Published on 02-Jul-2009
Validated on 18 Jul 2013
"With SAP ERP, the savings on purchasing costs alone have produced an immediate 100 percent return on our investment." - Lola González, Chief Financial Officer at ICS
Institut Català de la Salut
C-Suite Framework, Enterprise Resource Planning, Information On Demand, Optimizing IT, Leveraging Information, Optimizing IT, Smarter Planet, Supply Chain Management, Transforming Business, Virtualization
IBM Business Partner:
Institut Català de la Salut (ICS) runs eight hospitals and 470 primary care units located in Catalunya, Spain. With a budget of some 2.6 billion Euros, ICS hospitals offer almost one-third of all beds available within the Catalan Hospital Network. ICS employs some 40,000 people and covers the whole range of healthcare services, primary care, acute care and specialized services.
Collecting group-wide information from its self-developed applications made analysis and improvement costly and ineffective for both business management and clinical outcomes.
Working with IBM Global Business Services, ICS deployed a full range of SAP applications including the SAP for Healthcare solution, on IBM Power Systems servers and IBM System Storage hardware. ICS chose IBM as a partner for the whole transformation program, including application management, development, system operation, call center and hardware.
Early cost-reduction estimates range between 5 and 10 percent, principally from gains in procurement efficiencies and inventory control; this has delivered an immediate 100 percent return on investment. In one hospital, third-party invoicing levels increased from 74 percent to 92 percent. From the clinical point of view, ICS runs a patient-centric system that improves health quality, safety and accessibility.
Institut Català de la Salut (ICS) runs eight hospitals and 470 primary care units located in Catalunya, Spain. With a budget of some 2.6 billion Euros, ICS hospitals offer almost one-third of all beds available within the Catalan Hospital Network. ICS employs some 40,000 people and covers the whole range of healthcare services, primary care, acute care and specialized services. With more than 4,000 inpatient beds, ICS provides care delivery services to more than 6 million people. Handling more than 46 million primary care visits, 2.7 million outpatient visits and 215,000 inpatients per year makes ICS the largest healthcare provider in Catalonia.
Coordinating both medical and support activities was a complex challenge. For example, with separate purchasing departments in its different operational units, ICS was not able to exploit vendor economies of scale. At the medical level, the different systems and procedures within the various hospitals made it very difficult to compare and improve efficiency, as the data was effectively isolated in each unit’s systems.
Lola González, Chief Financial Officer at ICS, comments, “Technically and financially, it was clear that we could solve the issues by working with IBM Global Business Services. The first milestone was the support of the doctors. It was essential for the success of the project to have the doctors’ support on how the solution could help them to work in a better and more efficient way.
“The first step was to invite more than 200 doctors to advise on a solution developed by IBM, contributing as project owners and not merely as spectators.”
Meeting the challenge
At each hospital ICS was running in-house developed software, not truly capable of meeting the needs of the group. It lacked scalability, and had not originally been designed for collecting and integrating data from multiple sites. The group considered writing its own software, buying an integration solution, or reconsidering its strategy completely.
“We believe that every business should be focused on what they know best, and we at the ICS specialize in taking care of people, not software. Working with IBM, we took an early decision to move to SAP software to manage the business, and selected the SAP for Healthcare solution,” says Lola González.
IBM Global Business Services was selected to analyze and design a new corporate model, including the implementation of a single information system based on SAP applications. The service included the detailed system design, building, testing and implementation. With advice from the IBM Global Business Services team, ICS implemented a suite of SAP ERP applications.
IBM Global Business Services was able to assist ICS with the design, building, implementation and test of new business processes and new ways of working, supported by its ability to deliver on a complex program with thousands of users who need constant 24-hour access. In addition, ICS provides a high-profile service of direct social and political relevance for the local population, and it was important that ICS selected a trusted partner.
The combination of SAP ERP for general business management and the industry-based offerings provides a comprehensive range of integrated systems for ICS, where it is possible to control every operational process from within a single environment.
IBM Global Business Services – Application Management Services was subsequently selected to provide the ongoing maintenance and development.
Building a new infrastructure
With the help of IBM Global Technology services, ICS implemented IBM Power 505 servers and an IBM BladeCenter with JS12 Express blade servers to run the main SAP applications under IBM AIX, while the Oracle database runs in AIX partitions on two IBM Power 590 servers. These servers all utilize IBM POWER6 processors, which combine excellent performance with impressive energy efficiency – helping to reduce operational expenditure on power and cooling. The two database servers are clustered using IBM PowerHA technology, providing business continuity even in the event of a hardware failure.
The environment is supported by a storage area network based around IBM System Storage DS8100 hardware, which provides a high-performance, highly scalable storage architecture. IBM Tivoli Storage Manager handles backup and restore processes, using incremental backup technology to reduce backup windows and reduce the amount of data that needs to be copied across the network.
