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Hyperion Planning: A case-based budgeting approach flexed for volume

“With Hyperion Planning, we’ve adopted both a standard paradigm and a shared tool for budgeting.”
Amy Campbell, North Region Vice President of Finance, Community Health Network  

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 was planning a total overhaul of its finance infrastructure. Community’s leaders sought to replace an unwieldy maze of disparate general ledger, budgeting, planning, purchasing, supply chain and related systems with a single set of integrated applications.

The challenges
Financial planning and analysis were major weaknesses for the network, without a standardized approach or a common technology platform. Some entities provided only an annual budget, while other entities focused on quarterly forecasts. The inconsistent processes and approaches limited the system’s ability to perform meaningful variance analysis.  

Entities used differing processes and levels of detail:
•    Rolling forecasts versus annual budgets
•    Accounts and departments versus income statement line items and entities
•    Offline solutions in Excel, which limited transparency of the underlying business drivers
•    No consistent use of driver-based planning concepts

What the team did
Grant Thornton LLP worked with Community to implement a case-based budgeting paradigm as its system-wide standard to support accurate financial planning. Using this approach, facility leadership estimates volumes for each patient case type that will be performed during the year. Historical utilization data is used to determine the correct revenue and cost rates. The planning model applies these rates to the case volumes, generating accurate projections.

As its platform, Community selected Oracle’s Hyperion Planning (HP) tool to provide:
•    A financial planning platform with the ability to plan at the product line, facility and department levels
•    Three planning models with unique functionality for acute care, ambulatory care and network shared services
•    Linkages with Community’s integrated financial systems for accurate historical rate information

Outcomes
Case-based budgeting concepts and Hyperion Planning help Community leverage accurate and detailed historical cost data with current volume estimates to project future results. This approach allows Community to apply the budget rate to actual volumes for flex budget reporting in order to analyze financial results against expected performance.

The system’s multiple planning models allow Community to maintain connectivity between hospitals and physicians, and still incorporate that data into a third consolidation model for combined reporting at the network level.

In addition, HP synchronizes seamlessly with the network’s new suite of Oracle finance applications, including PeopleSoft, Hyperion Financial Management, Hyperion Data Relationship Management, Hyperion Profitability and Cost Management, Oracle Business Intelligence Enterprise Edition and Oracle Essbase, as well as the other electronic health record, timekeeping and HR-related systems that form the heart of Community’s finance system infrastructure.

Community Health NetworkContacts
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

Todd Wegener
Consulting Senior Manager
Business Advisory Services
T +1 913 272 2708