According to the American Hospital Association, more than 40% of expenses hospitals incur come from administrative costs. This significant burden impacts providers and can even lead to delays in patient care.
To address this issue and proactively get ahead on costs, Barry T. Katzen, M.D., chief medical innovation officer for Baptist Health South Florida, launched Baptist Health Innovations. This unique business unit is designed to provide clinicians and staff with resources to turn their ideas into transformative products and services.
To learn more about Baptist Health Innovations and HealthChain, a supply chain platform it had a role in launching, Becker’s Healthcare recently spoke with five healthcare leaders with in-depth knowledge of these initiatives:
- Nila Bhakuni, assistant vice president, innovation, Baptist Health South Florida
- Mark Coticchia, corporate vice president, innovation, Baptist Health South Florida
- Misty Garrison, director of procurement operations, UVA Health (Charlottesville, Va.)
- George Godfrey, chief supply chain officer, corporate vice president of shared services, Baptist Health South Florida
- Barry Katzen, M.D., chief medical innovation officer and founder of Baptist Heath Innovations, and founder and chief medical executive emeritus of Miami Cardiac & Vascular Institute, part of Baptist Health South Florida.
A culture and infrastructure that democratizes innovation
The Baptist Health Innovations team is known for its excellence in commercializing know-how, data and processes. Its reputation is particularly strong in commercialization of nonclinical technologies and inventions like HealthChain. This patent-pending supply chain management toolset reduces costs in the procure-to-pay process and smooths operations for suppliers, vendors, contractors and employees.
The individual and institutional knowledge of over 28,000 employees is a unique, valuable asset and a major source of innovative product and service ideas. The organization’s leadership team believes that great ideas can come from anywhere — ranging from financial professionals to pharmacists, nurses, clinical institute leaders and more.
“We have no prejudice against where innovation can come from,” Dr. Katzen said. “And, for us, innovation goes beyond clinical innovation. We are dedicated to improving healthcare delivery in all its forms. As a result, we need an infrastructure that accepts innovative ideas from literally anywhere in the organization.”
Baptist Health Innovations plays a central role in helping creators develop ideas and move them through implementation and commercialization pathways so they can bring value to the organization. The team has fielded hundreds of employee ideas and helped many successfully move into commercialization. An essential part of this approach is rewarding staff members for their creativity. “Developing an intellectual property policy with very generous revenue-sharing terms for inventors was one of the first things we did at Baptist Health Innovations,” Mr. Coticchia said.
Katzen believes the opportunities for operational innovations are huge. These types of projects align with Baptist Health Innovations’ pragmatic and action-oriented philosophy. As Coticchia explained, the team focuses on projects that can be completed in a five-year time frame. Since operational innovation projects do not require FDA approvals or clinical trials, they come to fruition with greater agility and speed.
“The future is now, Coticchia said. “We look to develop new products and processes that can have near-term impact. Progress in tech transfer is measured by doing deals, such as intellectual property and codevelopment agreements, licensing deals, spinoffs and more.”
Between 2019 and the end of fiscal year 2024 (Sept. 30), the organization has completed 980 transactions; 16 co-development collaborations with companies like Fujitsu, Philips and Becton Dickinson; 25 license deals; 3 equity investments; and launched a startup company. These initiatives have generated millions of dollars in licensing revenues for Baptist Health and millions more in cost savings.
Through the support of the John S. and James L. Knight Foundation, Baptist Health Innovations launched the Knight Foundation Fellowship in Healthcare Technology Innovation. This competitive program attracts, trains and empowers healthcare visionaries and entrepreneurs to develop a diverse and connected community of innovators at Baptist Health and in South Florida.
“The grant was the largest award ever provided to a healthcare institution by the Knight Foundation,” Ms. Bhakuni said. “To date, the fellowship program has produced 140 fellows both inside Baptist Health and outside the health system. It teaches a curriculum based on a series of practicums using real world problems and solutions.”
Baptist Health has succeeded in creating a culture of innovation, as well as in the ability to create the transactions and deal flow needed to make ideas real for people who value them. Katzen noted that having those skills internally is a prized asset for the organization.