IBM Global Technology Services delivered the infrastructure implementation from end to end, and now manages both the hardware and the user help desk as an out-tasked service. The machines themselves are co-located at a data center run by a third-party service provider.
Managing cultural change
The SAP ERP solution, including finance, controlling, logistics, purchasing and inventory management has now been deployed to all ICS hospitals. The SAP for Healthcare solution has been deployed to half of the hospitals, with program completion due in June 2010.
Lola González remarks, “IBM Global Business Services has helped us conduct thousands of hours of training at the hospitals, a particularly valuable exercise. For example, for a 600-bed hospital, IBM completed training for 2,300 people – and this was an essential part of the project’s success. As with any ERP implementation, the technical side is only half of the story – it is absolutely vital to manage the change in working practices too. IBM is one of the few organizations with the size, skills and industry commitment to do both.”
Improving process efficiencies
With the SAP applications in place, ICS now has a central view of hospital operations. For example, procurement has been centralized in a shared service center, which allows ICS to place more cost-effective contracts with suppliers. In turn, by aligning purchasing more closely with each hospital’s needs, ICS has been able to reduce its total inventory of medical supplies, freeing up capital and reducing physical storage requirements. The whole ICS logistics network is now managed by a unique third-party logistics operator in order to assure adequate service levels for all the services – reducing stock levels while minimizing stock shortages.
“With SAP ERP, the savings on purchasing costs alone have produced an immediate 100 percent return on our investment,” says Lola González. “The centralized procurement has helped us gain a much clearer picture of what we require, and enabled us to put in place new plans for contracts for the next three or four years.”
The funding agencies benefit from more efficient operating processes, with lower operating costs and savings due to shared services, and an improved revenue stream. Early cost-reduction estimates range between 5 percent and 10 percent. In one hospital, third-party invoicing levels increased from 74 percent to 92 percent. Procurement costs are being significantly reduced, taking into account economies of scale across all the member organizations. Better requirements forecasting minimizes waste and avoids overstocking, which was common under the previous independent systems, as individual institutions tended to over-order to ensure availability of drugs and supplies.
For non-clinical managers, patient data can be combined with the purchasing and related business information to allow the team to understand and analyze the performance of different hospitals, in terms of business efficiency and cost control.
“This is something we could never do before – gain insight into how our healthcare-related processes interact with our operational and financial processes,” comments Lola González. “The SAP solution enables us to generate regular reports on which treatments are most popular, most effective, and most cost-efficient – so we can improve patient care while enhancing budgetary management.”
In addition to the administrative and operational advantages, the SAP applications also provide enhanced functionalities for healthcare-specific processes. All patient information – whatever hospital initally collects it – is managed centrally by the SAP for Healthcare solution. As a result, doctors at any hospital can access complete, consolidated patient charts and records, enabling them to diagnose and prescribe more easily. Moreover, with all patient data now handled electronically, there is no risk of misplaced records.
Patient safety is improved with end-to-end process management technology that provides the proper access, continuity, and coordination of care – and mitigates human error by utilizing specific medical logic and enforcing safety protocols. The system even enables automated scheduling for appointments with medical services such as x-rays, MRI scans and other specialist functions, and delivers the results in real-time. Duplicate tests are eliminated and return hospital visits minimized.
Doctors, nurses and other healthcare professionals are able to provide the best service to their patients because up-to-date information on every patient is available to all hospitals, medical care centers and administrative offices throughout the region.
Shared patient data is also enabling health professionals at different hospitals to examine aggregated treatment results from different medical approaches from across the group, and adjust their own practices accordingly (“evidence-based medicine”). This is designed to improve patient outcomes by taking data formerly only available on a hospital-by-hospital basis, collating it in a way that was not possible before, and making the information available collectively, to help identify the most successful and cost-effective treatments.
The improvements in procurement and inventory processes are also having a beneficial effect on patient care. Resources can be balanced to meet current needs, and optimized use of resources helps more people get access to the care they need, when they need it. For example, patients can be assured of drugs and supplies being available when required.
A unified, standardized solution
Lola González comments, “Now that ICS has a single solution for all its units, we have standardized information at every hospital. We have improved our security of information, with gains in system reliability. We are all able to work the same way, based on the same information. Culturally, we are now one company rather than the sum of eight independent units working by themselves, which is a great benefit to Catalunya, ICS and, of course, the patients.”
Products and services used
IBM products and services that were used in this case study.
High Availability Cluster Multi-Processing (HACMP), Tivoli Storage Manager
GTS ITS Server: Server Product Services for Power Systems, IBM-SAP Alliance, IBM Global Business Services, GTS Data Center Services
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