John Muir cuts $5 million from IT budget with benchmarking

Christian Pass, chief financial officer at John Muir

It's a story healthcare has heard before: Hospital installs expensive electronic health records software, must rein in spending to avoid hefty losses. For California's John Muir Health, that meant a comprehensive review of their information technology expenses that ended up saving them big on total IT costs.

"We made sure our IT spend wasn't completely out of line by looking at other facilities," said Christian Pass, chief financial officer at John Muir.

Pass enlisted consultancy The Chartis Group to help with that work.

"The consultant looked at our numbers, they looked at what some of the drivers to the expenses were and really helped us think through what was the best way to use our IT dollars," he said.

While scrutinizing IT spending, for instance, officials ended up confronting a question over how they would manage the disaster recovery system for their EHR.

"We were going to buy the system hardware and let someone else host it, but we discovered that it was less expensive and created a better service by going down an SaaS path," he said.

The process also led John Muir to change operating systems for its EHR after discovering that the IBM framework it was using was slightly more expensive than other options. The system instead switched to X86 machines, Pass said.

By working with the consultant to scrutinize its IT spend since 2015, John Muir cut $5 million in costs, an 8 percent reduction.

"The exercise was really geared toward finding efficiencies," he said. "Knowing that we had to run Epic, knowing that we had to have off-site recovery, we really set out to find the best way."

Pass, who plans to speak more about his system's experience during a panel discussion at the HIMSS17 conference in Orlando in February, said there a few essential controls needed to be able to effectively manage costs.

First is a strong governance culture, highlighted by a collaborative spirit among all C-suite titles at the operation. From his perspective, that means the CFO and the chief information officer need to work as one.

But the other control needed is a strong value in understanding the demand of systems, which means making sure you really grasp what's good enough and what their existing technology allows for before investing in new elements.

"By adding additional systems we create burden, friction and expense," Pass said. "So we are really trying first to look at what's available and how we leverage that versus going out and buying a shiny new toy."

Pass and Chartis Group associate principal Greg McGovern will present the session, "Benchmarking, IT cost controls and efficiencies," on Wednesday, Feb. 22 at 1-2 p.m. EST in Room W307A.

HIMSS17 runs from Feb. 19-23, 2017 at the Orange County Convention Center.

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Contact the author: henry.powderly@himssmedia.com