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Too Far Ahead of the IT Curve?

By John P Glaser

Introduction Question: Peachtree Healthcare’s patchwork IT infrastructure is in critical condition. Should the CEO approve a shift to risky new technology or go with the time-tested monolithic system?
Freshly showered and cooling down after their squash game, Max Berndt drank iced tea with his board chairman, Paul Lefler. Max, a thoracic surgeon by training, was the CEO of Peachtree Healthcare. He’d occupied the post for nearly 12 years. In that time the company had grown—mainly by mergers—from a single teaching hospital into a regional network of 11 large and midsize institutions, supported by ancillary clinics, physician practices, trauma centers, rehabilitation facilities, and nursing homes.
Together, these entities had nearly 4,000 employed and affiliated physicians, who annually treated a million patients from throughout Georgia and beyond. The patients ranged in age from newborn to nonagenarian; represented all races, ethnicities, lifestyles, and economic conditions; and manifested every imaginable injury and disease. Many of them, over the course of a year, would be seen at more than one Peachtree Healthcare facility. Max’s marching orders were to ensure quality, consistency, and continuity of care across the entire network—and to deliver all that with the highest levels of efficacy, economy, and respect for patients and staff.
Max, still sweating lightly, finished his tea and ordered more. He and Paul commiserated over the steady vanishing of squash courts in the metro Atlanta area. This particular block of four courts was located in a health club not far from Peachtree’s Marietta headquarters. Apart from the one Max and Paul had used, the other three were dark.
“By next week,” Paul predicted, “at least one of those courts is gone.”
In Paul Lefler’s worldview, things always happened fast. Paul was the CEO of Wyndham Trust, the region’s leading retail bank and mortgage lender. Having overseen Wyndham’s rapid growth through mergers and acquisitions, he was an avid believer in brute-force standardization. His management team had honed the art of disciplined conversion, changing everything from signage to systems and processes in very short order, “like ripping off an adhesive bandage.”
Squash courts weren’t the only thing vanishing from Max’s universe. So was a comfortable management consensus about Peachtree Healthcare’s long-term aims and how best to achieve them. Paul—like other board members and some in Max’s management inner circle—was applying constant pressure on Max to follow the example of others in the health care industry: Push ahead on standards and on the systems and processes to support them. “You’ve got all the hospitals doing things differently. You’ve got incompatible technology that’s held together by sweat and ingenuity and, possibly, prayer. Just do what other institutions are doing. Common systems, broad standardization… It’s the competitive reality, and it’s the right long-term play! So, what the hell are you waiting for?” But then the iced tea arrived, and Max used the interruption as an excuse not to answer Paul’s question.
They’d been having this conversation for several months—sometimes informally, other times in full board or committee meetings. Max listened, to a point. Eventually, he always fell back on his clinical experience. “You can standardize the testing of ball bearings for manufacturing defects,” he said. “But as far as I know, you can’t—at least not yet—standardize the protocol for treating colon cancer.”
As a physician, Max believed that the last word in all matters of patient care should rest with the doctor and the patient. But as a CEO he believed in best practices. So his compromise position was to favor selective (Max called it “surgical”) standardization. Indeed, many areas of clinical treatment—immunizations, pharmacy record keeping, aspects of diabetes care—could safely be standardized around best practices over which there were few disagreements. In other areas, though, standardized practices could have scary patient-safety consequences, and physicians had to be free to form their own judgments about which treatments were best for which patients.
Lately, however, worrisome developments were eroding Max’s confidence that he could hold out against Paul’s brute-force prescription.

Remember The African Queen?

Days before, there had been a meltdown of the clinical information system at Wallis Memorial Hospital in Decatur. (Wallis was Peachtree’s most recent addition.) Since Max had been lunching with his chief information officer, Candace Markovich, when the alarm came through to her PDA, he drove her over to Wallis to investigate.
On the way, Candace reprised her concerns about ensuring uptime and performance quality across Peachtree’s patchwork infrastructure. “More and more, I feel like Humphrey Bogart in The African Queen, trying to keep the blasted engine running on the boat,” she said. “So much of our energy and budget goes into just treading water. And the more we grow, the worse it gets.”
At Wallis, Max saw cold panic on the faces of the IT staff as they rushed around trying to repair and reboot the system. Doctors and nursing supervisors stood around looking helpless or angry, sometimes a mix of both. Clinicians, having finally been persuaded to use information technology as a primary tool in delivering care, now depended on it to work reliably. When it didn’t cooperate, they—and their patients—were basically screwed.
Now Max witnessed the routine nightmare that many doctors recoiled from. Talented, hardworking, highly paid people were being kept from doing their jobs by the too-unremarkable failure of what had become an indispensable tool. Although everyone in IT was working diligently to fix the problem, diligence wasn’t enough to keep disgust at bay. Wherever Max looked, he saw pain.
And yet Max was also that rarity in medicine—a physician leader who recognized and embraced the value in technology. An early enthusiast of telemedicine, he had participated in long-distance, computer-assisted research conferences and consultations on behalf of his own and other doctors’ patients. He had easily been converted to the view that computerized, consolidated patient records were vastly superior to manila file folders scattered throughout various specialists’ offices, subject to eccentric clinical and record-keeping habits. As CEO, he had shown consistent leadership in visibly championing IT-based innovation. And he enjoyed a close, positive working relationship with Candace.
Even so, all he was hearing from Candace lately was that the IT infrastructure was consuming so much maintenance energy that further technical innovation was becoming a luxury, an afterthought. At Wallis, Max had gotten to see the nature of the problem up close and personal.
Luckily, the situation ended up being resolved without major consequences to patients—this time. But Max was now convinced that something urgently needed to be done. The African Queen was headed toward the rapids.

