Marshfield Clinic Health System Accelerates Growth Through Efficiency and Data-Driven Insights

“We use TBM data in our capital meetings, where we decide where our strategic dollars go and how we prioritize the solutions we bring into the organization.”

Marshfield Clinic was founded in 1916 by six physicians from Marshfield, Wisconsin. Since then, the organization has grown into one of the largest private, multispecialty group practices in the United States.

Today, Marshfield Clinic Health System (MCHS) is an integrated health system with more than 60 locations serving nearly a million patients in rural Wisconsin. With more than 1,400 providers comprising over 170 specialty areas, a world-class research institute, and an education division, MCHS is known for its innovation around site of care and dedication to its mission of “enriching lives through accessible, affordable, and compassionate healthcare.”

Industry changes accelerated the need for TBM

For nearly 100 years, Marshfield Clinic operated a single hospital in Wisconsin. This model served the organization well for many years. But in 2014, increased consolidation in the healthcare industry was making it difficult for single hospital entities to remain in operation. Instead of becoming a target of acquisition, Marshfield Clinic executives decided to transition the operation into an integrated healthcare system by opening new hospitals and acquiring others.

From an IT perspective, this meant Marshfield Clinic needed to understand its technology costs and create a process that would allow the organization to integrate different hospital systems into a cohesive operation and accurately apportion costs across these groups.

“We found ourselves moving quickly toward a service-orientated taxonomy with many data sets behind it,” said Monica Braun, technology business management (TBM) practice manager at MCHS. “Using the TBM discipline allowed us to create that model quicker to align our costs.”

Although this journey technically started in 2012 with the creation of a manual cost model for IT, the organization’s response to the industry challenges accelerated it. “As we entered this period of growth, we had a strong sense from our leaders that we needed more than spreadsheets to get us through,” said Sara Scheu, director of IT business management and shared services at MCHS. “We were going to need to do more and do it faster. While we had years of success with that manual approach, we were now up against changing financial data and a list of projects that seemed never-ending.”

As a result, MCHS implemented Apptio in 2018. This enabled the organization to advance its TBM discipline faster and adapt its IT financial practice to a well-known industry standard, rationalize its application portfolio, streamline its mergers and acquisition (M&A) activity, and develop deeper relationships with its business partners. According to Scheu, Apptio was instrumental in helping the IT team provide speed to data and network with some of the world’s best and largest organizations, including many of its healthcare peers, which enabled MCHS to aggressively pursue its growth initiatives.

Application portfolio rationalization

In 2017, MCHS’ executives wanted a more granular view of the data contributing to their TBM cost model. As a result, the IT team created an application list and documented the costs down to the application level.

This manual effort established the foundation for an application portfolio management (APM) system. Once Apptio was implemented, MCHS’ IT team was able to align the application list to the TBM taxonomy, build out an APM, intersect it with Apptio Cost Transparency (now packaged as ApptioOne Plus), and integrate it into the organization’s workflow and expectations across the technology organization.

Next up was project portfolio management. The team started this effort started in 2020, using Apptio to create roadmaps for key projects to align work with key organization initiatives and priorities and help IT leaders make decisions and manage resources. It continues in 2022.

By first getting their application portfolio in order in-house, MCHS positioned itself well to pursue its growth plans and acquire new hospitals.

Streamlined M&A activity

Every new medical practice acquired by MCHS came with a diverse set of applications that had to be rationalized by the IT team. “With acquisitions of health systems, there are a lot of things that have to transition from the legacy systems to our standards,” said Tim Buss, chief technology officer and vice president of technology services at MCHS.

Using information from Apptio, MCHS developed a playbook of standard software and IT services that aligned to the medical programs. This playbook allowed MCHS to acquire the medical practices within budget, converting over 90% of the software to organizational standards within the specified transition timeline.

“We use TBM to prioritize: find the low-hanging fruit where we can save the most money and get those transitioned to our system first,” Buss said.

