated and potentially onerous. Here are five points to keep in mind as you embark on the journey.
1: Determine why you’re pursuing the change. “Before switching to the cloud, it is critical to understand why your organization is making the move,” says Borgula. “Organization leaders inside and outside of the IT department must understand and agree to what’s driving the project and what the end goals are. They also should decide how invasive the project will be. Is the organization going to align verticals, for example, and embrace an enterprise solution that addresses multiple functionalities? If the health system has more than one site, is every location going to be on the same system? If the organization is pursuing a merger or acquisition strategy, is it going to require everyone to be on the same platform? You must ask and answer these questions because, if you don’t, you are going to set up your program incorrectly, and it may be tough to undo.”
Once an organization understands the project scope, it can be beneficial to examine the costs involved in implementing the system to set up expectations around ROI. Things to consider include the relative costs of continuing the status quo versus onboarding the new solution. Moreover, organizations should determine whether they are missing business opportunities by holding on to server-based systems—and what the financial ramifications of those missed chances might be.
“I’d say for most organizations, if they are accurate in how they tally up the costs, they’ll probably be neutral in moving to the cloud initially,” says Borgula. “However, in the long-term, if you stand up the proper practices and use the new functionalities that are available every six months, you can start seeing real cost savings and value. Plus, if the organization is better able to seize new opportunities because it is not saddled with brick-and-mortar solutions, there are even greater cost benefits.”
2: Check that you are culturally ready. A key part of preparing the culture is asking whether the organization is enthusiastic about—or at least amenable to—change. Although not everyone has to be on board, there must be a champion or group of champions in leadership that will underscore the importance of the work and establish some ground rules. “An organization has to be culturally ready to reinvent who they are,” says Shore Medical’s Banner. “It’s not good enough to repackage old processes. Organizations need to be willing to embrace new ways of doing things, so they can remain more nimble and responsive to changing dynamics.”
More specifically, making the shift to cloud-based solutions requires a change in mindset around customization. With on-premise programs, insurers, hospitals, and health systems frequently customize the technology to meet their needs. This approach results in systems that are customized so much that they don’t look or function as they were originally intended and are costly and cumbersome to upgrade. With a cloud-based offering, organizations will be limited in the degree of customization allowed. They must welcome the core standardized business processes that are based on best practice and incorporate them into their operations. Project leaders must establish this expectation upfront and make sure that it is followed throughout implementation.
Organizations also must anticipate and respond to possible concerns surrounding the cloud. In particular, there may be reservations around job security. “People can get uneasy when they hear the words ‘cloud’ or ‘remote host,’ and they worry what that could mean for them and their long-term value,” says Banner. “Project leaders should acknowledge those perspectives and attend to them. At Shore Medical Center, we’re roughly a $200 million organization, and we have an IT team of about 35 people that support a number of enterprise and third-party applications. Historically, this team has built the networks and servers, rolling their sleeves up to handle the various tasks. When they hear ‘remote host,’ it creates uncertainty. The best approach for addressing these concerns is to paint the vision of why we are doing what we’re doing and talk about what their roles might be like in the future.”
3: Convene stakeholders. It’s critical to note that shifting to the cloud is not an IT project but an organizationwide initiative. “We view this like running a relay race, and each stakeholder has a piece of it,” says Banner. “For our ERP project, we created a steering committee of senior leaders across the organization, including the vice president of human resources, director of finance, and director of logistics and material management—as well as myself and an IT project manager. By meeting regularly and sharing perspectives, we ensured that all stakeholders were onboard, involved, and satisfied with the final outcomes.”
It’s essential that stakeholders appreciate and agree to the time commitment involved in the project because onboarding a cloud-based solution can extend over a prolonged period. “It took us nine months to even select our cloud vendor because we wanted to do reference calls, ask thoughtful questions, and see demonstrations of the various functionalities,” says Banner. “Before we even got to the costs involved, we wanted to be sure a potential system could meet stakeholder needs in a way with which the IT team was comfortable. If a solution can’t meet both stakeholder and IT requirements, then there’s no reason to talk about budgets.”
Stakeholders also must appreciate that to be part of the team they have to make meeting attendance a priority. “If you’re going to be involved in these projects, then you have to be fully committed,” says Banner. “Once the project kicks off, it’s a fluid, living initiative. Although there is a project plan that guides the timing of decisions, tests, and so on, things can morph and change throughout the effort. If a stakeholder misses two meetings and then wants to revisit something on which the group has already decided, it can be frustrating for everyone and take the project off track. People must take their roles seriously and be committed for the long haul.”
