January 31, 2000

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Case Study:
Centralized Administration: First Aid For Health System

By Felix Gorrio

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ew industries face an IT infrastructure overhaul as critical as health care. By all accounts, the federal rules that say providers must comply with complex Health Insurance Portability and Accountability Act (HIPAA) standards by 2002 promise to fundamentally alter how health-care services are delivered.

St. Joseph Health System in Orange, Calif., is trying to stay ahead of the regulatory game. With installations spread across California, New Mexico, and Texas, it has already instituted a centralized E-commerce infrastructure to administer the flow of data over a large community of owned sites, affiliates, and trading partners.

St. Joseph, with more than $1 billion in revenue last year, includes 10 acute-care hospitals, four home-health agencies, as well as hospices, outpatient services, nursing facilities, community clinics, and physician organizations. "When everything was standalone on PCs, every hospital and clinic did its own thing," says Dave Schinderle, VP of finance and treasurer. "With the advent of frame relay and wide area networks, our electronic data interchange group understands that they can't support stuff scattered all over three states. The costs would be too high."

St. Joseph initially implemented financial electronic data interchange with Mellon Bank in 1992 to simplify banking transactions. It used value-added networks and dedicated connections at that time. When the company expanded its network in 1998 to share patient data and track the flow of supplies throughout its trading community, it built an E-commerce engine that supports multiple trading protocols--including Secure Multipurpose Internet Mail Exchange (S/MIME), the Extensible Markup Language, and EDIFact--to comply with HIPAA.

"We didn't want to have multiple security suites running because of the training, implementation, and support issues," Schinderle says. The company implemented E-commerce software from Cyclone Commerce Inc. on its own network because a transparent platform- and protocol-independent architecture supported its diverse trading partners. These included large pharmaceutical companies with advanced E-commerce engines of their own, as well as local clinics using the Web to send and receive data.

St. Joseph has centralized administration of its E-commerce infrastructure--encompassing the Internet, value-added networks, and dedicated line relationships--at its headquarters. From there, it troubleshoots electronic transactions throughout its health-care system.

"All of our I/Os are controlled through a central communications hub," Schinderle says. "By having a small, concentrated group in our central IS area--run by three to four people--it all gets effectively controlled and monitored. They know what to do when they see a problem."

Maintaining centralized administration also reduces IT administration staff and HIPAA training costs. "The HIPAA implementation guides are approximately 3,500 pages long so far. There's just no way that you're going to train people in the field to deal with that level of technical detail," he says. Beyond large pharmaceutical companies, laboratories, and insurance providers, St. Joseph shares data with physicians and other small practices.

"Health care, unfortunately, tends to be a cottage industry," Schinderle says, and facilities are not always so computer-savvy. "Most of the industry has not invested heavily in E-commerce, and there aren't a lot of large corporate players to push it. For those trading partners that have not invested yet in the technology, we can provide a client license until they upgrade to an equivalent product of their own," Schinderle says. Client licenses let St. Joseph reduce supply-chain costs by licensing copies of its E-commerce software for smaller affiliates and partners that would otherwise retain legacy or paper systems to manage their relationships with St. Joseph.

St. Joseph is grappling with HIPAA issues, such as security standards and implementation guidelines for electronic transactions in health care, in advance of the 2002 compliance deadline although many other health-care companies, particularly smaller ones, haven't done that yet.

Return to main story, "Rapid-Fire IT Infrastructures."

Illustration by Bob Daly
Photo by Howe and Bodner

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