Ferrara Candy’s IT Modernization Journey Uses Automated Intelligence to Support Rapid Business Growth

Transcript of a discussion on how a global candy maker unlocks end-to-end process and economic efficiency through increased actionable insight and optimization of servers and storage.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Hewlett Packard Enterprise.

Dana Gardner: Hello, and welcome to the next edition of the BriefingsDirect Voice of the Customer podcast series. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for this ongoing discussion on bringing intelligence to IT infrastructure.

Gardner

Our next IT modernization journey interview explores how a global candy maker depends on increased insight for deploying and optimizing servers and storage. We’ll now learn how Ferrara Candy Company boosts its agility as a manufacturer by expanding the use of analysis and proactive refinement in its data center operations.

Stay with us to hear about unlocking the potential for end-to-end process and economic efficiency with our guest, Stefan Floyhar, Senior Manager of IT Infrastructure at Ferrara Candy Co. in Oakbrook Terrace, Illinois. Welcome, Stefan.

Floyhar: Thank you for having me.

Gardner: What are the major reasons Ferrara Candy took a new approach in bringing added intelligence to your servers and storage operations?

Floyhar: The driving force behind utilizing intelligence at the infrastructure level specifically was to alleviate the firefighting operations that we were constantly undergoing with the old infrastructure.

Gardner: And what sort of issues did that entail? What was the nature of the firefighting?

Floyhar: We were constantly addressing infrastructure-related hardware failures, firmware issues, and not having visibility into true growth factors. That included not knowing what’s happening on the backend during an outage or from a problem with performance. We had a lack of visibility into true real-time performance data and fully scalable performance data.

Gardner: There’s nothing worse than being caught up in reactive firefighting mode when you’re also trying to be innovative, re-architect, and adjust to things like mergers and growth. What were some of the business pressures that you were facing even as you were trying to keep up with that old-fashioned mode of operations?

IT meets expanded candy demands

Floyhar

Floyhar: We have undergone a significant amount of growth in the last seven years -- going from 125 virtual machines to 452, as of this morning. Those 452 virtual machines are all application-driven and application-specific. As we continued to grow, as we continued to merge and acquire other candy companies, that growth exploded exponentially.

The merger with Ferrara Pan Candy, and Farley’s and Sathers in 2012, for example, saw an initial growth explosion. More recently, in 2017 and 2018, we were acquired by Ferrero. We also acquired Nestlé Confections USA, which has essentially doubled the business overnight. The growth is continuing at an exponential rate.

Gardner: The old mode of IT operations just couldn’t keep up with that dynamic environment?

Floyhar: That is correct, yes.

Gardner: Ferrara Candy might not roll off the tongue for many people, but I bet they have heard a lot of your major candy brands. Could you help people understand how big and global you are as a confectionery manufacturer by letting us know some of your major brands?

Floyhar: We are the producers of Now and Later, Lemonheads, Boston Baked Beans, Atomic Fireballs, Bob’s Candy Canes, and Trolli Gummies, which is one of our major brands. We also recently acquired Crunch Bar, Butterfinger, 100 Grand, Laffy Taffy, and Willy Wonka brands, among others.

We produce a little over 1 million pounds of gummies per week, and we are currently utilizing 2.5 million square feet of warehousing.

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Gardner: Wow! Some of those brands bring me way back. I mean, I was eating those when I was a kid, so those are some age-old and favorite brands.

Let’s get back to the IT that supports that volume and diversity of favorite confections. What were some of the major drivers that brought you to a higher level of automation, intelligence, and therefore being able to get on top of operations rather than trying to play catch up?

Floyhar: We have a very lean staff of engineers. That forced us to seek the next generation of product, specifically around artificial intelligence (AI) and machine learning (ML). We absolutely needed that because we’re growing at this exponential rate. We needed to take the focus off of infrastructure-related tasks and leverage technology to manage and operate the application stack and get it up to snuff. And so that was the major driving force for seeking AI [in our operations and management].

Gardner: And when you refer to AI you are not talking about helping your marketers better factor which candy to bring into a region. You are talking about intelligence inside of your IT operations, so AIOps, right?

