HIStalk Interviews Dan Herman, Aspen Advisors

Dan Herman is founder and managing principal of Aspen Advisors of Pittsburgh, PA.

Tell me about yourself and about Aspen Advisors.

I’ve been in the business for 30 years this month. I did an internship with Rich Correll of the Detroit Medical Center as a management engineer and I always credit him for getting me in this business. 

I worked in decision support, merging medical record and patient accounting data to come up with an early case mix system that I spoke about at HIMSS in the mid ‘80s. I then got into project management with a large revenue cycle implementation. I worked for consulting in the Big 6, or the Big 8 at the time, and joined a small firm called First Consulting Group back in 1991.

I started Aspen Advisors in 2006. We focus on healthcare, really three things. Helping IT executives with difficult decisions related to IT and strategic decisions with investment and planning. Managing large-scale projects and programs, particularly those on the clinical side, with revenue cycle and technology as well. Third, optimizing and looking at how we use the technology better through informatics, clinical content, and process enhancement.

What really distinguishes one consulting company from another other than the people that they employ?

It’s how they serve their clients and what services they focus in on. We’re organized as a multi-specialty group practice. It’s really practitioner-led and professionally managed and I guess I’m the head doc. I think it’s really having that experience of “been there, done that,” working in operations, working in IT.

It’s also core values, that professional integrity. Doing what’s in the client’s best interest and serving them first. And, making sure the associates share your core values and are continually growing themselves. It’s that understanding of what your client is looking for and doing one project at a time. It might be a small project. It’s developing that relationship over time.

With an apparent talent shortage, what makes consultants want to join a company and stay there?

It’s that challenge. It’s growth. It’s having mentors, people to look up to, people who have been there and can help them grow and guide them in their careers. It’s not “one size fits all.” Everyone has different needs and skill sets.

It’s looking for the talent and stretching people’s capabilities. I can make the analogy, “We’ll throw you out in the water, but you’ll have a life vest and we’ll be looking after you the whole time.” It’s getting individuals who are looking for a challenge, looking to grow their skills, and looking to do new things. You hear of consultants who get stuck at a client for a year, two years, three years. We don’t do that. We really look at what’s best for the client and what’s best for the consultant and make sure there’s that rotation there.

What are the pressing priorities and concerns of your clients and how have those changed over the last couple of years?

Going back 5-10 years, our clients have gotten the IT side. They have better leadership. They’re smarter. A lot of the clients we work with are former consultants. They come from the vendor environment.

What they are really looking for is expertise to fill a particular role for a particular period of time. Structure and discipline, whether it be project management or whether it be educating and working with them on a IT service management program. The third area is what I call the advisory – helping an organization with a decision where it’s difficult to make that decision themselves due to internal politics or various opinions such that you really need that outsider.

With respect to some specific areas, clearly the electronic medical record implementation is a priority. We don’t focus on the analyst, the builder side of things. We focus more on how we work with our clients to use the technology and get value from it. How do we shorten the length of stay? How do we reduce the errors? How do we improve the revenue cycle? It’s about the process and the technology coming together and putting methodologies in place for that.

Hospitals are spending up to hundreds of millions of dollars on clinical systems implementation. Do you think they have a solid plan for obtaining ROI and, given potential reimbursement challenges, can they afford those systems?

It depends on the organization. I’m working for one that has about 600 provider physicians and a financing arm associated with it. They’re very integrated from an organization and they have a very clear business strategy. They’re migrating to service line management and have very clear accountabilities.

They’re struggling right now because their IT environment on the EMR side is very, very fragmented. We worked with that organization to put a strategy together and a total cost of ownership model with respect to staying the course with a best-of-breed strategy compared with an integrated solution. Clearly it was in favor of the integrated solution.

Other organizations we’ll work with really don’t need to throw everything out and start from scratch. I’ve heard of some organizations that have recently thrown out Meditech and gone to another vendor. I just scratch my head sometimes if it’s an organization that doesn’t have a lot of capital and doesn’t have a lot case for change. Why throw out the technology? Why not just use what you currently have, better? It depends on the organization. 

Looking ahead, it might be a land grab right now with respect to “Everybody’s throwing money at healthcare IT, and in particular, EMRs.” I think that’s going to change in the next couple of years. With the reimbursement changes that are coming into play — Medicare and Medicaid cuts, some of the aspects of healthcare reform, or healthcare insurance reform, rather — I think there’s going to be big pressure in margins. It’s going to be time to say, “What can we do with what we have? How do we get value out of what we have already and improve things?”

Some predict that HITECH is pushing software sales that were premature and there will be a second wave of purchases to replace them. How do you see that changing the vendor world?

That’s going to be an interesting one. I’ve been in this industry long enough to see vendors come and go. Those vendors and organizations that are focused solely on healthcare, whether it be one niche or the other, will be able to expand services within that.

Those bigger companies with other lines of business — across healthcare, not only in IT but in supply chain and pharmaceuticals and whatnot — I think they might shift their priorities elsewhere. The question is, what’s going to happen to that vendor in the market as far as the support? They’ll be there, but how much R&D will go into that product?

It’s a niche area there are a lot of new vendors coming in. In the EMR area, there is still a Top Six or so on both sides. There aren’t many more if you’re a big place.

You mentioned system and workflow optimization in hospitals. Is that happening or will it happen eventually?

