Heath IT Mismanagement: MD Anderson to cut about 1,000 jobs due to "financial downfall officials largely attributed to its EPIC EHR implementation project"

At numerous posts on this blog I link to stories of health IT expense putting hospital financial stability at risk, e.g.:

"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" at http://hcrenewal.blogspot.com/2016/04/what-is-more-important-in-healthcare.html

"Lahey Health: hospital jobs lost, but computer vendors prosper" at http://hcrenewal.blogspot.com/2015/05/lahey-health-hospital-jobs-lost-but.html,

"Monetary losses and layoffs from EHR expenses and EHR mismanagement" (http://hcrenewal.blogspot.com/2013/06/monetary-losses-and-layoffs-from-ehr.html),

"Financial woes at Maine Medical Center: Reading this blog might have saved them millions of dollars, and prevented massive 'cost saving initiatives'" (http://hcrenewal.blogspot.com/2013/05/financial-woes-at-maine-medical-center.html),

and "In Fixing Those 9,553 EHR "Issues", Southern Arizona’s Largest Health Network is $28.5 Million In The Red" (http://hcrenewal.blogspot.com/2014/06/in-fixing-those-9553-ehr-issues.html)

Here's another recent example:

MD Anderson to cut about 1,000 jobs 
Becker's Hospital Review 
Ayla Ellison
Jan. 5, 2017
http://www.beckershospitalreview.com/hospital-management-administration/md-anderson-to-cut-1-000-jobs.html

The University of Texas MD Anderson Cancer Center in Houston plans to eliminate about 1,000 jobs, or 5 percent of its 20,000-person workforce, as it tries to improve its financial health.

At a press conference Thursday, MD Anderson officials said between 800 and 900 workers will be laid off, and an additional 100 to 200 jobs will be cut through retirement and attrition, according to the Houston Business Journal. The job cuts will not affect any physicians.

"We primarily focused on those areas where we could make staff reductions, re-engineer administrative support, and not impact quality of patient care," officials said at the press conference, according to the report.

The job cuts are expected to save MD Anderson about $120 million a year.

MD Anderson is scaling back its workforce after it reported a combined $102 million operating loss in September and October and a $9 million operating loss in November. At the press conference Thursday, MD Anderson CFO Dan Fontaine said the organization likely does not have a positive operating margin for December, according to the report.

MD Anderson's financial troubles began in early 2016 when it rolled out a new Epic EHR system. The organization recorded a 76.9 percent drop in adjusted income for the 10 months that ended June 30, 2016, a downfall officials largely attributed to its EHR implementation project.

It appears MD Anderson failed to estimate health IT costs and impacts properly, and/or failed to write safeguards for seller-caused cost overruns into its contracts. 

That is known as "mismanagement" by definition.  

It's not as if information important to such planning was unavailable.  In fact some of it is free at this very blog, e.g., the 30 or so posts under the query link http://hcrenewal.blogspot.com/search/label/EPIC.

Despite its sagging financials, MD Anderson officials said Thursday the organization's long-term financial health remains strong.

"We are innovating to develop novel care delivery models, adopting enabling technologies and diversifying revenue streams," said MD Anderson in an emailed statement. "MD Anderson will be here for patients and their families today, tomorrow and long into the future."

Not if those efforts are mismanaged as badly as this one.

Finally, perhaps the cost of commercial EHR software needs to be critically investigated. 

That it could put an organization of the stature of an MD Anderson in jeopardy seems to me to be a red flag, mismanagement or not.

-- SS

Note:  I have not posted in awhile due to being occupied with EHR forensic and evidentiary issues.  

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

http://www.bizjournals.com/boston/blog/health-care/2016/03/southcoast-health-cutting-dozens-of-jobs-on-heels.html

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

Lahey Health: hospital jobs lost, but computer vendors prosper

At numerous posts on this blog I link to stories of health IT expense putting hospital financial stability at risk, e.g., "Monetary losses and layoffs from EHR expenses and EHR mismanagement" (http://hcrenewal.blogspot.com/2013/06/monetary-losses-and-layoffs-from-ehr.html),  "Financial woes at Maine Medical Center: Reading this blog might have saved them millions of dollars, and prevented massive 'cost saving initiatives'" (http://hcrenewal.blogspot.com/2013/05/financial-woes-at-maine-medical-center.html), "In Fixing Those 9,553 EHR "Issues", Southern Arizona’s Largest Health Network is $28.5 Million In The Red" (http://hcrenewal.blogspot.com/2014/06/in-fixing-those-9553-ehr-issues.html) and others.

