Customer Relationship Management

1. Customer Relationship Management CRM in Modern Health Care Delivery Group Presentation – IS 6800 Renee’ Ross Hung Winn M.D., J.D

2. Agenda • Definition of CRM • Importance of CRM to General Managers • Statistics • Industry leaders • Success stories • Case Study – MU Healthcare System • Best Practices • Lessons Learned

3. CRM – What is it? • CRM – “Strategy used to learn more about customers’ needs and behaviors in order to develop stronger relationships with them”http://guide.darwinmag.com/technology/enterprise/crm/index.html?; last accessed September 27, 2004. • CRM – “Any application or initiative designed to help an organization optimize interactions with customers, suppliers, or prospects via one or more touch points – such as a call center, salesperson, distributor, store, branch office, Web, or e-mail – for the purpose of acquiring, retaining, or cross-selling customers.”Goodhue, D. L., Wixon B. H., and Watson, H. J., “Realizing Business Benefits Through CRM: Hitting the Right Target In The Right Way” MIS Quarterly Executive, Vol. 1, 2, 2002, pp. 79-96. • CRM introduced in 1993

4. Importance of CRM to GM’s • CRM can…. • Increase customer service levels • Improve efficiency of call centers • Cross-sell products more effectively • Help sales staff close deals quickly • Simplify marketing processes • Increase ROI http://guide.darwinmag.com/technology/enterprise/crm/index.html?; last accessed September 27, 2004.

5. Importance of CRM to GM’s “Research has shown that companies that create satisfied, loyal customers have more repeat business, lower customer-acquisition costs, and stronger brand value—all of which translates into better financial performance” http://siebel.com; last accessed October 17, 2004.

6. CRM Spending • 2001 - $8.8 billion • 2003 - $9.4 billion • 2005 projection - $30.6 billion • Gartner estimates that large businesses spend between $30 million and $90 million on CRM initiatives over a 3-year period Mello, A., “Watch out for CRM’s hidden costs” October 17, 2001; http://techupdate.zdnet.com/techupdate/stories/main/0,14179,2818263,00.html; last accessed on October 29, 2004.

7. CRM Spending • Budgeting for CRM – hidden costs • Project management • Software integration • Data maintenance • Training • Gartner revealed many businesses underestimate CRM costs by 40-75% Mello, A., “Watch out for CRM’s hidden costs” October 17, 2001; http://techupdate.zdnet.com/techupdate/stories/main/0,14179,2818263,00.html; last accessed on October 29, 2004.

8. CRM Infrastructure Dyche, J., The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002

9. CRM Targets / Components • Applications • Infrastructure • Transformation All three are necessary, to some degree, for successful implementation of CRM initiatives Goodhue, D. L., Wixon B. H., and Watson, H. J., “Realizing Business Benefits Through CRM: Hitting the Right Target In The Right Way” MIS Quarterly Executive, Vol. 1, 2, 2002, pp. 79-96.

10. Retention vs. Acquisition • Retention of customers gives greater benefit over acquisition of new customers • Builds trust and loyalty • Up-sell and cross sell opportunities • Move customers through the lifecycle • Acquisition, Growth and Retention • Movement will maximize their value and increase profits • Studies indicate that increasing the number of customers a company retains each year by just 5% can increase contribution to shareholder value by 40% to 95% Ref 21, 22

11. Retention vs. Acquisition • Average U.S. companies lose 20% of customers every year – not knowing why • Costs 6 to 7 times more to attain a new customer than to retain current customers http://www.crmtrends.com/crm.html; last accessed October 28, 2004. Bleicher, Paul. “An Imposing Change.” Pharmaceutical Executive. Jun 2004. p.p. 26-30.

12. CRM Success Stories • 80% of organizations report success with CRM programs • Examples • Union Pacific Railroad (Siebel) • 4500 users / Replaced legacy system / Strategic part of overall business intelligence strategy • Northwestern Memorial Hospital, Chicago (PeopleSoft) • 5800 employees / Replaced legacy system / “Automation means clinicians can focus more time on patient care. Having PeopleSoft as a support system will help us achieve our mission of patients first.” Ref 7, 16, 20

13. CRM Failure • Failure rate of 15-25% • 85% of CRM users cannot quantify benefits Krass, P., “CRM: Once More, Without Reeling” March 17, 2003; http://www.cfo.com/article/1,5309,8948/BS/12/4,00.html; last accessed October 15, 2004.