Floyhar: Yes, absolutely. So things like Hewlett Packard Enterprise (HPE) InfoSight and some of the other providers with cloud-type operations for failure metrics and growth perspectives. We needed somebody with proven metrics. Proven technology was a huge factor in product determination.

Gardner: How about storage specifically? Was that something you targeted? It seems a lot of people need to reinvent and modernize their storage and server infrastructure in tandem and coordination.

Floyhar: Storage was actually the driving factor for us. It’s what started the whole renovation of IT within Ferrara. With our older storage, we were constantly suffering bottlenecks with administrative tasks and in not having visibility into what was going on.

During that discovery process and research, HPE InfoSight really jumped off the page at us. That level of AI, the proven track record, and being able to produce data around my work loads.

Storage drove that need for change. We looked at a lot of different storage area networks (SANs) and providers, everything from HPE Nimble to Pure, VNX, Unity, Hitachi, … insert major SAN provider here. We probably did six or so months’ worth of research working with those vendors, doing proof of concepts (POCs) and looking at different products to truly determine what was the best storage solution for Ferrara.

During that discovery process, during that research, HPE InfoSight really jumped off the page at us. That level of AI, the proven track record, being able to produce data around my actual work loads. I needed real-life examples, not a sales and marketing pitch.

By having a demo and seeing that data being given that on the fly and on request was absolutely paramount in making our decision.

Gardner: And, of course, InfoSight, was a part of Nimble Storage and Nimble became acquired by HPE. Now we are even seeing InfoSight technology being distributed and integrated across HPE’s broad infrastructure offerings. Is InfoSight something that you are happy to see extended to other areas of IT infrastructure?

Floyhar: Yes, ever since we adopted the Nimble Storage solution I have been waiting for InfoSight to be adopted elsewhere. Finally it’s been added across the ProLiant series of servers. We are an HPE ProLiant DL560 shop.

I am ultra-excited to see what that level of AI brings for predictive failures monitoring, which is essentially going to alleviate any downtime. Any time we can predict a failure, it’s obviously better than being reactive, with a retroactive approach where something fails and then we have to replace it.

Gardner: Stefan, how do you consume that proactive insight? What does InfoSight bring in terms of an operations interface? Or have you crafted a new process in your operations? How have you changed your culture to accommodate such a proactive stance? As you point out, being proactive is a fairly new way of avoiding failures and degraded performance.

Proactivity improves productivity

Floyhar: A lot of things have changed with that proactivity. First, the support model, with the automatic opening and closure of tickets with HPE support. The Nimble support is absolutely fantastic. I don’t have to wait for something reactive at 2 am, and then call HPE support. The SAN does it for me; InfoSight does it for me. It automatically opens the ticket and an engineer calls me at the beginning of my workday.

No longer are we getting interrupted with those 2, 3, 4 am emergency calls because our monitoring platform has notified us that, “Hey, a disk failed or looks like it’s going to fail.” That, in turn, has led to a complete culture change within my team. It takes us away from that firefighting, the constant, reactive methodologies of maintaining traditional three-tier infrastructure and truly into leveraging AI and the support behind it.

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We are now able to turn the corner from reactive to proactive, including on applications redesign or re-work, or on tweaking performance improvements. We are taking that proactive approach with the applications themselves, which has rolled even further downhill to our end users and improved their productivity.

In the last six months, we have received significant praise for the applications performance, based on where it was three years ago compared with today. And, yes, part of that is because of the back-end upgrades in the infrastructure platform, but also because as we’ve been able to focus more on the applications administration tasks and truly making it a more pleasant experience for our end users -- less pain, less latency, just less issues.

Gardner: You are a big SAP shop, so that improvement extends across all of your operations, to your logistics and supply chain, for example. How does having a stronger sense of confidence in your IT operations give you benefits on business-level innovation?

Floyhar: As you mentioned, we are a large SAP shop. We run any number of SAP-insert-acronym-here systems. Being proactive on addressing some of the application issues has honestly caused less downtime for the applications. We have seen into the four- and five-9s (99.99-9 percent) uptime from an application availability perspective.

