Today’s competitive world demands effective and flexible strategies for meeting the ever-changing challenges to the healthcare industry. Several trends drive the need to reengineer healthcare delivery. Healthcare sectors are expanding, merging, and consolidating. There is growing demand to decrease costs and improve efficiency and access with no measurable negative impact on quality. It is illogical to assume that old processes will meet future challenges. Instead, healthcare managers must look to other industries for proven approaches to become more cost-effective and efficient in the delivery of health services. Application of process modeling and Business Process Reengineering (BPR) has enabled American manufacturing to regain its worldwide leadership position and can enable similar improvements in healthcare. BPR is a systematic approach to breaking complex functions into manageable, understandable processes by analyzing them and then implementing prioritized changes.

Despite the fact that the input, throughput, and output of healthcare processes is people, not machinery, re-engineering efforts can be successful in healthcare. The functional areas most amenable to BPR are the non-clinical areas, such as Billing, Supply Management, etc. The functions associated with these areas are similar across other industries, and reference models from other industries are often valuable. In clinical areas, some procedures or practices may take longer to evaluate, and there may be much more resistance to change. Reference models — and the analysis tools that support them — enable creative solutions to be tested and validated prior to implementation.

Healthcare corporations have traditionally resorted to techniques such as employee empowerment, continuous quality improvement (CQI), and total quality management (TQM) to achieve their goals. Hospitals in particular have been quick to embrace TQM, with the goal of quality improvement through participative process improvement. TQM and CQI generally cause an improvement in metrics of 5-20%, while BPR provides measurable improvement of greater than 70%. Rather than merely improving current processes, BPR takes a more radical approach by redefining needs, capabilities, and goals and then recommending extreme changes. In some cases, this may mean starting from scratch with a new innovative process.

In the U.S., the Department of Defense (DoD) has taken the lead in applying BPR principles to multiple process improvement projects in healthcare. A vast support network exists within the DoD to drive BPR initiatives as a way of meeting the challenges of managed care, base closings and downsizing. Private sector healthcare entities face similar pressures but do not have the advantage of a network of providers acting in concert. Effective reengineering in private sector healthcare is possible, and desirable, if a systematic and standardized (across departments) approach is used.

Recognizing the need for a universal starting point for process improvements, Wizdom Systems developed the Healthcare Enterprise Reference Model. This model was developed over five years through numerous healthcare consulting and process reengineering projects. It is the synthesis of many smaller models detailing specific pieces, or groups, of healthcare functions. The Healthcare Enterprise Reference Model has been validated by various healthcare practitioners and academicians.

Wizdom Systems uses a systematic approach to information gathering called Minerva^TM. Minerva is a four-pronged approach to BPR project management that encompasses strategic assessment, analysis of the "AS-IS", creation and analysis of the "TO-BE", and implementation of process improvements. Minerva ensures that all critical information is obtained and prioritized and that all ensuing models have internal reliability.

The Healthcare Enterprise Reference Model is considered a starting point for documenting an existing healthcare enterprise in an "AS-IS" model and can be used to design the organization to meet its needs. The model provides the foundation to rationalize continuously in the true sense of the word and encourages new ways of thinking about healthcare delivery. It will act as a starting point for benchmarking activities and provide a template for process improvements. The model will help companies emphasize opportunities not problems, and it provides a proven template that can be used by companies who wish to plan business process optimization to meet the healthcare challenges of the future.

The problem facing today's healthcare administrators has become: "How can we provide care to the same number of patients at a greatly reduced cost without harming quality?" Revenues per patient day are declining at a faster rate than the rate of cost reduction. In order to remain viable, every dollar of lost revenues must be matched by a dollar in reduced variable expense. Since many hospital costs are fixed, the largest variable expense is labor. Downsizing is not the answer, however, since this has been shown to adversely affect quality.

Sustained viability requires an assessment, analysis, diagnosis, and treatment of activities and functions that support the delivery of patient care. Once current processes are understood and have been redesigned to eliminate redundancies and non-value-added activities, areas for long-term process improvement become apparent. In addition, the activities, resources, and essential capabilities of the organization will be defined and improved.