14. CRM Industry Leaders

15. Company Information • Headquarters in San Mateo, California • Founded 1993 • 5000 employees • 2.8 million users at 4,000+ organizations • 2003 revenue - $1.35 billion • Strategy • “CRM for Everyone” – CRM software solutions for any kind of organization, any type of user, and any budget • Product Offerings • Siebel Business Analytics • Siebel On Demand • Siebel Sales • Siebel Professional http://siebel.com; last accessed October 17, 2004.

16. Company Information • Headquarters in Pleasanton, California • Founded 1987 • 12,000 employees • Serving 12,200 organizations • 2003 revenue - $2.3 billion • Strategy • Flexible and adaptable business solutions • Product Offerings • PeopleSoft Enterprise • PeopleSoft Enterprise One • PeopleSoft World • http://www.peoplesoft.com; last accessed October 17, 2004. 

17. Company Information • Headquarters in Bellevue, Washington • 900 customers in 50 industries • Strategy • Through three audience-specific portals, Onyx Employee Portal, Onyx Customer Portal and Onyx Partner Portal, Onyx Enterprise CRM provides proven technology ideal for business environments that need flexible, reliable and manageable CRM • Product Offerings • Onyx CRMExpress • Onyx Portable CRM • Onyx Analytics http://www.onyx.com; last accessed October 17, 2004. 

18. Company Information • Headquarters in Waldorf, Germany • Founded 1972 • 30,000 employees • 2.8 million users; 1,500 partners • Mission • To provide collaborative business solutions for all types of industries and for every major market • Product Offerings • mySAP Business Suite • mySAP ERP • SAP xApps • http://www.sap.com; last accessed October 17, 2004. 

19. CRM and Electronic Medical Records (EMR) • “Initiative designed to help an organization (physician / hospital) optimize interactions with customers (patients) for the purpose of acquiring or retaining customers (patients).” Goodhue, D. L., Wixon B. H., and Watson, H. J., “Realizing Business Benefits Through CRM: Hitting the Right Target In The Right Way” MIS Quarterly Executive, Vol. 1, 2, 2002, pp. 79-96

20. Need for EMR • Archaic information systems • According to the Journal of American Medical Association, “as many as 98,000 patients die each year in U.S. hospitals from preventable medical errors • Lack of reliable health information. Swartz, Nikki, “A Prescription for Electronic Health Records” Information Management Journal, Vol 38, 4, 2004, p.20-22.

21. Market for EMR • The market for EMR for physicians excluding the hospitals is $500 M in 2004 and expects to grow to $ 5 B in 2008 J. Larson, The Arizona Republic

22. National Agenda for EMR • “ BY COMPUTERIZING HEALTH RECORDS, WE CAN AVOID DANGEROUS MEDICAL MISTAKES, REDUCE COSTS AND IMPROVE CARE” • In the US, every patient should have EMR or EHR within 10 years President Bush’s State of the Union address, 1/20/2004

23. Electronic Medical Records • In Massachusetts, Blue Cross & Blue Shield of Massachusetts plans to donate $50 millions to fund a pilot project that electronically links patients’ medical records between the hospitals and health care providers in 3 communities. • The goal is building a statewide EM system that connects hospitals and clinics. This mission has a widespread support among insurers, hospitals and doctors. L. Kowalczyk, Global Staff

24. Electronic Medical Records (EMR) • Transition from paper medical records (PMR) to EMR requires strong physician leadership and institution’s committeemen of human and capital resources

25. Case Study MU Healthcare System

27. Case Study • MU HEALTH CARE SYSTEM MU Health Care system consists of 2 operational entities: • School of Medicine (SOM) • University Physicians (UP): medical practice • MU Health Care • University Hospital • Columbia Regional Hospital • Clinics

28. MU School of Medicine

29. MU School of Medicine (SOM) • DEAN • Associate Deans • Chairpersons of Basic Science Departments • Chairpersons of Clinical Departments (Medicine, General Surgery, Obstetrics and Gynecology, Pediatrics, Family Medicine…) • UNIVERSITY PHYSICIANS