We have been able to proactively catch a number of issues, whether using HPE InfoSight or standard notifications. We have been able to proactively catch a number of issues that would have caused downtime, even as minimal as 30 minutes. But when you start talking about an operation that runs 24x7, 360 days a year, and truly depends on SAP to be the backbone, it’s the lifeblood of what we do on a business operations basis.

So 30 minutes makes all the difference on the production floor. Being able to turn that support corner has absolutely been critical in our success.

Gardner: Let’s go back to data. When it comes to having storage confidence, you can extend that confidence across your data lifecycle. It's not just storage and accommodating key mission-critical apps. You can start to modernize and gain efficiencies through backup and recovery, and to making the right cache and de-dupe decisions.

What’s it been like to extend your InfoSight-based intelligence culture into the full data lifecycle?

Sweet, simplified data backup and recovery

Floyhar: Our backup and recovery has gotten significantly less complex -- and significantly faster -- using Veeam with the storage API and Nimble snapshots. Our backup window went from about 22.5 hours a day, which was less than ideal, obviously, down to less than 30 minutes for a lot of our mission-critical systems.

We are talking about 8-10 terabytes of Microsoft Exchange data, 8-10 terabytes of SAP data -- all being backed up, full backups, in less than 60 minutes, using Veeam with the storage API. Again, it’s transformed how much time and how much effort we put into managing our backups.

Again, we have turned the corner on managing our backups on an exception-basis. So now it’s only upon failure. We have gained that much trust in the product and the back-end infrastructure.

We specifically watch for failure, and any time something comes up that's what we address as opposed to watching everything 100 percent of the time to make sure it's working.

We specifically watch for failure, and any time something comes up that’s what we address as opposed to watching everything 100 percent of the time to make sure that it’s all working. Outside of the backups, just every application has seen significant performance increases.

Gardner: Thinking about the future, a lot of organizations are experimenting more with hybrid cloud models and hybrid IT models. One of the things that holds them up from adoption is not feeling confident about having insight, clarity, and transparency across these different types of systems and architectures.

Does what HPE InfoSight and similar technologies bring to the table give you more confidence to start moving toward a hybrid model, or at least experimenting in that direction for better performance in price and economic payback?

Headed to hybrid, invested in IoT

Floyhar: Yes, absolutely, it does. We started to dabble into the cloud, and a mixed-hybrid infrastructure a few years before Nimble came into play. We now have a significantly larger cloud presence. And we were able to scale that cloud presence easily specifically because of the data. With our growth trending, all of the pieces involved with InfoSight, we were able to use that data to scale out and know what it looks like from a storage perspective on Amazon Web Services (AWS).

We started with SAP HANA out in the cloud, and now we’re utilizing some of that data on the back end. We are able to size and scale significantly better than we ever could have in the past, so it has actually opened up the door to adopting a bit more cloud architecture for our infrastructure.

Gardner: And looking to the other end from cloud, core, and data center, increasingly manufacturers like yourselves -- and in large warehouse environments like you have described -- the Internet of Things (IoT) is becoming much more in demand. You can place sensors and measure things in ways we didn’t dream of before.

Even though IoT generates massive amounts of data -- and it’s even processing at the edge – have you gained confidence to take these platform technologies in that direction, out to the edge, and hope that you can gain end-to-end insights, from edge to core?

Floyhar: The executives at our company have deemed that data is a necessity. We are a very data-driven company. Manufacturers of our size are truly benefiting from IoT and that data. For us, people say “big data” or insert-common-acronym-here. People process big data, but nobody truly understands what that term means.

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With our executives, we have gone through the entire process and said, “Hey, you know what? We have actually defined what big data means to Ferrara. We are going to utilize this data to help drive leaner manufacturing processes, to help drive higher-quality products out the door every single time to achieve an industry standard of quality that quite frankly has never been met before.”

We have very lofty goals for utilizing this data to drive the manufacturing process. We are working with a very large industrial automation company to assist us in utilizing IoT, not quite edge computing yet, but we might get there in the next couple of years. Right now we are truly adopting the IoT mentality around manufacturing.

