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Community Health Network: Anatomy of finance transformation

Community Health Network - Community Health Network: Anatomy of finance transformation“We were spending more time entering and formatting data than analyzing what was driving performance. It could take three months to transform data into insight. By then, it was too late.”
Holly Millard, Senior Vice President, Finance, Community Health Network 


The client

Community Health Network (Community), a nonprofit health system with more than 200 care sites and affiliates throughout central Indiana, has a full continuum of care that integrates hundreds of physicians, specialty and acute care hospitals, surgery centers, home care services, MedCheck clinics, and behavioral and employer health services. It includes 1,200 staffed hospital beds; 13,000 employees; 2,000 physicians, of which 500 are employees; and an operating revenue of $2.1 billion.

The challenge
Community has grown and expanded through M&As and alliances over many years, developing into a major regional health care provider.

Each newly introduced entity brought its own set of business processes and financial systems. The result was an amalgam of different tools, applications, and approaches to financial operations and data management — an increasing level of complexity for the organization and a decreasing level of visibility of meaningful performance information. With each addition, the real integration work remained behind the scenes within operations.

What the team did
Community was determined to find an implementation partner that understood the complexities of large-scale transformation and health care finance and accounting, possessed the technical skills and experience to deliver multiple interlaced systems, and had both proven program management capabilities and bandwidth. Community selected Grant Thornton LLP as an innovative process and technology leader.

For the underlying technology to support the total overhaul of finance processes and infrastructure, Grant Thornton recommended a suite of Oracle applications. Bryan Wiggins, principal in Grant Thornton’s Technology Solutions practice, explained the choice: “Community was attracted to the Oracle suite because they were able to cover their entire landscape of needs with best-in-class leading solutions from a single industry-leading vendor, taking advantage of products that are strategically engineered to work together. Grant Thornton is a specialized Oracle partner with knowledge across all application areas. Community was attracted to our Harmony Approach to technology-enabled, large-scale transformation. Through Harmony, Grant Thornton aligns; integrates; and optimizes industry best practices, business processes and enabling technologies. This approach allows us to help clients gain efficiencies, improve compliance and enhance decision-making capabilities across their organizations in support of strategic objectives.”

Community and Grant Thornton adopted an integrated team-without-borders approach to ensure that client and consultant worked together to meet an aggressive schedule, utilizing:
  • Dedicated resources committed from both organizations
  • Full-time program managers with both organizations
  • Specialists from both organizations dedicated to each phase of the transformation

The team’s first project was to convert the entire network to a common language, starting with the chart of accounts (CoA). The team started by analyzing the largest entities’ chart structure. Redesign focused on transforming CoA details with the hospitals, physician practices and overhead organizations, as well as normalizing department numbers across the network. Two supply chain components — a unified item master and a single vendor master — were also targeted. This was necessary because of the variety of ways products were defined and ordered, the different identifiers of items and vendors, and the lack of four important elements: ability to produce clear inventories or cover shortages by sharing inventory, insight into network spending volumes with individual vendors, foundation for negotiating the best possible contracts, and means of enforcing negotiated agreements.

Wave 1
The team worked toward the go-live date to deploy key systems — and to customize. Grant Thornton configured an Oracle application to provide accurate cost and revenue data for more effective budgeting and planning. With this tool, data can be pulled from every conceivable resource, including general ledger, supply billing, labor cost and the clinical data warehouse. Even pounds of laundry can be linked to specific patient services.

Wave 2
Everything related to supply chain operations was bundled. Wiggins responded to concerns about potential effects of this complex phase on work lives: “A critical focus was ensuring no disruptions to the delivery of patient care, even as significant changes were being made to the procurement and inventory management processes.”

Change management was vital to the entire effort, according to Community’s Senior Vice President of Finance Holly Millard: “We engaged Grant Thornton to complete a change readiness assessment of our organization. They interviewed stakeholders throughout the organization. Those findings helped us understand where we had weaknesses that required special attention, communication and training.” To build support across the organization, key leaders were engaged throughout the project.

Outcomes
The newly consolidated financial system provided an opportunity for Community to accurately understand what had never been transparent before: the true cost to deliver services.

The entire health system shares definitions for crucial chart structures. The common language resides in an Oracle application, which also manages job code classifications and reconciles the item master — reducing the number of items and vendors by thousands, and centrally managing ICD-10 mappings.

With a single vendor master, Community now has visibility into spend for these vendors across the network. Standardized item and vendor master data allows Community to negotiate aggressive volume discounts, and enforce preferred vendor and purchasing policies systemwide. Electronic data interchange transactions are now more broadly and deeply deployed, and time and labor performance in handling and logistics at the receiving dock are improved by as much as 40%.

For Community, costing has become a science.
Grant Thornton Technology Solutions Director Cynthia Moehlman explained: “By and large, health care organizations lack consistent data and insight to their actual costs involved in delivering a service. By costing all the way down to ground zero, Community is able to understand and compare costs across physicians, facilities, supply types and procedures throughout their network. They can develop analytics to understand the differences at a facility or even physician level.” Amy Campbell, Community’s North Region vice president of finance, said that previously, “…we had no standard approach or platform for planning and budgeting, and no reliable sources of data. It was a largely manual process. With this project, we adopted both a standard paradigm and tool for budgeting.”

One of the two full-time program managers, Grant Thornton’s Technology Solutions Senior Manager Sharon Harrell, noted, “In the first quarter [of the finance and reporting wave], the new systems eliminated two days of manual consolidation effort in the month-end close process, empowering much deeper review and analysis of the financial data.”

With the sweeping transformation behind them, Community and Grant Thornton project leaders offer these lessons for others’ future success:

  • Examine the state of your current finance infrastructure.
  • Don’t think small.
  • Prepare for the future.
  • Focus your team.
  • Engage senior leadership directly.

The biggest takeaway for Community’s Holly Millard? Surround yourself with a team you trust.

See the full case study for details about the finance transformation.

Contact
Bryan Wiggins
Principal
Technology Solutions
T +1 513 345 4630

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

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