Performing surgery on a hospital HRMS

It was a tough operation but it looks like the patient is going to pull through

It took a merger to create one of Ontario’s largest hospitals. And it will take more than $13 million to create a new, integrated information technology system to link the four sites.

The executives at Hamilton Health Sciences Centre (HHSC) are betting it will be worth every penny. That’s because the system is expected to revolutionize the way departments relate to staff and one another — and save money, too. The $13-million investment comes at a time when the hospital is projecting a $38-million deficit.

Two years after the merger, the hospital is implementing a system described as “the largest and most significant health care investment of its kind in Canada.” The project, built on the foundation of enterprises resources planning (ERP) software from PeopleSoft Canada Ltd., will replace a variety of legacy systems with a single, integrated application.

The HHSC was formed in 1996 when two hospitals on four sites, the Hamilton Civic Hospitals (HCH) and Chedoke-McMaster Hospitals (CMH), merged.

A comprehensive information technology system would be high on the want list of any manager, let alone those at what is arguably the largest in the province. Unfortunately, there wasn’t one.

When the merger happened, “it was like Noah’s Ark. We had two of everything,” says Doug Appt, HHSC’s vice president of human resources. In fact, because both the merging hospitals had been formed by mergers in the 1970s, there were different legacy payroll systems for each of the four sites.

The new hospital has a total of about 1,200 acute and long-term care beds, approximately 8,000 employees or 6,000 full-time equivalents, 16 collective agreements, and an annual budget of roughly $500 million.

It took much of 1997 to reorganize HHSC’s management. Even then, the organization was running separate business information systems, supported by two sets of staff. But it was only a matter of time before the new organization turned to functional integration through an information technology steering committee chaired by Scott Rowand, HHSC’s founding CEO. If consolidating management positions was tough, information technology posed challenges of nightmarish proportions.

In addition to payroll, other critical IT-dependent functions were:

•human resources;

•general ledger;

•accounts payable;

•accounts receivable;


•cash management and expenditure control;

•assets management;

•capital planning;

•inventory; and


To a large extent the HCH sites had taken a single-vendor approach to business operations but were running different Meditech systems, while CMH had taken a best-of-breed approach.

In addition, the threat of Year 2000 compliance loomed on the horizon. The cost of just making the necessary systems compliant without even integrating corporate information resources “would have cost somewhere in the order of $5 million,” says Appt.

An information technology review for HHSC by The Kennedy Group in early 1997 recommended the acquisition and implementation of an Enterprise-Wide Integrated Business System (EWIBS). A key recommendation was that HHSC needed “an enterprise-wide integrated repository of financial/administrative data available to all levels of management.” The report, which went to the HHSC board in June 1997, also suggested the HRMS module be a top priority.

Despite the cost, three main factors persuaded the board to approve the massive undertaking, says Appt. First, Y2K compliance was an immediate need. Second, running two distinct systems was labour-intensive and made consolidated corporate information very difficult to compile. And third, the vision of a new integrated business information system helped define a foundation for the new HHSC.

“That’s what triggered the decision to put a task force together,” says project manager Lisa Parent. In August, 1997, the EWIBS project was launched with a task force co-chaired by Parent and vice-president of finance David Watts.

They are each 100 per cent responsible for the success of the project, says Parent. “If I mess up, Dave is responsible, and if Dave messes up, I’m responsible. And we’re both successful if everything works out,” says Parent, adding that the arrangement ensures their mutual commitment.

The hospital didn’t want to simply do things right, it wanted to do the right things.

“We really weren’t just trying to integrate. What we wanted to put in place was a system designed for HHSC. We weren’t really trying to replicate something from one of the former hospitals, we were looking for a whole new environment,” says Parent, who has a background in finance as well as information technology.

Many of the legacy systems are closed, hierarchical ones, which means data processing can only be done internally.

“We had something in the neighbourhood of 50 different systems,” says Parent. The EWIBS plan called for reducing that to about 10 new modules on an integrated system.

A 200-page request for proposals for an ERP system was prepared in the fall of 1997. The RFP called for four phases of implementation to address the respective requirements of staff management, financial management, materials management and health information management.

It specified a single, open solution based on a fully-integrated relational database. It was to use an intranet to link servers through a redundant network of fibre-optic cable. Each of the four sites would be connected to the other sites.

The HR requirements called for the ability to do on-line position management, applications management, job descriptions and benefits administration. It included the ability to amend employee information, process salary changes and establish employee seniority. There is also a labour relations module and a health and safety component.

Five of nine pre-qualified vendors responded to the RFP. Two were eliminated because they didn’t meet mandatory criteria, one of which was Canadian payroll requirements. In March 1998, PeopleSoft was selected.

“Our expectation in terms of budget for EWIBS is somewhere between $13 million and $14 million with a projected return or savings of about $4.5 million,” once it is fully implemented, says Parent. That means EWIBS is expected to pay for itself in about three years from the hard savings from organizational consolidation and streamlining alone.

“We have not even built into that the soft savings” from process redesign and automation, which may be even higher, says Parent.

The hospital’s EWIBS project is one of Canada’s benchmark examples “of a health care institution that is moving beyond restructuring with a plan to move forward,” says PeopleSoft’s marketing director Jeffrey Read. HHSC “really got their act together to pull the value out of this amalgamated entity.”

Restructuring and financial pressures across the country brought health care organizations to the realization that if they invest in technology, it will help reduce overall costs, allowing more to be spent on patient care, he says.