And that is, as you mentioned, a huge amount of data. But it is also a very exciting opportunity for Ferrara. We make candy, right? We are not making cars, or tanks, or very expansive computer systems. We are not doing that level of intricacy. We are just making candy.

But to be able to leverage the machine data at almost every inch of the factory floor? If we could get that and utilize it to drive end-to-end process, efficiency, and manufacturing efficiencies? It not only helps us produce a better-quality product faster, it’s also environmentally conscious, because there will be less waste, if any waste at all.

The list of wonderful things that comes out of this goes on and on. It really is an exciting opportunity. We are trying to leverage that. The intelligent back-end storage and computer systems are ultra-imperative to us for meeting those objectives.

Gardner: Any words of advice for other organizations that are not as far ahead as you are when it comes to going to all-flash and highly intelligent storage -- and then extending that intelligence into an AIOps culture? With 20/20 hindsight, for those organizations that would like to use more AIOps, who would like to get more intelligence through something like HPE InfoSight, what advice can you give them?

Floyhar: First things first -- use it. For even small organizations, all the way up to the largest of organizations, it may almost seem like, “Well, what is that data really going to be used for?” I promise, if you use it, it is greatly beneficial to your IT operations.

Historically we would constantly be fighting infrastructure-related issues -- outages, performance bottlenecks, and so on. With the AI behind HPE InfoSight, the AI makes all the difference. You don't have to fight that fight when it becomes a problem because you nip it in the bud.

If you don't have it -- get it. It’s very important. This is the future of technology. Using AI to predictively analyze all of the data -- not just from your environment -- but being able to take a conglomerate view of customer data and keep it together and use predictive analytics – that truly does allow IT organizations to turn the corner from reactive to proactive.

Historically we would constantly be fighting infrastructure-related issues -- outages, performance bottlenecks, and so on. With the AI behind HPE InfoSight, and other providers, including cloud platforms, the AI makes all the difference. You don’t have to fight that fight when it becomes a problem because you get to nip it in the bud.

Gardner: I’m afraid we’ll have to leave it there. We have been exploring how a global candy maker has increased its resources insights for best deploying and optimizing service and storage. We have heard how they have also moved toward an AIOps culture and had great benefits as a result in boosting their agility as a manufacturer. Ferrara Candy has also been managing growth by expanding its use of analysis and proactive refinement of its data center infrastructure.

So please join me in thanking our guest, Stefan Floyhar, Senior Manager of IT Infrastructure at Ferrara Candy Co. in Oakbrook Terrace, Illinois. Thank you, Stefan.

Floyhar: Thank you very much, Dana.

Gardner: And a big thank you to our audience as well for joining this special BriefingsDirect Voice of the Customer IT modernization interview. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing series of Hewlett Packard Enterprise-sponsored discussions.

Thanks again for listening. Pass this along to your IT community, if you would, and do come back next time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Hewlett Packard Enterprise.

Transcript of a discussion on how a global candy maker unlocks end-to-end process and economic efficiency through increased actionable insight and optimization of servers and storage. Copyright Interarbor Solutions, LLC, 2005-2019. All rights reserved.

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As Price Transparency Grows Inevitable, Healthcare Providers Need Better Tools to Close the Gap on Patient Trust

Transcript of a discussion on how healthcare providers can become more proactive in financial and cost transparency from the patient perspective.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: HealthPay24.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you’re listening to BriefingsDirect.

Gardner

Our next healthcare finance insights discussion explores ways that healthcare providers can become more proactive in financial and cost transparency from the patient perspective.

By anticipating rather than reacting to mandates on healthcare economics and process efficiencies, providers are becoming more competitive and building more trust and satisfaction with their patients -- and caregivers.

To learn more about the benefits of a more proactive and data-driven approach to healthcare cost estimation, we are joined by expert Kate Pepoon, Manager of Revenue Cycle Operations at Baystate Health in Springfield, Mass. Welcome, Kate.

Pepoon: Thank you for having me.

