Financial Analytics From the Ground Up
Ardent Health Services' rapid acquisition of several disparate medical/surgical ("med/surge") hospital systems beginning in mid-2002 created a need within the company for consolidated, standardized reporting and performance management capabilities. With its information needs skyrocketing, Ardent rebuilt its IT infrastructure to better support decision-making companywide. The new system architecture includes an ERP suite from Lawson Software, BPM and analytics from Hyperion, and an Oracle data warehouse. David DeLozier, Ardent Health's director of enterprise reporting and analytics, who played a critical role in these IT upgrades, spoke with BPM magazine about what he learned through the process.
Article Tools
Resource Center
Access white papers, product demos, and presentations from companies whose reputations have been built on helping BPM practitioners get the most from initiatives.
- BPM 101: Selecting a Business Performance Management Vendor" -- new white paper from BPM Partners
- "The Finance Challenge of Aligning the Business With Strategic Goals," a podcast featuring Palladium Group's Phillip Peck
- Ventana Research white paper "Decision-Making and Performance: Improving Essential Business Analytics and Technologies"
- “XBRL at a Glance,” white paper from XBRL US
advertisement
BPM: As you bought these medical/surgical hospitals, how exactly did your performance management needs change?
David DeLozier: When you start acquiring facilities with very different reporting and performance management processes, measuring and managing performance is highly manual and time-intensive. You have a significant need for understanding your core business and what you are consolidating. One of the biggest things that we have been working on is consistent reporting across the board.
Also, there is a great need when you start trying to manage new areas -- especially something that is a bit complex, like a medical/surgical hospital -- to be able to analyze information in several different ways. In addition to just getting our financial reporting up to speed, we have been working on data warehousing capabilities as well. Currently we are building everything on an Oracle data warehouse platform and building the associated OLAP analytics cubes with Hyperion's Essbase. The views and analytics capabilities are delivered online using Hyperion Analyzer, and Hyperion's Excel add-in is used for ad hoc reporting by some of our power users.
BPM: How is that working for you?
DeLozier: It is working very well. We have our finance cube that consolidates actual, budget, and forecast information live for all facilities. This new application allows us more capabilities than existing applications such as our static Crystal reports and Hyperion Enterprise. We use Hyperion Enterprise as a consolidated reporting tool, but it is limited in its dimensionality. Using a Hyperion Essbase cube for this same information, we were able to create more dimensions and thus more ways of slicing and dicing and looking at the information. Additionally we are able to utilize features like dashboards, stoplights, and drilling within the Hyperion Analyzer views we have delivered.
BPM: Could you give me some examples of the different dimensions that you can use now?
DeLozier: First of all, we expanded the number of categories of information we are using. We are looking at our actuals, our prior year, our budget, and our first and second forecasts. We also created departments as a dimension, which allows us to look across individual departments in different facilities. So if I want to see how my intensive care units are doing across all the med/surge hospitals, I can look just at the intensive care units. Additionally, we have the freedom to create any needed rollups in any of the other dimensions such as time periods, companies, and accounts.
We also are able to create measures directly in the cube itself that allow us to not have to create manually some of the key calculations. I think the most important dimension is on the departmental side. We are able to group our departments and create alternative rollups within the departments. You really do not want to do these manipulations in your consolidated reporting tool that you are using for external reporting. You want to have more of an operational system where you can create whatever ad hoc and operational reporting is needed and not affect external reporting.
BPM: So the internal information stays separate.
DeLozier: Yes. The data warehouse information is kept separate from the Hyperion Enterprise financial reporting information, although both are sourced from our Lawson G/L system.
The revenue analysis, or product line, cube, which is in the process of being built, contains much of the remaining operational information. This application is where we are pulling our clinical information from the various hospitals' systems and putting it into a data warehouse. We are then creating multiple analytical cubes off of that data warehouse.
BPM: What types of clinical information?
DeLozier: All the information around our patient-level detail -- while addressing HIPAA standards to not give out patient information. Everything from hospitals to departments to doctors to procedures to charges to what receipts are received. We can slice and dice into this product line cube to understand, "OK, for a specific diagnosis-related group, what is my profitability? At this hospital? In this marketplace?" That is the kind of information we just do not have enough of today.
BPM: What are some examples of how you put the measures in the cube itself?
DeLozier: Everything in med/surge works off of net revenue. You have your gross revenue, then you take out the contractual amounts -- the amounts that are contracted for, as an example, Medicare -- and then you have your net revenue. So you want to see, "What are my operating expenses as a percentage of net revenue?" Another key factor is adjusted patient days. Whenever you are dealing with patients coming to the hospital, you want to see what you are receiving and spending per adjusted patient day. And adjusted patient day is really a way of taking your revenue, looking at inpatient, and discounting your outpatient revenue to adjust your patient days appropriately. Those measures are built directly into our finance cube as a dimension so that we can pull that information without having to set up multiple separate calculations in the account dimension.
BPM: That means you can get the information more quickly?
DeLozier: Absolutely. And today, the finance cube is being used for the monthly operational reviews that are conducted at our med/surge hospitals.
BPM: Did you have any trouble with pulling all of this information together, or has it been a pretty easy process?
DeLozier: Putting together our finance cube was fairly easy. The productivity cube was more difficult, but it was manageable primarily because significant steps were taken to define the underlying components before the productivity data warehouse project began. The product line cube has been the largest undertaking because of the breadth of the data being collected and the sheer number of feeder systems being interfaced.
The biggest problem we have with the finance cube is the immediacy of the data. With the general ledger system in Lawson, our financial users are pretty used to doing a lot of things on a monthly cycle. So they are not updating all the data on a daily basis, although obviously transactions are occurring on a daily basis. Ideally what we would want are for charges and expenses to get posted into the G/L system as they happen. Then we would be able to see where we stand at any point in time during the month. What is really happening is that after a month is completed, people are working through the system to get that month closed out. You really only feel confident about the prior month's data once the month is completely closed out.
BPM: How do you go about trying to change that? What can you do about it?
DeLozier: I think the biggest challenge in the use of these systems is that when you are trying to build the capability to manage your business -- the system solutions to manage your business -- the bigger issue a lot of times beyond technology is the process. You have to have a mind-set change of the people that are capturing the data at the initial entry point that they need to get the data into the system in as timely a fashion as possible so that it becomes usable before things are too late and you are just looking at history at that point. We have been working with our operational group and talking about, "What can we do to change the process to make sure the data is getting captured quickly?" They are the end consumers at the end of the day, so they have good motivation for trying to make things happen a little bit faster.