Medicine Is Different

The day after the squash match, Max sat in a budget meeting in his office attended by Candace and Peachtree CFO Tom Drane. Max wanted to know what it was going to cost to rearchitect technology across all of Peachtree’s facilities. Candace and Tom cataloged the results of a request for information Candace had put out earlier in the year. Max paid nervous attention. The combination of IT and big, hairy numbers was certainly not unheard of, but it was still intimidating, mysterious, and worrying. Moreover, it was hard for Max to reconcile the task of standardization with all the realities of the health care mission.
Sometimes Max envied Paul Lefler the dispassionate nature of the banking business. No patients, only customers—and most of them just wanted something simple: a loan, a place to put their money, a way to get at it easily. Paul could choose end-to-end standardization with a clear conscience.
Health care, though, was different. It was a matter of life or death. Doctors—not wizards of finance—were the authority figures of greatest consequence. Any effort to control or otherwise interfere in physicians’ duties was scrutinized in the long shadow of the Hippocratic oath. For that and other reasons, mergers were not typically a feature of market behavior among hospitals. Often when they were tried, hospital mergers failed. Each institution had its own idiosyncratic, doctor-dominated identity. Put one together with another, and you’d constructed an oxymoron—a health care “system.”
Or so the wisdom went until Peachtree did its first merger and created a potent synergy between two great teaching hospitals. Now Max presided over a federation of 11 hospitals of assorted sizes and special purposes, each with its own proud history and culture, each with its own weird mishmash of IT systems of various vintages and vendor pedigrees. Soon, depending on just how much standardization he ultimately decided to pursue, Max was going to rock the whole boat either a little or a lot.
Presently under consideration were proposals for what Candace called monoliths—massive systems running massively ambitious enterprise software that would compel the arduous redesign of every business process. The hardware and software, she explained, “are the tip of the iceberg costwise. It’s everything that comes next that makes this so expensive.”
Tom reached across a small conference table and turned the page in a three-ring notebook assembled for Max’s edification (Max was famously scornful of PowerPoint). “Looking at benchmark data for implementations of comparable size,” said Tom, “you see there’s potential for the cost to multiply two or three times over budget.”
Max admired the way Tom could convey a thoroughly terrifying possibility without betraying the slightest vocal stress—the CFO version of bedside manner.
“Really?” said Max. “Two or three? Depending on what?”
“Mainly on consulting services,” said Candace. “The time it takes. How hard it is to change the processes, get buy-in, roll out the system without too much scope creep, train the people, make customizations, fix problems that crop up after implementation.”
“The good news?” asked Max.
“It can work,” said Candace. “It gets the job done. It leaves us with a brand-new homogeneous infrastructure, a single set of systems and applications, complete interoperability and consistency across all of the hospitals, a unified patient records database. Unified everything, really. It’s like we become a single institution with multiple campuses.”
“Okay,” said Max, looking now at Tom. “Is there a number you’d like to leave me with?”
“Five hundred million to a billion,” said Tom. “Spread out over five to seven years.”
“But it could be more?”
Tom shrugged. “It could. But I’m comfortable with a billion at the high end.”

