Services Take a Hit

By Larry Barrett  |  Posted 2002-04-15 Print this article Print

Since drug distributor McKesson bought software supplier HBO & Co., its hospital customers have suffered. Computers crashed. Patient records went haywire. They're only now recovering.

Services Take a Hit

One of the first signs that McKesson was cutting corners came from its services division. In the wake of the merger, some customers woke up to find their account representatives of five or seven years were no longer with the company. Instead of being assigned a new representative familiar with the hospital's needs, many customers were simply given an 800 number to call.

Shortly before the merger, CRHC bought the company's Pathways financial and materials management software suite to manage the three-hospital network's purchasing, inventory and accounts payable.

The Pathways suite was created after HBO bought software developer Enterprise Systems Inc. (ESI), which developed the materials management portion. ESI used a third-party vendor, accounting software developer FlexiInternational, for general-ledger functions. ESI would work out the integration issues with FlexiInternational to ensure that all the purchasing, accounts payable and inventory changes would be recorded seamlessly to the general-ledger software. CRHC executives would then access the general-ledger software to track revenue and expenses.

But by CRHC's account, FlexiInternational was upgrading its general-ledger product. The new version hadn't been integrated with McKesson's material-management offering, and CRHC had to deal with two companies to get the separate pieces of software integrated, instead of getting the fully integrated product it had been promised.

As a result, CRHC couldn't access the detailed financial information it needed to justify and plan its annual information technology budget or eliminate redundant spending, because not all the sales and expenses were being recorded properly.

"For six months, I had one very nervous CFO," Morrison says.

CRHC spent an additional $200,000 to $300,000 implementing the software, according to Morrison, partially with its own in-house team and with the cooperation of McKesson and Flexi. The hospital system also had to conduct extensive, unplanned audits to help ensure financials were accurate.

A project that should have taken only a year took almost two years to complete. Although $200,000 to $300,000 in additional costs may seem small compared with those of other major installations, it was taken out of the hospital's annual IT budget of around $5.5 million.

Bill Culmer, CIO at Baptist Health System, a health care delivery network in Montgomery, Ala., had a serious issue with McKesson's Image Maker product, software that electronically feeds and scans images to create an electronic record for his hospitals' patients.

"That was the biggest problem when I got here," Culmer says. "It crashed a lot because of internal interface issues. Bottom line: It was just bad code. The clinical information was accessible but when you started to put together all the pieces from different departments, say from radiology or from the lab, it would crash."

That meant doctors and nurses would have to record all the clinical information on paper and put that into a patient's file after he or she was discharged.

Baptist Health Systems was forced to document and track patient records on paper while simultaneously finding replacement systems to do what Image Maker was supposed to be doing. At its core, the software wasn't able to effectively retrieve and exchange information about patients or their treatments within the 10-hospital network.

Information such as the patient's medical history, insurance information, recent procedures and future treatment couldn't be gathered and stored in a convenient electronic file. That forced doctors and nurses to become amateur private detectives as they hunted down the pertinent information from various departments. Patients often wouldn't know of the details behind the bureaucracy and couldn't get immediate answers to their medical questions.

"The good news is it didn't directly affect patient care," Culmer says. "There were some mistakes that took time to go back and resolve, of course, but it didn't affect treatment. But it did have an impact on our budget."

Culmer, whose own position has just been eliminated due to budget constraints, says McKesson did make some financial concessions to offset the software's shortcomings, but adds that "it's impossible to be compensated for the frustration and time spent trying to fix the problem.

"There was a time when our board of directors would have shot me if I had suggested we use another McKesson product," Culmer said.

Both Morrison and Culmer note that McKesson has been extremely fair and responsive in trying to resolve technical problems and has made great strides in the past two years to improve both the quality of the applications and the company's service support, thanks primarily to efforts by its information solutions president, Graham King. King could not be reached for comment, and other McKesson officials declined repeated opportunities to discuss the issue.

"I've been a customer of McKesson's long enough to see all the peaks and valleys," Morrison says. "Right now, they're definitely coming out of the valley, but then again, you never know when that next dip is going to come."

Senior Writer
Larry, of San Carlos, Calif., was a senior writer and editor at CNet, writing analysis, breaking news and opinion stories. He was technology reporter at the San Jose Business Journal from 1996-1997. He graduated with a B.A. from San Jose State University where he was also executive editor of the daily student newspaper.

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