Gardner: We are also here with Julie Gerdeman, President of HealthPay24 in Mechanicsburg, Penn. Good to have you back, Julie.

Gerdeman: Thanks, Dana.

Gardner: We are at the point with healthcare and medical cost transparency that the finger, so to speak, has been pulled out of the dike. We have had mandates and regulations, but it's still a new endeavor. People are feeling their way through providing cost transparency and the need for more accurate estimations about what things will actually cost when you have a medical procedure.

Kate, why does it remain difficult and complex to provide accurate medical cost estimates?

Education is healthy 

Pepoon: It has to do with educating our patients. Patients don’t understand what a chargemaster is, which, of course, is the technical term for the data we are now required to post on our websites. For them to see a spreadsheet that lists 21,000 different codes and costs can be overwhelming.

Pepoon

What Baystate Health does, as I’m sure most other hospitals in Massachusetts do, is give patients an option to call us if they have any questions. You’re right, this is in its infancy. We are just getting our feet wet. Patients may not even know what questions to ask. So we have to try and educate as much as possible.

Gardner: Julie, it seems like the intention is good, the idea of getting more information in peoples' hands so they can make rational decisions, particularly about something as important as healthcare. The intent sounds great, but the implementation and the details are not quite there yet.

Given that providers need to become more proactive, look at the different parts of transparency, and make it user-friendly, where are we in terms of this capability?

Gerdeman: We are still in the infancy. We had a race to the deadline, to the Centers for Medicare and Medicaid Services (CMS) [part of the U.S. Department of Health and Human Services] deadline of Jan. 1, 2019. That’s when all the providers rushed to at least meet the bare minimum of compliance. A lot of what we have seen is just the publishing of the chargemaster with some context available.

But where there is competition, we have seen it taken a bit further. Where I live in Pennsylvania, for example, I could drive to a number of different healthcare providers. Because of that competition, we are seeing providers that don't just provide context, they are leveraging the chargemaster and price transparency as competitive differentiation.

Gardner: Perhaps we should make clear that there are many areas where you don’t really have a choice and there isn’t much competition. There is one major facility that handles most medical procedures, and that’s where you go.

But that's changing. There are places where it’s more of a marketplace, but that's not necessarily the case at Baystate Health. Tell us why for your patients, they don't necessarily do a lot of shopping around yet.

Clearing up charge confusion 

Pepoon: They don't. That question you just asked Julie, it's kind of the opposite for us because we have multiple hospitals. When we posted our chargemaster, we also posted it for our other three hospitals, not just for the main one, which is Baystate Medical Center (BMC). And that can create confusion for our patients as well.

We are not yet at the drive to be competitive with other area hospitals because BMC is the only level-1 trauma center in its geographical area. But when we had patients ask why costs are so different at our other hospitals, which are just 40 miles away, we had to step up and educate our staff. And that was largely guiding patients as to the difference between a chargemaster price and what they are actually going to pay. And that is more an estimate of charges from their particular insurance.

We have not yet had a lot of questions from patients, but we anticipate it will definitely increase. We are ready to answer the questions and guide our patients.

We have not yet had a lot of questions from patients, but we anticipate it will definitely increase. We are ready to answer the questions and guide our patients.

Gardner: The chargemaster is just a starting point, and not necessarily an accurate one from the perspective of an outsider looking in.

But it began the process to more accurate price transparency. And even while there is initially a regulatory impetus, one of the biggest drivers is gaining trust, loyalty, and a better customer experience, a sense of confidence about the healthcare payments process.

Julie, what does it take to get past this point of eroding trust due to complexity? How do we reverse that erosion and build a better process so people to feel comfortable about how they pay for their healthcare?

Gerdeman: There is an opportunity for providers to create a trusted, unique, and personalized experience, even with this transparency regulation. In any experience when you are procuring goods and services, there is a need for information. People want to get information and do research. This has become an expectation now with consumerization -- a superior consumer experience.

Gerdeman

And what Kate described for her staff, that's one way of providing a great experience. You train the staff. You have them readily available to answer questions to the highest level of detail. That's necessary and expected by patients.

