Information Management

This is the eleventh article in the Medical Management "Signature Series" by Managed Care Resources, Inc. -- articles on topics in managed care written by experts in the field. The author of this article is Roberta L. Carefoote.

Information system planning is a bothersome and vexing issue for health care leaders, at least according to the 1997 Hospitals & Health Networks Leadership Survey. Many respondents believe that information technology is a key determinant in the future profitability and competitiveness of their organization. According to Jan Greene and the leaders surveyed,1 the right system will enable organizations to track patients across a variety of settings, provide quality and outcome data, and pull together the right information at the right time to make necessary financial decisions. Make the wrong choice, and your information technology can eat away at your bottom line and let your competitors push ahead of you.

This article addresses broadly the issue of medical management information technology in managed care. It highlights an information framework developed by the National Committee for Quality Assurance (NCQA), introduces some key data elements for a medical management information system (IS), and outlines a process for selecting the right information system. It also identifies some of the potential impediments to securing an effective system and provides the reader with some resource sources. This article is intended to serve as a basis for learning more about medical management information systems and should be supplemented with additional reading on the subject.

Information Framework

What better place to start a discussion about medical management information systems than with a framework that guides the development of any information system or strategy. NCQA, through its Health Employer Data Information Set (HEDIS) 3.0 Volume 4 development process, has put out a road map for information systems which identifies the critical characteristics of an information framework.2 While clearly broader than just medical management information, the characteristics noted in the information framework are easily transferable to our subject matter. The critical characteristics of a framework include the following:

  • Data elements -- A comprehensive set of data elements are defined and collected to support clinical management and performance measurement. Some examples of data elements critical to utilization and quality management are highlighted in the next section.
  • Linkages -- Sources and repositories of data can easily and reliably exchange information.
  • Standardization -- The structure, content, definition and coding of all medical information is consistent in all patient care settings. Common messaging protocols are used among all organizations in the health care system. Unique identifiers are used for each patient, provider, insurer, and employer.
  • Data quality -- Methods for verifying and improving the quality of the data elements and data values are consistently applied. These methods verify the accuracy and completeness of data input, storage, and retrieval.
  • Security and confidentiality -- Patient records are protected from unauthorized access. Strict penalties are invoked for individuals and organizations that abridge patient confidentiality.
  • Automation -- Patient clinical information is maintained in a computerized patient record that can be linked to clinical protocols and monitored for follow-up and preventive care. Worthy of note is a recent survey of information systems trends in Modern Healthcare3 which reports that seven in ten respondents said they've either completed or are actively working on a system that makes patient information and histories accessible throughout their organizations. Eight in ten organizations surveyed are implementing systems that computerize physician orders and retrieve the results electronically.
  • Data sharing -- Health plans, providers, and public health agencies can, with proper security, electronically exchange information.

NCQA recognizes that most information systems cannot meet all these requirements. However, they are intended to provide direction to those seeking to find integrated systems. NCQA believes that their framework will make it possible to deliver high quality care more cost effectively. In the short term, the information framework was designed as a vehicle for communicating expectations directly with the managed care industry. In the longer term, the information framework should accelerate the creation of an environment in which advanced performance measures can be implemented without undue hardship on the health plan.

Key Data Elements

As per the information framework set forth by NCQA, a key element consists of defining the specific data elements and then collecting the required information. In medical management, which for the purposes of this article encompasses both utilization and quality management, the definition of data elements is a critical first step in securing a meaningful information system.

