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Hyperion Profitability and Cost Management: Delivering truly accurate cost data

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“By costing all the way down to the transaction level, Community Health Network is able to understand and compare costs for physicians, facilities, supply types and procedures across the organization.”
Cynthia Moehlman, Director, Technology Solutions, Grant Thornton LLP
 
The client
A nonprofit health system with more than 200 care sites and affiliates throughout central Indiana, Community Health Network’s full continuum of care integrates thousands of physicians; hundreds of specialty and acute care hospitals; and numerous surgery centers, home care services, MedChecks, and behavioral health and employer health services.

Community Health Network at a glance
Patient encounters: 2 million annually
Staffed hospital beds: 1,200
Hospital admissions: 54,000 annually
Outpatient visits: 1 million annually
ER visits: 275,000 annually
Outpatient surgeries: 85,000 annually
Inpatient surgeries: 13,000 annually
Physicians: 2,000; 500 employed
Employed physician visits: 700,000 annually
Employees: 13,000
Operating revenue: $2.1 billion annually
Numbers are approximate.
The situation
Community Health Network planned a total overhaul of its finance infrastructure. Its leaders sought to replace an unwieldy maze of disparate general ledger, budgeting and planning, purchasing, supply chain, and related systems with a single set of integrated applications.
 
The challenges
Like many health care organizations, Community struggled to understand the actual cost of delivering care services. Because of inconsistent tools and an application that did not function for all facilities, the organization had no true understanding of costs. It also had no visibility into profitability associated with its various services.

What the team did
Community selected Oracle Hyperion Profitability and Cost Management (HPCM) to bring clarity to an opaque costing process.
 
HPCM provides the ability to pull data from multiple resources. Primary data sources for Community’s cost project include multiple general ledgers — PeopleSoft; Meditech and Hyperion Financial Management consolidated financials; as well as billing systems for supply costs, human capital systems for labor costs, procedures, and tests from EHR systems. With the HPCM implementation, even square feet and pounds of laundry are linked to specific patient services.
 
Outcomes
For Community, HPCM creates allocation models that are flexible and traceable across the entire organization, including shared service groups, hospitals and physician practices. The system reveals the true cost to deliver comparable services at Community’s many locations and — when paired with revenue — the profitability generated by those services.

HPCM also provides valuable insight to help Community improve operational outcomes, efficiency and profitability across the organization through analytics that show cost and profitability differences at both the facility and the physician levels.

Utilizing HPCM features, the implementation team produced multiple costing models. Two primary models are for physician practices and acute care. Both operate consistently across the organization and are consolidated at the network level. There are plans underway to add models such as one for home health.

In addition, HPCM synchronizes seamlessly with the organization’s new suite of Oracle finance applications, including PeopleSoft, Hyperion Finance Manager, Hyperion Data Relationship Manager, Hyperion Planning, Oracle Business Intelligence Enterprise Edition, and Essbase as well as the other EHR, timekeeping, and HR-related systems that form the heart of Community’s IT infrastructure.
    
Community’s finance transformation provided the means to improve costing methodology and leverage complete and accessible data to deliver accurate cost and profitability insights into the financial health of the organization.

Cost methodology for health system profitabilityContacts
Bryan Wiggins

Principal
Technology Solutions
T +1 513 345 4630

Sharon Harrell
Senior Manager
Technology Solutions
T +1 404 475 0020

Cynthia Moehlman
Director
Technology Solutions
T +1 913 272 2771

Maura King
Key Account Executive
Health Care Advisory Services
T +1 312 602 8216