Healthcare Technology Platform: Build or Buy?
A Closer Look at the Total Cost of Ownership for Practice Management and Population Health Solutions
The U.S. healthcare system is in the midst of rapid transformation. Evolving payment models, changing regulations, and shifting ownership structures are creating new challenges for healthcare providers. Medical practice decision-makers recognize that in order to thrive in this increasingly complex environment, new methodologies and healthcare-specific technologies are needed to advance business and financial objectives, as well as enhance the patient experience, improve the health of populations, and lower the overall cost of care.1 Medical practices – whether independent, part of a larger organization or owned by a health system – require an integrated managed healthcare platform that addresses all aspects of their operations, from meeting quality of care objectives for value-based reimbursement contracts, to proactively monitoring the health of their patient population, to coordinating care and sharing clinical data across the care continuum. When evaluating alternatives, organizations must first decide whether to buy separate solutions (e.g. RCM, EHR, data integration and analytics, clinical risk management, care management, and more) and manage the procurement, implementation, integration, and support of each product, or contract with one partner for a single, integrated managed platform that includes all the required infrastructure and services.
This white paper explores the benefits of buying an integrated managed healthcare platform that encompasses all of a practice’s clinical, financial, practice transformation, regulatory, security, and reporting requirements, versus building a healthcare platform internally. Organizations that examine both the technology resources and human expertise required to build, deploy, and support a practice- transforming, comprehensive next-generation healthcare solution will be better positioned to assess the true cost of ownership for each alternative.
The implementation of the HITECH2 Act and the Affordable Care Act3 has accelerated much of healthcare’s recent transformation. The shift from volume to value-based healthcare has been particularly challenging as providers seek to improve quality, enhance the patient experience, and lower the overall cost of care in order to meet outcomes-based measures. The U.S. Department of Health and Human Services (HHS) is making an aggressive push to switch Medicare reimbursements from volume to value-based and has established the goal of tying 30 percent of traditional fee-for- service Medicare payments to quality through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and 50 percent of payments to these models by the end of 2018.
Many providers are struggling to prepare for this rapid move to value-based healthcare; in fact, many are trying to understand what needs to be done from either an organizational or technological standpoint. All providers will require next- generation methodologies and technologies that satisfy the evolving requirements for practice management, electronic health records (EHR), population health management, and fee-for-service and value-based reporting.
To maintain financial health and enable infrastructure investments, a practice must have a strong practice management system with robust revenue cycle management components. To earn Meaningful Use and PQRS incentives and avoid payment penalties, physicians need a certified and meaningfully-structured EHR, as well as the ability to securely transfer clinical data to other providers. In order to manage the health of patient populations, improve care quality, and lower overall costs, practices require dashboards and care plans to identify gaps in care at the point-of-care; advanced analytics; and other proven population health management solutions.
In the face of these growing financial and administrative challenges, an increasing number of independent practices are seeking consolidation with larger practices or health systems. As organizations merge, stakeholders must consider how best to align technologies, workflows, people, and processes. Meanwhile, insurance participation requirements and governmental regulations continue to evolve, requiring practices to remain nimble and address the latest billing, EHR, and value-based reporting requirements.
High-performing organizations realize that having the right healthcare technology platform in place has never been more critical. Practices that are evaluating the best long-term transformational alternatives must first consider the pros and cons of buying a fully integrated managed platform versus building one internally.
The Build Approach
Building a comprehensive managed platform that includes revenue cycle management (RCM), EHR, and an integrated population health solution can take several years. The process requires significant monetary capital as well as a wealth of subject matter experts who are committed to developing, delivering, and maintaining a comprehensive solution.
Consider some of the steps in the process:
An organization must designate a project leader who is well- versed in technology and experienced with the everyday workings of healthcare. Having an in-depth understanding of life in the healthcare trenches will enhance the leader’s ability to successfully guide the organization through disruptive transformation.
Building a comprehensive managed platform can require millions of dollars in up-front capital. The process of securing financing and cash is time-consuming and mandates the expertise of multiple team members. Organizations must identify and purchase individual applications among dozens of available options. The evaluation process for each solution requires an analysis of needs; an assessment of staffing requirements and skill sets; product demonstrations; reference checking; and ROI analysis. Once solutions are selected, decision-makers must negotiate contracts with each vendor and secure the required capital.
Based on application requirements, the size of the organization, and projected growth, healthcare technology experts must procure hardware or a cloud-based solution that satisfies the technical specifications for each application’s platform. A high level of technical proficiency is essential to ensure each component is properly sized and offers the scalability needed to meet performance and growth requirements, including any changes necessitated by evolving industry regulations and payment models.
Once the healthcare technology solutions are identified, the various components must be integrated. This step requires coordination with the individual applications and hardware suppliers, and may require identifying and adding additional tools for managing interface processes. Interfaces require continuous maintenance as new solutions are added to the platform applications are updated.
In addition to implementing the core applications, organizations must identify and maintain the appropriate infrastructure and technical services for platform security, redundancy, remote access, and performance optimization. The evaluation process should include an assessment of which services are best managed internally and which should be outsourced to third-party partners.