HHSC bought three of PeopleSoft’s four ERP suites: human resources and payroll, financials and distribution and supply chain. The project cost breaks down to about $1.6 million for hardware, $3 million for software and $2.8 million for external consulting. In addition to that, internal project costs are estimated at $5.6 million.

Although PeopleSoft is the prime vendor for the project through its ERP solutions, the scope of the project called for a number of partners. Total Care Technology is providing staff scheduling capabilities, time and attendance documentation and time collection; Documentum is providing document management; Edify is providing integrated voice response, or IVR, so that changes to computerized records can be made by phone; and GE Capital is providing some of the financing, as well as sourcing the hardware, which includes HP and Intel servers. Kronos is providing swipe card devices for time management and scheduling. Other partners are Sierra Systems and SHL Systemhouse.

The task force, which consists of 10 vice-presidents and directors, operates from a portable classroom dubbed “the war room” because of the charts and graphs that cover the walls. In addition to Parent, a project coordinator and an administrative assistant, other project staff seconded on a full-time basis from relevant user departments include five from finance, two from HR, two from payroll and one from accounts payable, as well as 12 information technology staff. There are also several people committed on a part-time basis to the project, or full-time for limited periods.

“We have a serious commitment to getting the project done,” Parent says.

The project consists of four overlapping phases, the first of which started last April. The final phase, which involves costing of patient activity, ends March 31, 2001. For a number of reasons, including Y2K compliance, HR and payroll were the top priorities for the first phase, which is to be fully operational by March 1999. “The time lines are tight,” says Appt. “The risk is big if we’re not ready, and the dividends are large.”

At the moment, “we have an HR department, but no system,” says Parent. HHSC’s director of human resources and EWIBS task force member Ted Capstick doesn’t disagree.

“I can say that up until this project, we’ve never really had a human resources information system. We’ve used the back end of a payroll system and all the information what we call human resource information we’ve been able to develop off the payroll system. So this will now give us a true HR system.”

Part of the preliminary work of EWIBS was to define the scope of the project. Call it process redesign or process improvement, “but we decided not to just take the software and plop it down on a process maybe we didn’t need,” says Capstick. So a lot of work was done to ensure that form would follow function, he says. One of the driving forces is referred to as ERA, which stands for “eliminate, redesign, automate.”

Through a process of fit/gap reviews, processes and activities were identified. The first question was “what are we dong that we don’t need to do at all?” If there was no clear value added to a process, it was eliminated. In terms of human resources, payroll and finance that reduced processes from almost 150 to 64. “So we got down to that level, and in those 64 processes, found about 350 activities,” says Capstick.

Then they looked at whether it was necessary to perform those activities centrally, or whether they could be decentralized to an end-user, manager or clerical staff in the front-line unit. “We found we could move about 40 per cent of those activities out from the central areas.”

And finally, the task force said “let’s put aside our silos of HR and payroll and finance, and let’s look at whether or not there are similarities in activities that would allow them to be grouped together, in perhaps a totally different way,” Capstick says. One result is that there is no clear reason for payroll and HR to be separate.

“What it’s going to mean, as I see it in human resources, is a really substantial change in our approach to providing services to the organization,” says Capstick. HR has traditionally provided serving by “doing,” but “I think our way of providing service in the future will be to advise and consult and teach.” He sees the department becoming a resource of administrative experts, helping the rest of the organization deal efficiently with HR issues.

“It’s going to require a change in how our administrative staff perform their work. It is going to reduce staff,” although it is not clear how much, he says. “We’ve been up front about that, in HR and in finance. There’s no question that reducing those processes and moving some of the activities out further into the organization is going to have an impact.”

The examination of processes found about 85 in HR, which could be reduced to 34, Appt says. EWIBS offers mechanisms to decentralize many functions, so that staff can keep their own personnel information up to date or review their benefits from personal computers or service kiosks, for example.

HHSC’s HR department has about 50 people who deal with employee relations, labour relations and compensation and benefits. Another 25 deal with occupational health and safety, workers’ compensation and employee health. There is also an educational component that employs another 50 people. No one is sure how many jobs will be lost.

The traditional HR department does two things, says Appt. “It supports and aligns with the organization’s strategic directions and plans. That’s the value-added side.” On the other side, which is traditionally the bigger side in terms of staffing, “we push paper. We enter information, we conduct transactions that really don’t do much, other than facilitate other systems. It’s very labour intensive and inefficient.”

Capstick agrees. “We are the regulatory watchdogs and the policy police,” he says. The new philosophy is to let go of some of that. Rather than prospectively auditing things like expense claims as they move through the system, there will be retrospective audits.

“We are a hospital,” says Appt. But if you look beyond patient care, “we’re really about information. We’re really an information business.” He says that information technology and systems such as EWIBS allow organizations “to look at what kind of a culture you want,” with a traditional command-and-control system at one end of the spectrum and an organization based on open, accessible information at the other.

Revamping the business environment is the first step in a process of change, he says. Then the hospital plans to implement new clinical systems, “and really create an informational infrastructure that takes us well into the 21st century.”

That may make EWIBS seem like a warm-up, considering it will probably be twice as large, says Parent. “I’d say you’re probably looking at 30-35 per cent business systems and 65-70 per cent clinical systems,” she says.

The hospital’s vision includes offering regional shared services, and HHSC has already arranged relationships with other area hospitals so that they can benefit from administrative services like HR and payroll that are part of its EWIBS project.

Mike Moralis is a policy analyst with the Ontario Hospital Association and a freelance writer.

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