Tuesday, April 05, 2016

What is more important in healthcare, computers, or nurses and other human beings? Southcoast Health cutting dozens of jobs on heels of expensive IT upgrade

That I even have to ask the question on the title of this post is a tragedy and a scandal.

I've written a number of posts on this blog about hospitals laying off staff and even put in financial jeopardy due to EHR implementation, e.g., my June 2, 2014 post "In Fixing Those 9,553 EHR "Issues", Southern Arizona’s Largest Health Network is $28.5 Million In The Red" at http://hcrenewal.blogspot.com/2014/06/in-fixing-those-9553-ehr-issues.html and numerous others indexed under "healthcare IT costs" at query link http://hcrenewal.blogspot.com/search/label/healthcare%20IT%20cost

This often occurs due to poor project planning, overconfidence, underestimation of complexity and even incompetence, that drives up electronic records system costs way over estimates. 

It's happened again:

Southcoast Health cutting dozens of jobs on heels of expensive IT upgrade
Mar 30, 2016, 11:25am EDT
Updated Mar 30, 2016, 11:31am EDT

Stung by losses linked to costly technology upgrades, Southcoast Health is laying off 95 employees just a year after finalizing a similar staffing cut.

The cuts represent 1 percent of Southcoast’s 7,251 workforce, and will happen across the care provider's three hospitals in Fall River, Wareham and New Bedford. All levels of hospital staff will be affected, officials said.

Southcoast employees were notified of the cut Wednesday morning. The cuts come as the hospital negotiates a merger with Care New England, a four-hospital system in Rhode Island.

The care provider said the cuts stemmed from training costs associated with the installation of a $100 million records system, known as Epic. Similar operating challenges have been reported by other Massachusetts care providers in the midst of Epic upgrades and installations.

I note that $100 million can purchase an entire new hospital wing or facility.

Training costs, of all things, should have been factored into the original project plans.  It's not as if this issue is an unknown in an industry and product extant for several decades now.

Also, IMO the word "challenges" should be altered to "challenged" to describe the institutional geniuses responsible for debacles like this.

Training costs for the system, which went live in October, contributed to a $9.9 million operating loss in the first quarter of fiscal 2016, which ended Dec. 31. Hospital executives said similar expenses have impacted the bottom line in the current quarter, which ends Thursday.

So, training costs for the EHR devoured profits from an increasing revenue stream as below, plus consumed enough to leave a near $10 million loss. Stunning.

“These financial challenges are attributable to higher-than-budgeted operating expenses, largely a result of our Epic implementation,” said Southcoast president and CEO Keith Hovan, in a letter to employees. “During the first two quarters of this fiscal year, revenue has grown positively at a rate of 4 percent – a significant accomplishment, particularly given the lack of a flu season. However, expenses have grown at 6 percent during that time, which is an untenable variance that must be corrected.”

I note that the hospital system might have realized their cost underestimations via reading the literature a bit, including but not limited to my completely free academic site at http://cci.drexel.edu/faculty/ssilverstein/cases (in existence in various flavors since 1998), and this very blog.

Hovan went on to ask employees for recommendations to reduce costs, going so far as to tell employees to reach out to him directly.

How about reducing IT expenditure and laying off IT personnel responsible for the cost underestimates?  Costing is supposed to be a core competence of management information systems (MIS) personnel in those IT departments.

... Approximately 70 people were let go in October 2014, and another 35 were let go in January 2015.

The hospital still has 339 job openings for a number of clinical roles. Cohenno wouldn’t detail what kinds of jobs the hospital was eliminating, but said employees affected by today’s layoffs will be encouraged to apply to open positions.

Some consolation for being fired to maintain the good health of a computer.

The solution to this problem is for hospital executives to actually learn more about what they're getting into in HIT acquisition, implementation and operation, instead of simply believing the marketing hype coming from the HIT industry and its cybernetic hyper-enthusiasts.

That means reading far more than typical industry marketing BS, a.k.a. performing robust due diligence.

-- SS

1 comment:

Anonymous said...

Layoffs were likely the more "experienced" (read: older) workers.