It is the task of the healthcare manager to ensure that the firm achieves and maintains a position on the frontier of best practices and to push the frontier by continuous business process improvement.

Improving operational effectiveness may take many forms:

• Developing better HC delivery systems
• Eliminating waste
• Employing new capital equipment
• Empowering organizational learning
• Enhancing quality
• Expanding capacity
• Implementing improved processes
• Improving customer satisfaction
• Improving access
• Decreasing wait time for services
• Motivating employees
• Outsourcing nonstrategic activities
• Streamlining resource management

The goal of process improvement in healthcare is to maintain quality while reducing costs and improving access. The degree to which a healthcare organization is meeting this goal has traditionally been measured as follows:

Timeliness of Services
What are the wait times for internal and external customers? For instance, does a patient have to wait longer than normal for a non-urgent appointment with a provider? Does the provider have to wait longer than normal for a test result? Is the hospital waiting longer than normal for third-party reimbursement? When measuring timeliness, 'normal' may be defined as times set by internal and external regulations, i.e., hospital policies that limit wait times for certain procedures such as those designated STAT or ASAP. Average and desirable times may be defined during benchmarking activities, or by customer perception.

Quality
The ultimate goal of healthcare processes is to maintain or improve the health of patients or populations. Quality care has been defined and regulated externally by such entities as the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), and the National Committee for Quality Assurance (NCQA). Healthcare enterprises have used internal quality monitoring, such as CQI and TQM, to meet their self-imposed quality guidelines.

Capacity (Access)
The maximum amount of output generated by a process. It affects the revenue side of long-term profitability by determining how many customers can be served.

Flexibility
A flexible process has a relatively low cost for changing resources used or outputs produced. On the revenue side, the ability to adjust output cheaply or quickly may enable a firm to increase customer satisfaction or to serve additional customers.

The most important management concerns when starting a project that will result in big changes are understanding any possible barriers to implementing improved processes and coming up with effective methods for dealing with these barriers. Even if there are not obvious barriers to implementation, any process improvement project manager will have to encourage new ways of thinking about activities and functions.

According to management guru Peter Drucker, speaking at a November 1998 meeting of the American Management Association, administrators either lead change or follow. Change happens despite our best efforts at control, and true successes occur for those who are proactive, rather than reactive.

Eight strategies for leading the change associated with improvement projects are listed below:

1. Establish a Sense of Urgency — recognize that there is a problem and that there is some internal or external pressure to alleviate the problem, and communicate this urgency to others.
2. Create a Guiding Coalition — acquire executive buy-in for the change process. Set the direction for the project.
3. Develop a Vision and Strategy — figure out where you want to be and build a creative road map.
4. Communicate the Change Vision — all process owners should understand the change drivers.
5. Empower Broad-Based Action — truly effective change occurs across departmental and organizational barriers. Be a change agent.
6. Generate Short Term Wins — a quick process improvement will generate enthusiasm for the project as a whole.
7. Consolidate Gains to Produce More Change — many small improvements can be concentrated to produce a synergistic effect.
8. Anchor New Approaches in the Culture — understand and overcome cultural barriers.

Modeling and analysis techniques provide a disciplined approach to change management, analysis, and defining and tracking of requirements. Reengineering projects in healthcare encompass the following activities:

• Select a view of the business process that needs to be improved.
• Define who is waiting for the results and when they must be delivered.
• Form an interdisciplinary team of process owners.
• Build AS-IS process models using IDEF0 process modeling techniques.
• Build a glossary of definitions.
• Capture cost and time data in properties spreadsheet to use in What-If analysis.
• Identify and eliminate current non value-added activities.
• Analyze the improvement opportunities.
• Simplify, consolidate, and streamline value-added activities.
• Establish cost/performance measures to demonstrate improvements.
• Perform what-if analysis.
• Build the TO-BE process model.
• Create an implementation plan for process improvements.
• Validate enterprise level integration needs (through data models).
• Transform the enterprise requirements into solutions.