From a utilization management perspective, the information system should be able to generate reports necessary to effectively manage scarce resources. It is too cumbersome to document a complete list of data requirements but the following list should provide the reader with a sample of utilization management (UM) reports as well as the corresponding data elements. The objective is to demonstrate a simple way of defining data elements by using the end result as the starting point. Basic UM reports can include the:

  • Daily hospital census and hospital bed-days per thousand members per year. Used to define current performance, the census report requires data elements such as patient name, age, hospital, identification number, plan type and/or number, physician, diagnosis, admission date, expected discharge date, case manager, etc.
  • Approved elective surgery procedures. This report can lead to the identification of cases where case management or service coordination will be needed. Data elements include patient name, phone number, procedure date, physician, facility, health plan, procedure information, etc.
  • Hospital variance by physician and diagnosis. This report is intended to identify physician practice patterns, as well as diagnoses where there are opportunities to decrease hospital length of stays. Data elements include physician, patient, identification number(s), age, health plan, diagnosis, hospital, etc.
  • Specialty referrals, visits and per member per month data. This report looks at the specialty services that a PCP's members use and encompasses data elements such as specialty, PCP, claims paid, member months, per member per month, etc.
  • Claims paid by vendor. This report is intended to look at practice and billing patterns and requires data elements such as vendor identification, plan type, member and member identification, date of service, coding, description, monies billed, monies paid, etc.
  • Pharmacy utilization. This report is likely to look at pharmacy utilization by drug class for each provider and will include data elements such as physician, identification number, physician capitation and non-capitation, specialty, hospital, other medical services, pharmacy, etc.

From a quality management perspective, the information system should be able to (a) generate and report all HEDIS standard statistics and outcome measures - which is no small feat but the data elements required are clearly defined in HEDIS documents, (b) support credentialing and recredentialing efforts, and (c) enable provider profiling. In the ideal world, the system should also be able to provide for on-line management of treatment guidelines and protocol information, as well as access to in-house medical references. Where possible, the information system should facilitate the management of key quality processes, including indicator development and tracking, concurrent review of quality issues, medical record audits, provider and practitioner site audits, member complaints, and medical care evaluation studies. Finally, separate stand-alone systems might be employed to address satisfaction surveys and risk management issues. Within each of these functions, key data elements exist that need to be documented before starting a search for the ultimate in medical management information systems.

Selection Process

Selecting a medical management system is different from selecting a claims or billing system yet there are similarities in the process used to make the selection. Among the key steps in any IS selection process are: 4

  • Define basic requirements (as outlined above)
  • Review existing medical management systems
  • Establish required applications
  • Establish review or selection criteria
  • Set up Information System Task Force
  • Draft a Request-for-Information (RFI)
  • Review the RFI with the Task Force and User Groups
  • Finalize the top vendor list
  • Prepare and release the RFI
  • Receive and analyze the responses using a matrix
  • Select finalists
  • Conduct site visits
  • Finalize selection of vendor

While it is unlikely that any one system will meet all the requirements set forth in the first couple of steps where applications and date requirements are established, adherence to this process enables the user to methodically and fairly select a system that best meets its needs.

Potential Barriers

Despite valiant efforts to design, select and implement a sound medical management information system, potential impediments do surface.5 First, the market is evolving faster than the vendor's ability to support the information requirements. This is exacerbated by the fact that niche vendors, while attractive in their ability to respond quickly to market demands, have varying degrees of financial stability. Second, in comparison to the acute care sector, there is a limited base of experience with managed care and managed care information systems. Be wary of those vendors who promise tried and true systems that can do it all. Third, cooperative efforts between organizations are almost non-existent due to the proprietary environment, incompatible technologies and a lack of shared vision and goals. And, finally, the rules about purchasing information systems are changing. Andrew Pasternach 6 espouses six new buying rules that he believes will change the future of provider-vendor relationships:

  1. Big (client lists) does not mean better.
  2. Buy only the software that you need, rather than in bulk.
  3. Shop for value and note that high price does not always equate to high function.
  4. Find a vendor who will share the risks and rewards, rather than buying what's available and making the vendor take care of you.
  5. Be wary of "hot" software as it might not stay hot.
  6. Stick with a few vendors rather than buying the best and integrating.

