WRH board OKs budet, major investment in technology
WORTHINGTON -- At Monday's board meeting, the Worthington Regional Hospital Board of Trustees agreed to move forward with the implementation of an electronic information system as proposed by Sioux Valley Health System and also approved the hospital's budget for 2006.
Representatives from SVHS gave an extensive presentation on the proposed Epic information system, which has been given the internal name of docZ in honor of one of Sioux Valley Hospital's founders. SVHS began investigating options and seeking input from its clinicians regarding electronic information processes in 2003. Epic would basically get rid of all paper records within the health care system, relying on electronic operations for all functions, including billing, recordkeeping and charting of patients.
"We have 90 locations, and each location has its own paper record," explained Arlyn Broekhuis, chief information officer of SVHS. "We wanted to move out of a location-centric system to a patient-centric system."
After multiple evaluations of what's available in health care information, Epic became the system of choice. Broekhuis noted that Epic is already utilized in health care operations providing care to 55 million patients throughout the country. He also shared a comment from a clinician who is already utilizing Epic -- "You'll have to peel my cold, dead fingers off my mouse before I go back to paper."
For the WRH board members, the major drawback to implementing such a system was the price tag -- $2.2 million over the next six years -- which amounts to an increase in information technology costs of $1.4 million in that time period. Board members debated what the return would be on the substantial investment, but were finally convinced that going with the Sioux Valley proposal was the most cost-effective option for something that was inevitable.
"We believe it is the wave of the future," said WRH chief executive officer Mel Platt. "We're going to have to do it sooner or later. Yeah, $1.4 million over six years is a big investment, but we're going to have to do it. We'd like to see you give us a directive to proceed with the implementation. ... Indications coming from Washington are that by 2009, we will have to have electronic records."
After the board gave its approval to move ahead with Epic, board member Steve Dudley directed a comment regarding the ever-increasing costs of health care to the SVHS representatives: "We have to show the general public that this has improved their medical care. We're just adding costs and adding costs, and what's the benefit?"
Implementation of docZ at WRH will begin in November 2006 and will gradually be phased in over five years.
WRH Chief Financial Officer Bruce Viessman presented the final budget for 2006. The budget includes a 5.9 percent rate increase; contractual adjustments of 39.5 percent; and a 4.92 percent increase in expenses. The expense increase reflects an expected 8 percent increase in health insurance costs, 3.4 percent increase for union contracts and step adjustments; and increases in purchased services, including those for information technology from SVHS. Proposed capital equipment expenditures were approximately $359,000 for medical equipment, $124,000 for non-medical, and $251,000 for contingency. Viessman also projected that the capital equipment budget would have to increase substantially in 2007, to $1.15 million.
The approved budget is based on a 5.24 percent return on operations.
In WRH's current financial statement, which was presented earlier in finance committee portion of the meeting, the return is 6.38 percent for the current year to date, compared to a budget of 4.32 percent and last year of 3.86 percent.
For October, total patient revenue is over budget by $30,112 (1 percent), driven by outpatient volume. Outpatient visits were above budget for the month by 314 visits (9.19 percent). Income from operations for October is $151,257.
For all of 2005, net operating revenue is $282,374 (2 percent) under budget while operating expenses are $635,102 (4 percent) under budget. Income from operations for 10 months is $1,131,428 compared to a budget of $778,700 and last year of $656,756.
"With only two months left, I can finally say it looks like we're going to have a good year," said Viessman. "I think we're going to do OK."