Caveat Emptor Everywhere

On an evening a few weeks later, in mid-July, Candace appeared at Max’s door, obviously in the grip of a fresh enthusiasm. Max was trying to get out of the office for his son’s tenth birthday celebration (the boy already regretted his summer birthday, because most of his friends were scattered to family vacations and camps).
“Five minutes,” said Max. “It’s Teddy’s birthday.” Candace proceeded to take nearly ten.
“As you know, we’ve been goofing around some with SOA,” she told him, pronouncing it “SO-wuh,” a gentle-sounding locution that suggested a seaweed wrap at a Japanese spa. “Nothing too intense, just some prototypes to get a feel for it. My view has been that it’s a couple of years away from being ready as an option we’d have a lot of confidence in. But maybe there’s a way to manage the risk of being more aggressive.”
Max understood service-oriented architecture in a limited way. It was the latest hyperbolic promise of technology magic, a way of parsing information systems into modules that perform discrete services. Built out of reusable strands of programming code, these modules could be reconfigured, Lego-like, into new applications at a diminishing future cost. With Max’s blessing Candace had funded some SOA experiments; the results had been mixed but still were encouraging in the proof-of-concept sense.
“What’s good is that this would give us a lot of agility. We could easily change a system. We could try something out on a limited scale and move forward in small steps to keep the risk lower. But the thing for you to bear in mind is that SOA gives us the flexibility to go after selective standardization. It’s not a my-way-or-the-highway kind of deal.”
Max nodded, intrigued. Nevertheless, he remained standing and edged toward the door—he had to stop at the bakery on the way home to pick up the cake his wife had ordered. Candace talked faster. “The problem is, the SOA market’s not mature yet. There’s a lot of unpredictability. The vendors are still feeling their way along, and the risk for us is we become a victim of their—and our own—steep learning curve.”
After a couple of further ambiguous upside and downside observations, Candace released Max. In the car he continued processing the conversation. It was the devil you know versus the one you don’t. But the thought of surrendering on the question of selective standardization continued to nag at Max—it was a choice with huge implications for the indigenous clinical cultures of Peachtree’s original parts. A monolithic system would render the surgical approach difficult to the point of impossibility. But SOA might blow up in everyone’s faces, leaving Peachtree with selectively standardized chaos that was scarcely better than what existed today.
At the bakery Max was impressed by the colorful sheet cake. It was tomahawk themed for the Braves—Teddy was a big fan of Andruw Jones.

A Femur Meeting

At Max’s urgent behest, Candace presented the pros and cons of the SOA option to a small strategy task force, whose deliberations would inform Max’s recommendation to the board of directors. They met in a 12th floor conference room known as Femur (all of Peachtree’s meeting spaces were named for least-disagreeable body parts, mainly bones).
“No choice is perfect,” Candace said by way of introduction. “But who knows? Maybe there’s something here for us.” At a meeting two days earlier she had sketched out the monolithic system, scaring everyone with its price tag.
The team had originally been impaneled to give more shape and detail to Max’s goal of surgical standardization. It had made progress toward identifying best-practice opportunities and flagging areas where physicians and institutions should—for now, at least—be left to their own devices.
At the outset of this process, Max had framed what for him was the key issue: “We could declare that everyone in this building will from now on wear uniforms,” he said. “We’d then have an office-wear standard, but what would be the point? Standardization has to be seen in the context of something gained. Do no harm, right?” But now the whole strategy was up in the air. Max firmly believed that Peachtree’s best long-term bet—exemplified by his cautious approach to standardization—was to preserve at all costs the hospitals’ flexibility to respond to constant change. But Paul Lefler and others saw his caution as timid. Their view was that only by creating a thoroughly unified institution would Peachtree shed its legacy, premerger shackles.
Besides Max, Candace, and Tom, the team consisted of the COO, presidents of two of Peachtree’s hospitals, and the president of the Peachtree Healthcare Foundation, the company’s nonprofit research arm.
Candace moved quickly through her formal briefing, careful not to dive too deep, so there would be time for questions at the end. Tom asked who else in the health care industry was aggressively adopting an SOA strategy. “No one that I’m aware of,” she said. “To be honest, that’s one of the reasons key vendors are eager to work with us. They want to get some health care cred. On the one hand, that motivates them to be flexible on pricing. On the other, it makes us the guinea pigs.”
Max listened as Candace laid out the risks and uncertainties. SOA was new and had no industry track record, she said. “So it’s very hard to estimate with any reliability what a given unit of progress will cost, how long it will take to achieve it, and how close the resulting service will come to performing the way we intended it to. The concept of SOA suggests that it’s less expensive in the long run than the monolithic system, but we don’t have any data from other health care institutions to prove that. So you can’t rule out that it might end up costing the same.”
Max found himself wanting Candace to be just a little more upbeat on SOA. She’d incited him to think about it, and now he was beginning to wish he’d never heard of it. “So, why would anyone bother with it now?” he asked her.
She proceeded to share the Candace Markovich Theory of the IT Future: SOA was potentially the migration path to a transformative way of creating technology capability. “I really do believe that’s true,” she said. “So you can imagine how it might not totally thrill me to think about spending a bazillion dollars on a brand-new, shiny dinosaur that we’d be stuck with at a point in history when the IT world is moving someplace else. That isn’t a choice I’d want to have to make. But I can see the logic in making it, because SOA is still kind of a crapshoot.”
How should Peachtree try to fix its IT infrastructure problem?