4: Communicate and reinforce expectations. When organizations shift to cloud technology, they often open a floodgate for stakeholder demands. “For most organizations implementing an ERP system, for example, it’s been so long since they’ve had any upgrades due to the high levels of customization that everyone comes to the table wanting something,” says BCBSM’s Borgula. “If you don’t have good practices to handle this wave of requests, and if the various verticals aren’t working together, then you will either take a long time to start the project off and get approval, or you will have a disaster during implementation because you will get stuck trying to accommodate everybody’s past needs for 20 years.”
Sorting out priorities is going to require a lot of discussion between stakeholders. “It’s important to be clear that people should be respectful and productive when engaging in dialogue around existing procedures, workflows, application use, staffing, and so on,” says Shore Medical’s Banner. “You’ll want to communicate that you’re on a journey; however, you also should underscore that you’re not coming back home. This is not like a vacation where you go away and then come back to where you were. You’re going to go away and arrive at a different—greatly improved—place.”
5: Thoroughly vet your vendor. Not all cloud vendors are the same, and a comprehensive review of any potential partner is wise. “First and foremost, you want a company that has deep experience in these projects and knows what to expect,” says Borgula. “Look for a partner that has successfully navigated the challenges and will be frank about what you must do to prepare culturally, financially, and resource-wise. The cloud is a totally different method for hosting technology, and it requires organizational and cultural alignment. If the vendor isn’t straight with you about what needs to be done in advance and how much time that could take, you may end up having a 12-month project that takes four years to complete.”
A strong vendor also will offer robust analytics, which should include more than just dashboards and standardized reports. Organizations should seek analytics that provide real-time data to assess current performance and deliver meaningful information to inform decisions around “what-if” scenarios. This level of information will foster more strategic decision making, which is one of the benefits cloud-based solutions can deliver.
“You also want to be hypersensitive to the vendor’s security,” says Shore Medical’s Banner. “Since this solution will host a range of sensitive data, you want to be confident the company is up-to-date on the latest health information vulnerabilities and cyber-crime activities. A vendor should be able to detail its cyber-security model, showing you what it looks like, how long it has been in place, what kind of exposures it has allowed, what kind of breaches have occurred, what investments the company has made to improve security, and what obligations the vendor has to protect your data.”
Before selecting the vendor, make a point to meet and interact with the company’s team assigned to the project. “Our experience shows that if you get that team relationship right, there’s a palpable synergy that happens,” says Banner. “Although a team’s level of experience is worth noting, it is not the only factor to consider. I’d much rather have a team that’s a little more junior but that meets frequently, collaborates well, and believes they can tackle issues collectively. It’s also helpful to ascertain how the team will deal with difficult situations, problems that arise, rapid decision making, and issue escalation. Be sure to assess what kind of turnover the company has as well, because continuity is a big deal in a long-term project.”
Once implementation is complete, it is imperative to maintain the partnership with the vendor to ensure sustained performance and effective problem resolution. “When things go wrong—and there will be issues—it is important to refrain from blaming the vendor,” says Banner. “The fact is, if there is a problem, it is everyone’s issue to resolve, and you should have representatives from each team that works in the solution actively engaged in addressing it.”
Such a shared-responsibility approach enables issues to be resolved more quickly and comprehensively and can prevent them from recurring. It also will engender a more a meaningful partnership that leads to optimal use of the cloud-based system both now and in the future.
Our Sponsor Speaks
Mary Kilmer, executive director for Oracle Healthcare, discusses how shifting away from on-premise enterprise resource planning (ERP) solutions to cloud-based offerings can help healthcare organizations achieve better financial and business performance.
Q: Why is a cloud-based ERP system valuable?
Answer: As with other applications, moving your ERP solution to the cloud can be a cost-effective approach because it limits the need for onsite hardware and software and the upkeep that entails. Upgrades are easier, and organizations can take advantage of new features more rapidly.
As organizations make the shift to a cloud-based ERP, they may also want to consider consolidating different business functions into one enterprise-wide offering. This yields holistic processes where the various solutions are grouped together on one platform, including human resource, finances, supply chain, and so on. By having one enterprisewide system, you can have numerous cross-functional business processes and data, streamlining workflows and limiting duplication. A consolidated system has one user interface, a single set of security protocols, consistent reporting tools that pull data from across solutions, and so on. These allow organizations to be more efficient and strategic, getting the data they require more easily. Overall, an enterprisewide solution that is housed in the cloud helps an organization to be leaner while still accomplishing its day-to-day blocking and tackling, leading to more reliable performance and better decision making.
About Oracle Healthcare
The Oracle Cloud offers complete SaaS application suites for ERP, HCM and CX, plus best-in-class database Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) from data centers throughout the Americas, Europe, and Asia. Oracle cloud applications offer a truly unified, engaging user experience that’s easily adapted for the unique needs of healthcare provider organizations.