Insufficient IT Management Depth Results in Justice Dept. Investigation, Millions of Dollars in Fines
A large University medical faculty practice plan, noted for doctors who are among the finest in the world with expertise in cutting-edge therapy, entrusted the hospital's MIS department to upgrade their administrative and financial information systems. The plan, consisting of almost 1,000 physicians of over one hundred specialties and subspecialties, was seeing over a quarter of a million patients yearly.
The management team, as management teams do, assembled a large Task Force to draft the system requirements, send out RFP's, and work deals with possible vendors. Several high-powered business and MIS executives were brought in to run this Task Force. The institution's informatics specialists were kept at a distance from these proceedings because they were academics and not business-minded. On the few meetings they attended, their input was treated as secondary to the executives.
After some time, a commitment was made by MIS to a vendor package in the usual MIS way, with all the "proper business process." A series of preview meetings were held for the package. Two informaticists who attended the preview sessions for the financial software package felt that the software package looked rather like a Rube Goldberg contraption, with a primitive and cryptic user interface, needless complexity, poor manageability, difficult navigability, poor customizability, obtuse documentation, and other highly concerning characteristics at odds with many basic precepts of informatics.
Even the informaticists were severely confused by the demonstrations, and wondered aloud to each other how this package and these people could ever make this application fly successfully in such a complex environment. On the basis of their familiarity with those environments and with IT, they were concerned about a project 'flame out and crash.' Unfortunately since they were not empowered they were afraid to speak up, and what they did say was not taken very seriously.
About two years later, The U.S. Department of Justice and U.S. Attorney's Office announced an investigation of several million dollars worth of overbilling by the Faculty Practice Plan. In a press release, University officials downplayed overbilling as a common failure of medical centers across the country.
"The allegation is that we were not doing the refunding," the University said in a press release. "We don't yet know how much of the credit balance is overbilling. ... We've been vigilantly working with the federal authorities to determine the credit balance of the University." Of course, with the computer billing system as discombobulated as it was, determining that information, let alone anything more complex, proved to be quite a challenge.
Individuals and organizations with gripes against the University hyped the government probe. A former medical school worker, who was suing the University for over $3 million on charges of sexual harassment, suggested that the School of Medicine Dean had been fired as a result of the investigation. Several University officials said sources from the University unions told reporters that the dean was carried away in handcuffs by the police and that the sum under investigation was in the area of $20 million.
After a few years of investigations, the University faculty practice plan announced a settlement. Under the settlement, the plan would refund about $500,000 to the federal government with respect to Medicare and other federal health care programs, and make available approximately $2 million to designated health care carriers, and about $2.5 million to individuals and other entities. Furthermore, the University would make a settlement payment of $700,000 to the federal government in complete resolution of all claims.
The University announced that the credit balances included accounting entries for payments or portions of payments that the Faculty practice plan had been unable to match against outstanding charges for patient care, in many cases because information was erroneous or incomplete, as well as excess amounts resulting from duplicate payments from multiple payors. The inability to resolve these payments resulted from "faulty administrative and inadequate computer systems."
The University also announced it had voluntarily taken steps to upgrade its systems and their management, and would need to invest roughly $15 million more in "state of the art computer billing and information systems." (The old system, which cost several million in capital and heaven knows how much in operational costs, was scrapped.)
The medical director of the Faculty practice plan intoned that "the growing complexity of health insurance demands a billing and clinical administrative system as world-class as the quality of our patient care, and we have aggressively taken the necessary steps to put that system into place." The faculty practice plan resumed its practice of world-class patient care and perhaps learned that approaches to information technology can be as important as approaches to medicine.
In an uncharacteristic and somewhat stunning act of candor, the University attributed the shortcomings of the management team in a press release to "inadequate management depth." The informaticists were saddened but not surprised by how this Titanic billing system debacle led to a successful (for the Justice Department) diving expedition.