30. University Physicians • Headcount: • UP: 635 (370 physicians + 265 staff) • IT: 22 or 3.5% of total UP headcount • Budget: • UP ‘s revenue: 110 M • IT services: 2.7 M or 2.5% of revenue • Electronic medical records (EMR) • IDX system: scheduling and billing

31. MU Health Care • EXECUTIVE DIRECTOR • CIO, CFO • Hospital Directors • UNIVERSITY HOSPITAL • COLUMBIA REGIONAL HOSPITAL • CLINICS

32. University Hospital

33. University Hospital • Tertiary acute care hospital • All services except Women’s Health and Neonatal Intensive Care Unit (NICU) • Trauma Center • 260 Beds • Number of patients served: 11,532 (2003)

35. Columbia Regional Hospital • 262-bed acute care hospital • Surgery: Orthopedic Surgery, Urology, General Surgery • Medicine • Women’s Health Services: Obstetrics, Gynecology and others • Neonatal Intensive Care Unit (NICU) • Number of patients served: 6,477 (2003)

36. MU Health Care • Headcount: • MU Health Care: 5700 employees • ITS: 108 or 1.9% of the total headcount • Budget: • MU Health Care: 620 M • ITS: • 13.5 M or about 2.2% of the total revenue • 50% of budget for personnel • 50% of budget for hardware, software and outside supporting services • Total beds: 522 • Total in-patients served: 18009 • Total out-patient visits: 544,395

37. MU Health Care System • Customers: • Health care providers: physicians • Patients • Electronic clinical information is the organization’s effort to recruit and retain customers. • Operational efficiency • Improved quality of care

38. MU HEALTH CARE SYSTEM • Hospital Clinical Information System • Electronic medical records (EMR)

39. MILESTONE DEVELOPMENTS • Fall 2001, Vice Chancellor for MU Health Care System, committed to develop electronic medical records. • Dean and Executive Director strongly supported the project • A physician leader was appointed as a liaison between IT leadership and physicians. • Cerner was selected as a technical provider for the project. • Goal: Incremental implementation of system-wide electronic health information (EHI)

40. CERNER RELATIONSHIP • December 2001 • Technology fees, traditionally referred to as “licensing and support” • Consulting (implementation) fees – pay as you go • September 2003 • Outside consultants to renegotiate the contract

41. CERNER CORPORATION • Founded in 1979 • Headquartered in Kansas City • Leading supplier of healthcare information technology, with more than 5,273 associates and 1,500 clients worldwide. • In 2003, it had a revenue of $839.6 million and net income of $42.8 million.

42. CERNER CORPORATION • Offers centralized electronic medical record to seamlessly deliver health information such as laboratory results, images, medication and allergy data to health care teams that depend on complete, timely information. This increases measurable quality of care • Enables executives to manage resources, comply with regulations and recognize trends and best practices by combing clinical, operational and financial data from across the enterprise and the industry.

43. ELECTRONIC MEDICAL RECORDS • The cost of converting paper medical records to electronic medical records is $10,000 – 30,000 per physician. • The cost of electronic clinical information is between $50 M – $100 M for health care system of 2- 3 hospitals L. Kowalczyk, Global Staff M. K McGee, Informationweek.com

44. EMR’s Progress • 2002 • The projects was launched but progress was impaired by concerns about MU Health Care System’s fiscal situation. • 9/2003 • The project was reactivated on an accelerated time frame.

45. Patients' Medical InformationClinics • Demographic information including insurance • History: allergy • Physical examination • Laboratory: blood tests, radiographic images • Diagnoses • Treatments

46. Patients’ Medical InformationHospitals • Demographic information including insurance • Physician’s initial evaluation • History • Physical examination • Laboratory: blood tests, radiographic images • Diagnoses • Treatments

47. Patients’ Medical InformationHospitals • Subsequent visits: • Progress notes: medical students, residents and attending physicians • Physicians’ orders • Nursing notes: vital signs and assessment

48. Traditional Medical InformationDrawbacks • Important clinical information is not timely available: • outpatient information is not available when the patient is admitted to the hospital • Consultations • Inefficiency: • Duplication of effort • Time consuming • Illegible records • Missing medical records

49. HCFA Compliance Consultants Med record OR Transport Clerks Pharmacy Ethics Xray Techs Insurance Lab Student Student JCAHO Policies Computer Attending Family PATIENT Nurses Residents

50. Hospital Clinical Information System UH CRH