There is also a larger opportunity for providers, even just from a marketing perspective. We are starting to see healthcare providers define their brand uniquely and differently.  And patients will start to look for that brand experience. Healthcare is so personal, and it should be part of a personalized experience.

Gardner: Kate, I think it's fair to say that things are going to get even more challenging.  Increasingly, insurance companies are implementing more co-pays, more and different deductibles, and offering healthcare plans that are more complex overall.

What would you like to see happen in terms of the technologies and solutions that come to the market to help make this process better for you and your patients?

Accounting for transparency 

Pepoon: Dana, transparency is going to be the future. It's only going to get more … transparent.

This infancy stage of the government attempting to help educate consumers -- I think it was a great idea. The problem is that that did not come with a disclaimer. Now, each hospital is required to provide that disclaimer to help guide patients. The intent was fantastic, but there are so many different ways to look at the information provided. If you look at it face-value, it can be quite shocking.

I heard a great anecdote recently, that a patient can go online and look at the chargemaster and see that aspirin is going to cost them $100 at a hospital. Obviously, you are taken aback. But that’s not the actual cost to a patient.

Learn How to Meet Patient Demands
For Convenient Payment Options
For Healthcare Services

There needs to be much more robust education regarding what patients are looking at. Technology companies can help bring hospitals to the next level and assist with the education piece. Patients have to understand that there is a whole other layer, which is their actual insurance.

In Massachusetts we are pretty lucky because 12 years ago, then-Governor Mitt Romney [led a drive to bring health insurance to almost everyone]. Because of that, it’s reduced the amount of self-pay patients to the lowest level in the entire United States. Only around two to three percent of our patients don’t have insurance.

Some of the benefits that other states see from the published chargemaster list is better engaging with patients and to have conversations. Patients can say, “Well, I don’t have insurance and I would like to shop around. Thank you to Hospital A, because Hospital A is $2,000 for the procedure and Hospital B is only $1,500.”

But Massachusetts, as part of its healthcare laws, further dedicates itself to educating patients about their benefits. MassHealth, the Medicaid program of Massachusetts, requires hospitals to have certified financial counselors.

Those counselors are there to help with patient benefits and answer questions like, “Is this going to cost me $20,000?” No, because if you sign up for benefits or based on the benefits you have, it's not going to cost you that much. That chargemaster is more of a definition of what is charged to insurance companies.

The fear is that this is not so easily explained to patients. Patients don’t always even get to the point where they ask questions. If they think that something is going to cost $20,000, they may just move on.

Gardner: The sticker shock is something you have to work with them on and bring them back to reality by looking at the particulars of their insurance as well as their location, treatment requirements, and the specific medical issues. That's a lot of data, a lot of information to process.

Not only are the patients shopping for healthcare services, they will also be shopping for their next insurance policy. The more information, transparency, and understanding they have about their health payments, the better shopper they become the next time they pick an insurance company and plan. These are all choices. This is all data-driven. This is all information-dependent.

So Julie, why is it so hard in the medical setting for that data to become actionable? We know in other businesses that it's there. We know that we can even use machine learning (ML) and artificial intelligence (AI) to predict the weather, for example. And the way we predict the weather is we look at what happened the last 500 times a storm came up the East Coast as an example that sets a pattern.

Where do we go next? How can the same technologies we use to predict the weather be brought to the medical data processing problem?

Gerdeman: Kate said it well that transparency is here, and transparency is the future. But, honestly, transparency is table stakes at this point.

CMS has already indicated that they expect to expand the pricing transparency ruling to require even more. This was just the first step. They know that more has to be done to address complexity for patients as consumers.

Technology is going to play a critical role in all of this, because when you reference things like predicting the weather and other aspects of our lives, they all leverage technology. They look back in order to look forward. The same is true for and will be used in healthcare. It’s already starting to.

So [patient support] teams like Kate’s use estimation tools to provide the most accurate as possible costs to patients in advance of services and procedures. HealthPay24 has been involved as part of our mission, from pre-service to post-service, in that patient financial engagement.

