An Rx For Curing Acquisition Ailments

A Standardized Environment Helps The Medicine Go Down

In just a few years Integrated Health Services, Inc. grew from a $500 million companyto $3 billion, with 1,700 service locations spread across 47 states. The question for theIT management team was how to prevent becoming a bottleneck for the company's dailybusiness processes and how to expand IHS's repertoire of health services.

In many regards, post-acute healthcare companies such as Integrated Health Services,Inc. (Owings Mills, Md.; IHS) have a similar business model to that of other fast-paced,consumer-oriented industries. Retail products, hotel chains and even financial servicesenterprises frequently follow a 'growth by acquisition' strategy that often results in acompany providing specialized new products and services almost overnight.

IHS faces the additional challenge of continuing to provide high-quality healthcare inan environment of changing reimbursement regulations. Cost-efficiency would be thedetermining factor in who survives and who fails in the industry. Add to this the growingdemand by payors to contract with a single provider of all patient services to streamlinebilling and reimbursement processes.

These challenges create a growing need for healthcare providers to leverage existingoperating efficiencies while still expanding services by supplying a broad umbrella ofhealth services that cover all patient needs following hospital discharge. Successfulhealthcare firms have created just such an umbrella through the acquisition of otherproviders.

IHS had grown through acquisition of firms specializing in skilled nursing,rehabilitation, hospice, home respiratory, infusion, lithotripsy, diagnostic, geriatriccare and home healthcare services. But its goal of offering cost-effective patient care asa single provider for all post-acute care needs hinged on the ability to update and accessinformation quickly from any IHS branch.

Growth through acquisition places strenuous demands on any IT infrastructure. IHS is avery distributed and decentralized firm, with 500 long-term care facilities and thousandsof therapy and mobile x-ray contracts across the country. Because the "product"of healthcare providers is knowledge-based service with very special expertise, staff atIHS branches has a critical need to access yesterday's data to make informed decisions forthe next day. Its goal of offering cost-effective patient care as a single provider forall post-acute care needs hinges on the ability to update, access, and communicateinformation seamlessly across all IHS locations.

Criticality Of IT Care

The company's aggressive growth through acquisition brought with it a hodgepodge ofproprietary IT environments and legacy applications that made information sharingdifficult. In addition, payroll and billing were performed locally by a variety ofapplications and payroll services. The IHS IT department was faced with the daunting taskof unifying these diverse systems and bringing more than 80,000 employees into a singlecorporate human resource, financial and payroll system. This system also needed to provideconsistent reliability and true 24x7 accessibility.

The solution proved to be an open systems approach to rebuilding the company's ITinfrastructure. Open systems let the firm move away from proprietary networks and build aframework of standardized hardware components (HP servers and PCs and EMC disk arrays) anda corporate intranet to support data communication between IHS branches and corporate HQ.Diverse legacy financial applications were replaced with PeopleSoft to provide uniform andcentralized payroll, HR, revenue management and control, procurement, corporate accountingand tax reporting.

Another Kind Of Tax Cut

PeopleSoft gave IHS staff at remote sites access to applications and reporting usingthe corporate intranet as the source. IHS staff members immediately realized the benefitin having the reports they wanted and the flexibility to manipulate screens. At year-end,streamlined payroll processing and the ability to update and analyze data cuttax-processing time dramatically.

These applications are supported on HP 9000 Enterprise Servers. HP servers were chosenbased on the recommendation of PeopleSoft and other software vendors as a proven platformto support their applications.

The IHS IT department uses an HP T600/10-way server for testing and development.Another T600 is used for payroll processing at both corporate HQ and branch offices. Thefinancial applications for reporting, tax and corporate-level accounting are supported byan HP 9000 K560. K420 and K460 servers support various other healthcare and clinicalapplications. Network management services and HP OpenMail run on a K460 server. Networkperformance and response times have been improved by installing several hundred HPNetServers at remote locations to support local bill processing.

HP PCs, also chosen for their reliability, were deployed to create a remote access,wide area network. This network gives IHS staff direct access to PeopleSoft, e-mail, thecorporate intranet, data and applications that generate reports across systems.

The IHS IT department asked EMC to do some comparisons with their old legacy systems.The results were that EMC was chosen as the firm's standard storage because it could beused with NT servers. Using EMC disk arrays for archiving and backup also helped reduce oreliminate any downtime that might otherwise be associated with those tasks.

Since the IHS corporate intranet, called "The Gateway," was installed lastsummer, usership has rocketed from about 500 hits a month to 20,000 and is still growing.The intranet hosts all common IHS applications and shared data, permitting reports to begenerated from a PC at any IHS location. Before the intranet IHS was essentially apaper-based company. The intranet has given the firm the ability to do away with most ofthe paper and move toward becoming totally electronic.

Standardization is the key to the manageability and supportability of the new ITenvironment. Using the same platforms, PCs, printers, laptops, environment and softwarethroughout IHS helps IT staff manage those platforms. The open systems approach allows IHSthe free use of applications, enabling the IT department to solve potential bottlenecks byadding components as needed.

Open systems also helps the company expand and contract as needed. By standardizing onwell-known products and protocols, IHS has opened up the architecture so that when inacquisition mode, the firm can acquire companies seamlessly because no proprietaryboundaries exist.

Just by putting a PC on a desk at an acquisition site, IHS can provide new users withaccess to e-mail, the corporate intranet and shared systems -- sometimes in a matter ofhours. Because all branches have the same standardized components, open systems also makeit easier to sell pieces of the business as needed, as evidenced when the firm recentlygot out of the home healthcare business.

While it's true that IHS is successful by managing its solution vendors, it's theresulting synergy of the relationship that assured successful deployment here. These days,solutions must be quickly structured and tailored to industry- or company-specificaspects. The job requires the expertise and dedication of the vendors involved. Processrequirements planning, specifying and configuring software and servers, benchmarking,optimizing, deployment and training all can proceed more smoothly and on-schedule when ITgroups have pre-built effective relationships.

Under Pressure

With the pressure on our IT group to provide more at a lower cost, agility andcapability with data and network management tools and leveraging vendor relationships growin importance. At IHS, for example, the Technical Services Group staff has grown, but interms of operations and Help Desk costs they've gained significantly larger economies ofscale.

They've built up enough CPU, networking and router capacity to be able to handle newacquisitions while involving much lower overhead than anticipated. This keeps theTechnical Services Group off the critical path, keeps them from disappointing companyexecutives about the speed with which a new acquisition can be brought in line and becomea corporate asset. More importantly, acquisitions quickly become new healthcare resourcesand options for IHS customers.

For these reasons, IHS sought enhanced management capabilities for the new ITinfrastructure. It was also important to centralize management capabilities and enable arelatively small management team to operate this extremely distributed environment of over500 servers across the country. In order to allow remote support comparable to the qualityof on-site service, IHS is currently implementing several HP OpenView products, includingIT/Operations and Network Node Manager. Other specialized applications such as CiscoWorks,Visual Network's manageability platform and Computer Associates' tools are also beingintegrated with HP OpenView.

Because of the openness and standardization of the platform, the Technical ServicesGroup can now react very quickly to problems and take themselves out of the critical pathof major projects. They've provided the infrastructure, hardware and support structure forthe next round of business growth and healthcare service improvements

-- Drew Krushinski is vice president of IHS Technical Services and has 14years of IS experience.