Agaplesion AG

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The not-for-profit company, Agaplesion AG, is structured as a holding company consisting of 14 hospitals, 17 nursing homes for the elderly and a range of service companies. The organisation’s shareholders are German evangelical churches and various charitable foundations and institutions. In 2007, the group generated a turnover of around 400 million euros and employed some 6,500 staff. To assert itself in the market, the company’s services and costs must be transparent and traceable—in order to recognise potential improvements, incorporate new economic and medical requirements and exploit opportunities. To meet these requirements, Agaplesion opted for the group-wide introduction of a business intelligence (BI) solution from IBM Cognos in both its medical and commercial operations. At the same time, the healthcare provider automated its consolidation processes with IBM Cognos 8 Controller and linked them to its BI platform.

Challenges faced
The case-based lump sums and cost caps introduced as a result of the German healthcare reform have fundamentally changed the financing and management of healthcare institutions. Alongside medical indicators, business factors have become important measurements for hospitals and other care facilities. Agaplesion AG has managed to succeed in this market context, and much of this success can be attributed to the early introduction of sophisticated information logistics.

“We need to work profitably rather than simply profit-oriented,” explains Sebastian Polag, Controlling Manager of Agaplesion. “This calls for effective control of figures. Where are we? How are things looking at the individual sites? Is the quality of our services at the right level? Are we working profitably?”

Before the company decided to standardise its information logistics on the basis of a BI platform, Agaplesion used spreadsheets to create its reports and analyses. However, this procedure proved both timeconsuming and error-prone, not to mention the low level of detail and tedious process required to analyse complex business connections and issues. The changes in the healthcare market provided yet another argument in favour of the introduction of a comprehensive BI platform, in the form of the company’s external and internal reporting obligations.

Strategy followed
Agaplesion finally decided in favour of IBM Cognos 8 BI, which provided all the required functions in a complete and very user-friendly package. Implementation took place over several phases and was completed by the end of 2006. Agaplesion’s controlling and management staff now enjoy greater transparency across the entire group and access to a wider range of analyses, opening up considerably more management options to ensure the group’s efficient operation. “Healthcare companies handle large volumes of data, from patient diagnoses to treatment information.We can now analyse and evaluate data across the different medical institutions within the group and use it in our decision-making processes. Without a comprehensive BI solution, this would not be possible,” states Sebastian Polag. The controller also placed great importance on a high level of detail. “We immediately took advantage of the implementation of BI to gather as much detailed information as possible.” The new solution has automated and simplified the reporting process.Whereas in the past it took one or two specialist employees to compile the monthly medical reports, these documents are now created and distributed automatically.Medical reports and service controlling take place effortlessly.

Medical reporting is now mapped entirely in IBM Cognos 8 BI. Every head physician and department at the holding company’s institutions receives a comprehensive monthly report containing the latest medical performance data and key economic information, ensuring that specialists have access to all the facts they need to monitor quality and efficiency independently and take any required corrective actions. The departments know precisely where their services are and can plan and implement the appropriate actions.

For strategic control at group level, IBM Cognos 8 BI is used to create performance reports according to a range of business criteria. These reports provide a comprehensive overview of key strategic and economic data for the departments and service providers. Targetto- actual comparisons, strategic analyses for budget negotiations and other detailed evaluations help Agaplesion to ensure the competitiveness of its individual departments and facilities, and to maintain the group’s success in tough economic conditions. The implementation of BI has proven its worth and provided Agaplesion with valuable assistance in positioning itself successfully in the market. Encouraged by its positive experience with IT decision-support, the healthcare provider embarked on the next step at the end of 2007 and decided to update its financial reporting.

As the holding company grew in size, its ownership structures and interests became increasingly difficult to manage. The fact that the holding company and its subsidiaries use different consolidation standards made the process very complex: “Our hospitals need to prepare their accounts according to the Krankenhausbuchführungsverordnung (hospital accounting regulations), while the care homes for the elderly are governed by the Pflegebuchführungsverordnung (accounting regulations for care facilities), and our service companies are commercial entities subject to the German commercial code (HGB). Consolidation then needs to be carried out at group level, once again according to the commercial code. This consolidation process was too complex to handle using spreadsheets, an opinion shared by the group’s auditors.

At the end of 2007, the decision was taken to replace the previous spreadsheet-based and error-prone manual consolidation process with a professional solution. “We needed a solution that was also capable of allowing parallel closing at the touch of a button,” says Sebastian Polag. “IBM Cognos 8 Controller offered this function in an efficient and audit-proof manner.” As well as the ability to map complex ownership structures and interests, the solution’s comprehensive analysis options and sophisticated drill-downs through to individual accounting documents swayed the decision in the favour of IBM Cognos. The application also allows the flexible configuration of interest structures based on different controlling perspectives.

With the support of the IBM Cognos partner Evimcon, the implementation of IBM Cognos 8 Controller was launched in November 2007 and successfully completed in April 2008. The key was the seamless integration of IBM Cognos 8 Controller with IBM Cognos 8 BI, allowing the use of many existing standardisations and structures in the BI system.For instance, the project team was spared the task of creating mapping tables of the individual companies for costs and cost centre plans. The assignments were transferred effortlessly from the BI environment.

The project team also automated data supply, with a wide range of data sources prepared and transferred from subsystems to a data warehouse using ETL (Extract, Transform and Load). The data is then available to both IBM Cognos 8 Controller and IBM Cognos 8 BI. However, the most important data source is the bidirectional link between the BI environment and the consolidation solution, allowing data to be transferred directly from the BI environment to the Controller database where it is then available for consolidation. In the same way, data can be automatically sent back from IBM Cognos 8 Controller to IBM Cognos 8 BI for use in further analyses. For Agaplesion, the automation of group controlling has resulted in a dramatic increase in efficiency: accounting statements can now be created rapidly, with minimal staff resources. The new solution has also improved the quality of financial reporting. On completion of the implementation, the previous year’s annual accounts were reconstructed and checked to ensure that the software reached the same result as in the previous consolidation. “The excellent programming logic and automation helped us to spot some minor inconsistencies in the previous consolidation. This clearly shows that as soon as a company reaches a certain size, technical support in the form of a software solution is essential,” concludes Sebastian Polag.

Benefits realised
Thanks to IBM Cognos, Agaplesion is in a better position than ever before in a difficult market context. The organisation’s business processes are transparent, trends are recognisable and key controlling data can be called up at any time. The group’s consolidated accounts are prepared automatically. One particular benefit for the holding company is the bidirectional link between BI and consolidation, allowing management and controlling to carry out detailed analyses within consolidation. Consolidation data is also available in the BI platform for use in a wide range of reports, analyses and simulations. Group controlling and management staff have continuous access to the latest key data, trend analyses and facts to ensure the optimal control of the holding company in an increasingly competitive market.

Work on the “fast close” objective, with partial analyses for the annual accounts carried out during the financial year, is already underway. The implementation of IBM Cognos 8 Planning is scheduled for autumn, completing the cycle of analysis, reports, consolidation and planning—not forgetting comprehensive performance management. However, the not-for-profit Agaplesion AG is already ideally positioned to provide its services for the long-term good of its patients—true to the concept of “love thy neighbour.”

About IBM Cognos BI and Performance Management
IBM Cognos business intelligence (BI) and performance management solutions deliver world-leading enterprise planning, consolidation and BI software, support and services to help companies plan, understand and manage financial and operational performance. IBM Cognos solutions bring together technology, analytical applications, best practices, and a broad network of partners to give customers an open, adaptive and complete performance solution. Over 23,000 customers in more than 135 countries around the world choose IBM Cognos solutions.