But it is in arming providers and their staffs with that [predictive] technology that is most important for making a difference in the future. There will always be complexities in healthcare. There will always be things happening during procedures that physicians and surgeons can’t anticipate, and that’s where there will be modifications made later.

But given what we know of the costs around the 5,000 knee replacements some healthcare provider might already have done, I think we can begin to provide forward-looking data to patients so that they can make informed decisions like they never have before by comparing all of that.

See the New Best Practice
Of Driving Patient Loyalty
Through Estimation

Gardner: We know from other industries that bringing knowledge and usability works to combat complexity. And one of the places that can be most powerful is for a helpdesk. Those people are on the other end of a telephone or a chatbot from consumers -- whether you are in consumer electronics or information technology.

It seems to me that those people at Baystate Health, mandated by the Commonwealth of Massachusetts, who help patients are your helpdesk. So what tools would you like to see optimally in the hands of those people who are explaining away this complexity for your patients?

How to ask before you pay 

Pepoon: That’s a great question. Step one, I would love to see some type of education, perhaps a video from some hospitals if they partnered together, that helps patients understand what it is they are about to look at when they look at a chargemaster and the dollar amounts associated with certain procedures.

That’s going to set the stage for questions to come back through to the staff that you mentioned, the helpdesk people, who are there ready and willing to respond to patients.

But there is another problem with that. The problem is that these are moving targets. People like black-and-white. People like, “This is definitely what I’m going to pay,” before they get a procedure done.

We have heard of the comparison to buying a car. This is very similar to educating yourself in advance, of looking for a specific model you may like for a car, of going to different dealers, looking it up online, seeing what you’re going to pay and then negotiating that before you buy the car.

That’s the piece that’s missing from this healthcare process. You can’t yet negotiate on it. But in the future – with the whole transparency thing, you never know. But it’s that moving target that’s going to make this hard to swallow for a lot of patients because, obviously, this is not like buying a car. It’s your life, it’s your health.

The future is going to have more price transparency. And the future is also going to bring higher costs to patients regardless of who they are and what plan they have. Plans 10 years ago didn’t have deductibles. The plans we had 10 years ago that had a $5 co-pay, and now those plans have a $60 co-pay and a $5,000 deductible.

That’s the direction our healthcare climate is moving to. We are only going to see more cost burdens on patients. As people realize they are going to need to pay out more money for their own healthcare services, it’s going to bring a greater sense of concern.

So, when they do call and talk to that helpdesk, it’s really important for all of us in all of our hospitals to make sure that we are answering patients properly. It was an amazing idea to have this new transparency, but we need to explain what it means. We need to be able to reach out personally to patients and explain what it is they are about to look at. That’s our future.

Gerdeman: I would just like to add that at HealthPay24 we work with healthcare providers all across the country. There are areas that have already had to do this. They have had to be proactive and jump into a competitive landscape with personalized marketing materials.

We are starting to see educational videos in places like Pennsylvania using the human touch, and the approach of, “Yes, we recognize that you’re a consumer, and we recognize that you have a choice.” They have even gone to the extent of creating online price-checkers and charge-checkers to give people flexibility from their homes of conveniently clicking a box from a chargemaster to determine what procedure or service they are to be receiving. They can furthermore check those charges across multiple hospitals that are competing and that are making those calculators available to consumers proactively.

We are starting to see educational videos using the human touch. The providers recognize that you're a consumer and that you have a choice. They have created online price-checkers to allow people from their homes to determine the procedures and pricing.

Gardner: I’m sensing a building urgency around this need for transparency from large organizations like Baystate Health. And they are large, with service providers in both Western Massachusetts as well as the “Knowledge Corridor” of Massachusetts and Connecticut. They have four hospitals, 80 medical practices, 25 reference laboratories, 12,000 employees, and 1,600 physicians.

They have a sense of urgency but aren’t yet fully aware of what is available and how to solve this problem. It’s a big opportunity. I think we can all agree it’s time now to be proactive and recognize what’s required to make transparency happen and be accurate.

What do you recommend, Kate, for organizations to be more proactive, to get out in front of this issue? How can vendors in the marketplace such as Julie and HealthPay24 help?