Operational innovation in action HealthChain is a patented supply chain management solution that is fully emblematic of Baptist Health’s focus on operational innovation. The toolset and integrations were designed by Mr. Godfrey. A national leader in supply chain and logistics, Godfrey became an especially important and innovative leader during the COVID-19 pandemic. In particular, he developed what became HealthChain, a sophisticated tool that played an important role in Baptist Health’s operations during the pandemic. To allow other healthcare organizations to benefit, Godfrey collaborated with Baptist Health Innovations to commercialize HealthChain.
HealthChain helps supply chain teams reduce invoice match exceptions. These exceptions, which stem from discrepancies between purchase orders, receipts and invoices, can result in significant leakage of money. Unresolved invoice match exceptions can also generate credit holds.
“In healthcare, when credit holds occur, supplier delay can impact clinical workflows and lead to frustration for frontline teams,” Godfrey said. “HealthChain helps proactively prevent these situations before they disrupt patient care.”
Extensive time and effort go into investigating and resolving invoice match exceptions. At many health systems, the work is highly manual and time-consuming, making it ripe for innovation. As healthcare organizations grow or acquire other hospitals, the volume of match exceptions simply increases. Well aware of how broken the process was, Godfrey decided to take a completely different approach to solve the problem — one rooted in innovation.
“We knew we wanted bi-directional communication, while maintaining the enterprise resource planning (ERP) as our source of truth for invoice match exceptions. We’ve leveraged technology to resolve match exceptions in a truly innovative way. That is how we came up with HealthChain,” Godfrey said.
HealthChain automates the resolution of match exceptions. It manages the communications that surround and support ERP transactions, while enabling seamless communication among clinicians, administrators, supply chain professionals and suppliers.
Godfrey explained that unlike other third-party solutions that can only address specific scenarios, HealthChain is equipped to handle all types of exception handling. It uses predefined criteria to classify each exception and assign ownership, eliminating the need for manual triage. HealthChain then automatically creates a “case” for each exception and sends a templated email to the appropriate internal department.
In the first year of using HealthChain, Baptist Health resolved nearly 37,000 match exceptions and managed almost 98,000 emails in the application. The average resolution time dropped to nine days, a dramatic improvement over the industry average of more than 65 days.
“Faster invoice match exception resolution unlocked early payment discounts,” Godfrey said. “Incorporating these discounts into our pricing agreements has become a strategic priority. To date, the initiative has generated hundreds of thousands of dollars in savings and staff has been redeployed to work on more strategic supplier related initiatives.”
Given the immense value that HealthChain delivered to Baptist Health, Godfrey worked with Baptist Health Innovations to make it available to healthcare systems and integrated delivery networks (IDNs) nationwide.
Godfrey created the application and developed the integration within the Salesforce platform. “We protected the proprietary approach via five pending patent applications and engaged in licensing the capability to a preferred Salesforce system integrator called Penrod,” Bhakuni said.
Innovative ideas from Baptist Health are improving healthcare operations nationwide
A number of IDNs have engaged with Penrod and are now in various stages of HealthChain implementation. UVA Health is one of those organizations. Like Baptist Health, Ms. Garrison’s team will use HealthChain to reduce credit holds, take advantage of prompt pay discounts, prioritize exceptions to ensure the organization meets all supplier terms and conditions, and address open orders.
“Automation of supplier communications is so important,” Garrison said. “Having the ability to formally dispute invoices within a day of the invoice being presented allows for resolution times to be reduced from months to days.”
Automating backorder communications with suppliers is also a big focus. If the supply chain team can get that information to clinicians as quickly as possible, they can make necessary procedural or clinical changes.
According to Coticchia, the HealthChain commercial collaboration is a great example of nonclinical advancement that is dramatically helping healthcare operations. Garrison agreed, calling HealthChain a transformation for supply chain management. “It’s taking members of the team who were sending out hundreds of emails to resolve exceptions and moving them into more analytical roles,” she said.
Reflecting on nonclinical opportunities for innovation like HealthChain, Katzen observed that a good first step is for organizations to publicize that they are open to new ideas and create an environment where employees are comfortable bringing ideas forward.
“We’ve created the infrastructure and put in place the resources to take those ideas forward, “ he said. “The process of moving from an idea to a successful innovation is a winding road. You need the infrastructure and people to navigate the turns and pivots so you can get to the endpoint successfully.”