The benefits of this process were evident in MCHS’ most recent hospital acquisition. It occurred at an inopportune time, during the heaviest period of the COVID-19 pandemic response. However, because of TBM and the organization’s playbook approach, the acquisition was completed faster than expected. In fact, MCHS was able to complete the conversion two months early, saving the organization over $2 million in transition costs.

Within four years, MCHS has grown from one hospital to 10, doubled its staff, and surpassed $1 billion in annual revenue. IT has been instrumental every step of the way, Scheu said, and the organization continues to expand and to mature its TBM practices to improve its operation and support ongoing organizational needs.

Deeper business relationships

Conversations about IT spend and cost reduction can be tense and uncomfortable. But TBM has helped make those discussions smoother and more productive at MCHS. Using Apptio, MCHS’ TBM team can show transparency of costs and document value for the technology investments made as well as offer recommendations for optimizing spend and lowering costs. This has led to strong relationships with the business side of the organization, IT leaders, and executives. The TBM team is often sought out for their knowledge and input and included in strategic discussions.

One example of this working relationship has been in IT planning. Beginning in the fourth quarter of 2020, MCHS used Apptio to create a zero-based budget, adding a line item for every dollar of anticipated spend within the IT organization. This process illuminated many items for the teams to discuss, such as end dates of contracts, the financial impact of moving contracts from a perpetual license to a subscription license, asset retirement, and others, and sparked discussions that they had never been able to have before using other financial tools.

In addition, Apptio has helped simplify the forecasting process. Because the data is easy to absorb and provides detail at the right level using familiar terms, MCHS’ executives and directors are more involved in forecasting conversations now than they were before. This new process of zero-based forecasting ultimately created a plan against which the business delivered results with less than a 3% variance.

Overall, data from Apptio is used in a variety of ways across MCHS. “We use TBM data in our capital meetings, where we decide where our strategic dollars go and how we prioritize the solutions we bring into the organization,” said Jeri Koester, chief information officer at MCHS. “We also have a strong mission of controlling the cost of healthcare, so we often are looking for ways to efficiently use our applications and dollars associated with them. We use a number of cost-cutting initiatives with action plans that IT is committed to achieving. And finally, we use it from a financial update perspective, communicating with our business partners, CFO, and the Board where IT spend is at and how we are using our investments efficiently to serve our patients.”

What started as a manual exercise to create a cost model for IT has now matured into an automated process in Apptio that provides alignment and transparency of technology costs using an industry-standard taxonomy. This has enabled MCHS’ IT leaders to evaluate technology spend, coordinate plans, and make better financial decisions that add value to the organization’s strategic objectives.

Having been a manager with financial responsibilities for many years, Scheu said, she feels the shift to TBM and Apptio has been critical to the organization’s success.

“Solution managers and directors have a large scope of responsibility,” she said. “Our organization has entrusted them with full responsibility for contracts and costs associated with our solutions. If each of our IT leaders was left to their own ideas and approaches to managing this responsibility, we would have disjointed and misaligned decisions.

“Instead, we have an approach to financial management that is grounded in TBM and guided by experts,” she said. “This results in us having visibility to a holistic view of IT spend, the ability to have real-time conversations with our partners and vendors about the value and cost of IT, and ultimately, a seat at the table contributing to the mission of Marshfield Clinic Health System.”

Advice to others considering TBM

“We’ve gone from a clinical system on the brink of being acquired to a fully integrated health system with 10 hospitals, nearly 3 billion dollars in annual revenue, and recognition as a leading innovator around the site of care,” said Koester. “Our IT organization was crucial in every piece of these strategic decisions and has become embedded within MCHS’ strategies and work needed. And we’ve done all of this while only increasing IT spend by 2% since 2018.”

“Regarding TBM, my advice is just to start,” she said. “Hire a great team and then clear a path for them to get the resources and organizational support they need to demonstrate results and create momentum to embed TBM practices into their everyday work.”

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