Use IT to explain healthcare costs

Pepoon: There needs to be a better level of education at the place where patients go to look at what medical charge prices are. That forms a disclaimer, in a way, of, “Listen, this is what you are about to look at. It’s a little bit like jargon, and that’s okay. You are going to feel that way because this is raw data coming from a hospital, and a lot of people have to go to school for very long time to read and understand what it is that they are looking at.”

And I think if there has to be a way that we can have patients focused and able to call and ask questions. That’s going to help.

For the technology side going forward, I am very interested to see what it’s going to look like in about a year. I want to see the feedback from other hospitals and providers in Massachusetts as to how this has gone. Today, quite frankly, when I was doing research for us at Baystate I reached out to find out what are the questions patients are asking. Patients are not really calling that much to talk about this subject yet. I don’t know if that’s a good thing or a bad thing. I think that that’s a sentiment most hospitals in Massachusetts are feeling right now.

I don’t think there is one hospital system that’s ahead of the curve or running toward the goal of plastering all of this data out there. I don’t think everybody knows what to do with it yet. IT companies and partners that we have -- our technical partners like HealthPay24 – can help take jargon and put it into some version that is easily digestible.

That is going to be future. It ties back to the question of: Is transparency going to be the wave of the future? And that’s absolutely, “Yes.” But it’s all about who can read the language? If me and Julie are the only two people in a room who can read the language, we are letting our patients down.

Gardner: Well, engineering complexity out is one of the things the technology does very well. Software has been instrumental in that for the past 15 or 20 years.

There is a huge opportunity to look at technology and emerging technology today to provide new levels of clarity, reduce complexity, and to become more proactive.

Julie, as we end our discussion, for organizations like Baystate Health that want to be more proactive, to be able to answer those patient phone calls in the best way, what do you recommend? What can healthcare provider organizations start doing to be in front of this issue when it comes to accurate and transparent healthcare cost information? 

 

Gerdeman: There is a huge opportunity to look at technology available today, as well as emerging technology and where it’s headed. If history proves anything, Dana, to your point, it’s that technology can provide new levels of clarity and reduce complexity. You can digitize processes that were completely manual and where everything needed to be done on the phone, via fax, and on paper.

In healthcare, there’s a big opportunity to embrace technology to become more proactive. We talk about being proactive, and it really means to stop reacting and take a strategic approach, just like in IT architectures of the past. When you take that strategic approach you can look at processes and workflows and see what can be completely digitized and automated in new ways. I think that’s a huge opportunity.

I also don’t want to lose sight of the humane aspect because this is healthcare and we are all human, and so it’s personal. But again, technology can help personalize experiences. People may not be calling because they want access online via their phone, or they want everything to be mobile, simple, beautiful, and digital because that’s what we increasingly experience in all of our lives.

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Providers have a great opportunity to leverage technology to make things even more personal and humane and to differentiate themselves as brands, in Massachusetts and all across the country as they become leading brands in healthcare.

Gardner: I’m afraid we’ll have to leave it there. You’ve been listening to a sponsored BriefingsDirect healthcare finance insights discussion on how healthcare providers can become more proactive in modernizing financial and costs transparency -- from the patient perspective. And we’ve learned how anticipating rather than reacting to mandates on healthcare economics and process efficiencies builds more trust and satisfaction from patients as well as their caregivers.

So please join me in thanking our guests, Kate Pepoon, Manager of Revenue Cycle Operations at Baystate Health. Thank you so much, Kate.

Pepoon: Thank you, it was great.

Gardner: And we have been here with Julie Gerdeman, President of HealthPay24. Thank you so much, Julie.

Gerdeman: Thanks for the opportunity, Dana.

Gardner: And a big thank you as well to our audience for joining this HealthPay24-sponsored healthcare thought leadership discussion.

I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator. Thanks again for listening, and do come back next time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: HealthPay24.

Transcript of a discussion on how healthcare providers can become more proactive in financial and cost transparency from the patient perspective. Copyright Interarbor Solutions, LLC, 2005-2019. All rights reserved.

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