The last two steps listed above are critical for building information system applications. Wizdom Systems has developed automated tools that capture the requirements information obtained from the organization's functional experts into activity models from which logical data models can be built.

Critical understanding is obtained from the process of decomposing activities and functional areas to the level of detail needed for a robust analysis. Decisions about which activities are valuable to the goals of the organization, and which are not, are made easier by running the activity properties through the analysis tools in ProcessWorks!. ProcessWorks! creates all the information necessary to prove the validity of improvement decisions.

There are many analysis techniques available. All measure the basics—cost, time, and quality, and all are extensions of the activity model. Wizdom's modeling and analysis tools are based on IDEF (Integrated DEFinition Language). IDEF is a modeling format that is the government and industry standard. IDEF0 refers to activity models, and IDEF1x refers to data models.

The properties spreadsheet is populated with the following data during the information gathering and modeling phase of the reengineering project:

Cost
What is the actual cost of performing the process? For instance, the cost of performing "Process Referral" is based on the time it takes to do this task as a percentage of the salary of the person doing the task, along with the cost to use or run any needed equipment.

Time
Time is tracked according to cycle time or run time. Run time is the amount of time it takes to do one activity, cycle time is the run time plus any wait or down time.

Sequence
The activities on each IDEF0 diagram are all siblings from the same parent. They are all related but the birth order has not been established. The sequence section of the properties spreadsheet allows the project team to set the birth order. This is useful for analyzing work flow.

Organization
Who is doing this activity?

Primary inputs and outputs
Useful in flow modeling to prioritize which inputs and outputs will be tracked.

Each attribute has quantifiable values or properties.


Figure 2: Properties Spreadsheet

Once the activities have been defined and properties assigned, analysis begins:

Activity-based costing (ABC) links tasks to actual resource costs. ABC identifies value-added and non-value-added activities and encourages decision making about consolidation or elimination of activities. A non-value-added activity is one that uses resources but adds nothing to the end product (health care) from the perspective of the client. ABC identifies the most costly processes, which may or may not confirm existing opinions. Value judgements will be made on the cost-benefit ratio of each activity, and predictions can be made. The reader will note that ABC looks only at costs, not at reimbursements, but comparisons are easily made, and change decisions are factually supported.

Time-line analysis should be a part of every BPR project. It is a precursor to process flow models and yields valuable information about the often hidden costs (time equals money) associated with delivering healthcare. The time is takes to perform an activity (the run time), such as 'Process Referral', is only the tip of the iceberg. Adding the time it takes to do such things as wait for authorization, clarify an incomplete referral, or reenter data (cycle time) may significantly increase the cost of a seemingly straightforward activity.

Time-line analysis allows for comparisons between expected or optimal duration with actual duration. It is usually the case that eliminating down time or wait time will significantly reduce the amount of time, and thus the amount of money, it takes to perform an activity. Intangible but very important improvements in patient satisfaction are another benefit to time-line analysis and improvement. Why is time-line analysis so important? Linking time to activities identifies problem areas such as long cycle times or inappropriate task sequencing.

Analyzing workflow allows managers to define exact points in the process at which bottlenecks occur. Defining decision points and identifying looping and redundant processes yields an extra dimension to process understanding.

One of the primary uses of the activity model is to capture and define user requirements in order to build remediating applications. Because Wizdom's activity and data modeling tools share the same glossary database, definitions developed for the inputs, controls, outputs, and mechanisms in the activity model can be used in the development of a logical data model. These tools capture the requirements information provided by the organization's functional experts, transform it into views which management can work with, relate it to the logical data model developed by the information modeling team, and provide interfaces to the analysis tools and database management systems needed to evaluate the information and store the data instances.

In conclusion, by graphically documenting the current processes and analyzing the impact of change prior to implementation, healthcare managers will gain a better understanding of the barriers and facilitators to the proposed changes. Modeling eliminates the surprise factor in managing change. Applying BPR methods to healthcare processes will allow providers to push the envelope — if not redefine the envelope — for quality, cost-effective care.

For more details on healthcare BPR, please call (630) 357-3000 or e-mail Steve Kroll at skroll@wizdom.com.