The platform must include a secure infrastructure that provides role-based access and data encryption. Because medical facilities maintain a wealth of financial and clinical records, their data is particularly attractive to hackers. Failure to protect the privacy and security of patient records can be costly: HIPAA regulations allow for penalties of up to $50,000 per violation.4
Perhaps one of the most critical steps in the platform build process involves the alignment of a broad assortment of experts to manage the project and participate in the day-to-day operations. Decision-makers must identify staff requirements, from training and implementation, to billing and collections, to ongoing support and product updates. The organization must evaluate whether or not current employees have the time and skill set required for every aspect of the project, including requisition and project management, as well as ongoing support, training, and workflow optimization. Other staff is required for the more routine but vital tasks, such as provider credentialing, online insurance verification, patient collections, and population health monitoring and reporting. If a talent gap is identified, new staff must be hired, trained, and managed.
Staying ahead of ever-changing regulations can be a constant challenge for practices. To remain compliant, organizations must continually update applications, train staff members, tweak interfaces, and modify workflows. The transition to quality improvement programs is particularly challenging because of the impact on both financial and clinical operations, as well as the required workflow modifications for both staff and providers.
The practice transformation process requires more than an investment in tools for empowering clinical transformation and delivery of value-based healthcare. True transformation also calls for a change in culture, which cannot occur without engaged leaders, redefined work roles, strong patient and care team relationships, and a quality improvement strategy that focuses on the organization’s service delivery approach. Successful transformation requires the guidance of experienced individuals who have led other organizations through this process.
Even after an expert team is assembled and all the solution components are implemented, every aspect of the healthcare platform must be managed and maintained on an ongoing basis, seven days a week, 24 hours a day, 365 days a year.
Finally, the organization must be willing and able to invest the resources required to continually adapt the platform to meet ever- evolving healthcare industry requirements. Decision-makers should actively seek technology advancements and innovative application enhancements that optimize platform performance and provide the organization with the solutions required for long-term success.
The process of building and deploying an integrated practice management and population health platform is extremely complex. Initially organizational leaders may believe an internally-built platform allows more customization at a potentially lower cost. Unfortunately, physician groups and healthcare systems that attempt to develop a solution on this scale may find the project requires considerably more time, money, knowledge, and expert manpower than anticipated. As a result, projects are often under-resourced and delivered over-budget and/or behind schedule. Implementation delays in today’s rapidly changing healthcare environment could lead to a loss of anticipated financial incentives from value-based payment programs.
“Physician groups and healthcare systems that attempt to develop a solution on this scale may find the project requires considerably more time, money, knowledge, and expert manpower than anticipated.”
The Platform-as-a-Service Approach
As an alternative to building a platform internally, organizations can procure a single integrated healthcare solution that encompasses every required component, including infrastructure, applications, and middleware, as well as the subject matter experts to manage, maintain, and operate the project on an ongoing basis. The all-inclusive integrated Platform-as-a-Service (PaaS) approach offers numerous advantages:
Less impact on staff. Building an integrated platform requires expertise and input from of a wide variety of proven professionals, including clinicians and personnel in IT, finance, and operations. Organizations must consider if existing employees have the necessary skills and available time to dedicate to a project that could take years to deploy and requires ongoing staff support.
An integrated PaaS solution includes human intelligence; that is, the experts that understand both the financial and clinical requirements of a practice and who are experienced with deploying advanced technologies, proactively managing population health, and efficiently managing clinical and financial operations. With a PaaS solution, organizations have access to proven methodologies and seasoned subject matter experts with entire “playbooks” around practice transformation. These individuals understand the complexities of physician education and alignment, staff education and training, workflow modification, care coordination, patient engagement, business intelligence, and value-based reporting. In short, these experts have had the experience of working with other practices as they transitioned to value-based payment models.
More rapid implementation. A PaaS solution enables a single procurement process, includes all the infrastructure, applications, and subject matter experts needed for a successful deployment, and all the components – including interfaces – have been thoroughly tested. The platform provider managing the implementation is experienced with all aspects of the solution and understands the workflow requirements for optimizing financial and clinical performance.
Less risk. With a PaaS solution, financial risks are minimized because the cost of the solution is established from the start. Because operational personnel are employed by the platform provider, organizations don’t have to worry about disruptions in cash flow or system management in the event of staff turnovers. When governmental or insurance requirements change and software needs updating, the vendor’s team of experts handle all testing and deployment, minimizing the risk of service interruptions.
Considering the True Cost of Ownership
Medical providers seeking to adopt advanced technology in today’s increasingly complex environment must evaluate what solutions best satisfy their unique clinical and financial needs, which promise the best return on investment, and which position the organization to participate and thrive in value-based programs. To determine the true cost of ownership, organizations must consider every aspect of the project, including all up-front investments, the subject matter expertise and support personnel costs, the regulatory and security costs, and the costs of managing the solution on an ongoing basis. Organizations that analyze the true cost of ownership for a PaaS solution versus an internally-built system will likely conclude that the PaaS alternative offers a well- considered roadmap for the future and a more promising path to financial and clinical success.
Continuum Health is a physician enablement company based in Marlton, NJ providing a platform for practice management, population health management, and network development services. Continuum offers proven, strategic business and clinical solution empowering medical providers within physician groups, private practices, health systems, hospitals, and self-funded settings to enhance patient access and experience, improve quality and lower the overall cost of care.
1These objectives are more commonly known as the “Triple Aim.” http://www.ihi.org/Engage/Initiatives/TripleAim/pages/default.aspx
4American Medical Society: http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/hipaahealth-insurance-portability-accountability-act/hipaa-violations-enforcement.page?