Here's another, with human layoffs as a result:

Boston Globe
May 20, 2015
Lahey Health to lay off 130 workers at three hospitals
https://www.bostonglobe.com/business/2015/05/20/lahey-health-lay-off-workers/uXbvA2UcBpBLa8PLfRy5tJ/story.html

Lahey Health, the Burlington-based hospital network, is laying off 130 people at three hospitals and cutting the pay of top executives as it moves to close a budget gap.

Lahey said Wednesday that it lost $21 million during the six months that ended March 31 because it spent more than anticipated on the rollout of a new software system and lost business during the harsh winter as patients canceled appointments. It also blamed what it called low reimbursements from public and private insurers that did not cover the full cost of delivering care to patients.

... The job cuts represent about 1 percent of Lahey’s workforce of about 14,000 and include managers, clinicians, and administrative staff.

They include 95 people at Lahey’s flagship hospital in Burlington, 30 at Winchester Hospital, and five at Beverly Hospital.

In health IT, "spending more than anticipated" is an activity that might be more accurately called "fixing bad software at customer expense."

Perhaps hospitals need to abandon the dream that health IT is going to save money, and consider it a serious money sink for which exceptional due diligence needs to be performed - before purchase.

At least management is taking some of the hits in this case.

-- SS

Monetary losses and layoffs from EHR expenses and EHR mismanagement

More on monetary losses and layoffs from EHR expenses and EHR mismanagement:

1.  Layoffs to balance the budget...

http://www.news-record.com/news/local_news/article_da765340-d912-11e2-9eac-001a4bcf6878.html

... Wake Forest University Baptist Medical Center [Winston-Salem, NC] said in November 2012, that it would cut 950 jobs — 6 percent of its total staff.

Electronic records programs continue to push costs higher. The Winston-Salem Journal reported that Wake Forest’s Epic [EHR] program caused $8 million in work interruptions during the 2012-2013 year alone. Wake Forest is cutting costs at least through June 30 to make up for some of Epic’s expense. Its efforts include furloughs, wage reductions and other cuts.

2.  Cerner EHR Project Loses U.K. Hospital 18 Million Pounds

http://www.informationweek.com/healthcare/electronic-medical-records/ehr-project-loses-uk-hospital-18-million/240157036

... Royal Berkshire Foundation Trust's implementation of Cerner Millennium electronic health record system is costly to maintain and hard to use, causing patient backlogs ... British hospital's attempt to implement an electronic health record (EHR) system has been so disastrous that it has had to write off £18 million ($28 million).


... "Unfortunately, implementing the [EHR] system has at times been a difficult process and we acknowledge that we did not fully appreciate the challenges and resources required in a number of areas," said the hospital's chief executive, Ed Donald. 

In 2013, I find the statement "we did not fully appreciate the challenges and resources required in a number of areas" remarkable.

Dear Mr. Donald, please allow me to introduce you to a novel concept:

A Google search.  (Free, no less.)

Try this, for example:  https://www.google.com/search?q=healthcare%20IT%20failure

(I note that competent experts in my field, Medical Informatics, given appropriate executive presence - including hiring and firing authority, instead of the usual 'internal consultant' roles - could have prevented your organization's mistakes, and for a mere fraction of the £18 million.)

A campaign against public sector waste in Britain, The Taxpayer's Alliance, has seized on the hobbled project as an especially egregious example of bad procurement. "[NHS] trusts must work a lot harder to get a good deal for the taxpayers footing the bill," it warned.  [I guess money doesn't grow on trees in the UK as it seems to in the US -ed.]

The row comes in the same week British Parliament members expressed frustration that the funding scheme that supported other British hospitals' investment in EHRs, the controversial £9.8 billion ($15.2 billion) National Program for IT cancelled in 2011, continues to cost the country millions, with contracts in some cases not set to expire for 12 more years. [NPfIT in the NHS - see query link http://hcrenewal.blogspot.com/search/label/NPfIT - ed.]

Berkshire, however, opted out of that program in 2008 and had instead linked with the University of Pittsburgh Medical Center to help it implement Millennium.

I am merely the messenger here...

-- SS