I think it will. It depends on the life cycle. Organizations that were early on with the EMR like Allina, NorthShore Evanston, and St. Luke’s in Kansas City have been at this a long time. They’re past the stage of the basic EMR, revenue cycle systems, and PACS. They are optimizing what they have, but they are also gathering data, the business intelligence side of it. That will continue to occur, but I think it’s going to take a while.

One of the early projects I worked on was decision support in looking at case mix. Today they call it business intelligence and data warehousing. Unfortunately, the tools have changed and have gotten better, but I think the way we use analytics to change behavior and improve outcomes is still lagging.

Are hospitals that engage your company becoming more data driven?

Yes, some of them clearly are. They’ve gone through implementation and are now saying, “How do we improve? How do we use this to improve medication safety? Particularly in a capitated environment, how do we reduce the length of stay and reduce tests?” I see more organizations doing it, but we’re still not at the tipping point.

Aspen works on Epic implementations. Do you have concerns that Epic has so many balls in the air all of a sudden with so many large implementations going on at once?

It’s Epic more than others because, at the expertise level of the builder, the people that have been there, done that are in short supply. It’s a challenge.

We have a client in Louisiana. One of their biggest concerns on the ambulatory side is where they can get those resources, especially since a couple of other organizations in the region are doing the same. It comes down to having some creative HR recruitment and retention policies. We worked with the University of Colorado and they hired up hired up about 70 people on their team. They’re using consultants in a very limited way and they’re done it with some innovative practices.

There are other organizations that have done things like fixed-term employees, to retain individuals for a period of time and then give them to option to stay or leave the project when it’s done. What it comes down to is how creative your organization is in attracting this talent, as well as what part of the country you’re in. That can render a challenge. I don’t think it’s insurmountable, but you’ve got to get a little creative.

Will Epic’s employees be capable of the clinical transformation and optimization work given that their employees are mostly young and focus on Epic’s applications?

What I’ve seen is that on the vendor’s side, that type of talent was a rarity. I was a project manager, but rarely looked at process. I don’t think you get that from the vendor. Where you get that is either the organization is process oriented or gets outside help to put together an approach and insert some expertise and hope the client can do that because it’s not a one-time thing, it’s continual improvement.

Vendors weren’t big on those resources anyway. They were focused more on getting the system in and the specific knowledge of those products.

IT demand has always outstripped supply in hospitals. Is that still the case, and if so, how are hospitals making the priority decisions?

Yes, that’s a big thing. Demand, especially now, is outstripping supply.

In working with a big organization recently, we talked about if they embarked on this big EMR and revenue cycle project, what would come off the table. You can’t continue to do 15 other projects. This is the big one, not only for IT, but for the overall organization. It’s a constant struggle with IT governance and how it ties into the business.

I recently worked with a Midwest hospital. It was the same exact thing. They wanted to do everything. They had two or three vendors that were doing the same function, patient tracking for example, and they wanted to buy another one. We worked with them to put together a governance process tied into their overall capital and operating budgeting process.

It’s a struggle. Having organizations focus is a struggle. Often, it’s a cultural aspect, and not only with IT.

Are you seeing changes in role of the CIO or the CMIO?

I don’t have a super-technical background. I took one programming course in college and barely got through it. I’ve had people come to me and say, “You should be a CIO.” I said, “I’m not technical enough.”

Executives tell me that that that’s not what they want. They want a business person, someone who really understands their business, understands their culture, and can lead an IT function. Get good leaders underneath them, get it structured, and help them prioritize and make sure they’re putting their effort into the right things and not throwing money out the door.

I see that more. Folks who can sit at the executive table, but if they need to, go deep into their IT organizations and call a bluff with their technical guys. Someone who can work with the management team and the board to help them understand why they can only invest in these three things versus these 15 things, and not get shot for doing that.

Any final thoughts?

We’re going to see less reimbursement and more cost pressure. We’re going to see mergers and acquisitions and consolidation. What’s the priority? It makes no sense to invest in an EHR when your management team knows that down the road a year or two, it will probably not be an independent organization any more.

How do we manage interoperability? Not everybody has the money to throw out to vendors and start from scratch with an integrated vendor such as Epic. How do we make sure systems stay up? We’re depending more on the electronic medical record and clinicians and doctors are using the technology on a daily basis — we can’t have down time. How do we start taking data out and converting it to information on which we can make decisions or hold people accountable?

I’d like to refer to a quote by author Jim Collins. “Information Technology is never the reason for an organization’s success or failure, but can be an accelerator of either.” There’s a lot of attention and funding being directed to healthcare IT. However, IT itself is not the silver bullet riding in on the white horse.

Truth is, few organizations can afford huge IT investments, even with the help of the Meaningful Use incentives. Organizational change is never as easy as investing in the latest technological advancement. 

I remember in 1998 the CEO of my client, an academic medical center, was complaining that test turnaround time hadn’t improved after the implementation of a new radiology information system. He laughed, but understood what I was referring to when I told him that they didn’t buy the cattle prod peripheral to alert the radiologists that it was time to read and dictate their results. IT is only a tool. Engaged leadership, skilled and trained staff, and effective operational processes are key to user adoption and extracting value from expensive IT tools.

Our philosophy at Aspen is to enhance the value of our clients’ IT investments. Whether we are leading an enterprise-wide EMR implementation or coaching the IT leadership team in instilling ITIL service management processes, the goal is always to save our clients money, help them get a return, and transfer expertise so they become self sufficient. Believe it or not, we want to work ourselves out of a job. It’s in the client’s best interest and our associates want to move on to other challenging projects.