These impediments do not mean that forward movement is stalled. What they do mean is that access to comprehensive, reliable, and cost-effective information systems to-date is somewhat limited. In fact, the managed care organization (MCO) itself is helping to shape the industry and may need to assume some of the financial risk associated with development if it wants to move at a pace faster than the norm. Kaiser Permanente's Rocky Mountain Division is one MCO that broke the rules and found a vendor willing to come up with its dream system and share both the risks and rewards associated with the final product.6


Life would be simple if there were but one or two places to go to get information about medical management information technology. But such is not the case. Interested parties are left to their own resources when trying to wade through vast amounts of information on the subject. Here are a few helpful suggestions for anyone on a quest to secure, modify, or improve their information systems:

  • Secure a copy of Change Drivers: Information Systems for Managed Care, published this year by AHA.7 The book, written by experts at First Consulting Group, clarifies the business drivers in managed care, the key characteristics of managed care information systems, and how to plan and implement such systems. The book is intended to help the reader through the maze of information technology issues.

  • Browse through another book entitled, The CEO's Guide to Health Care Information Systems, published in 1996 by AHA.7 The book has chapters on vendor selection, system development, and IS management that should prove useful for the individual charged with overseeing the information technology implementation.

  • Visit two Internet web sites:
    1. The Healthcare Information Systems Directory at, which provides linkages to vendor sites.
    2. The Online Directory of Medical Software at which provides an index to reviews of software.

    Both web sites offer a great starting point for your information system search.7

  • Consider subscribing to Faulkner & Gray's monthly Health Data Management Journal 8 which covers a broad array of topics designed to give the reader practical, relevant, and timely information. As a subscriber, you are entitled to the 1999 Resource Guide offering detailed information on more than 1200 vendors. Their web site at provides more information about their publications.

  • Conduct a literature search of the medical databases available through the National Library of Medicine.9 While information system literature is numerous, not all of it has been published in recognized journals. Nevertheless, it behooves the researcher to at least scan the latest publications to determine if relevant information is available. With the release of the Internet version of Grateful Med, World Wide Web browsers can access and conduct Medline searches on-line at


Information systems and technology in managed care is a complex business but one that administrators must understand, control and own if they are to be successful in the next millennium. Gone are the days when the Chief Executive Officer can delegate IS ownership to the Chief Information Officer. Today, the business and information technology strategies must be closely aligned if business outcomes are to be achieved.5 It is fundamentally important that IS core competencies facilitate rather than erode the MCO's strategic positioning in the marketplace. For this reason, time invested in designing and selecting the "right" information system is time well spent. Nowhere is this more true than in the area of medical management, where payers, regulators and accrediting bodies closely monitor service costs and provision and service outcomes. The right system can catapult an MCO to the head of the pack, whereas the wrong system can effectively strangle forward movement.

For more information on Managed Care and Quality Management please contact us at (630) 325-6543 or by email at .

We hope that you will join us as we explore all of the elements of medical management in the coming months. In addition, we are offering a "Signature Series" on "Managed Care Contracting". We hope that the two series combined will lessen the mystery of managed care and help level the playing field between providers and payers.

Ira H. Rosenberg

Ira H. Rosenberg

President, Managed Care Resources, Inc.


1. Jan Greene, The 1997 Hospitals & Health Networks Leadership Survey, Hospitals & Health Networks, August 5, 1997, pp. 26-40.

2._____________, HEDIS 3.0 Volume 4, A Road Map for Information Systems - Executive Summary, NCQA Web Site March, 1997 pp. 1-5.

3. John Morrissey, Full Speed Ahead, Modern Healthcare, March 4, 1996, pp. 97-132.

4. _________, How to Select the Right Information System for an Ambulatory Care Project, A Medical Source Page - The Intelligent Source for Healthcare Information, 1995, Medical Alliances, Inc. pp. 1-5.

5. David D. Moriarity, Managed Care Strategy and IT Strategy, Conference Proceedings, 1995.

6. Andrew Pasternach, 6 New Buying Rules, Hospitals & Health Networks, February 20, 1998, pp. 34-40.

7. Chuck Appleby, InfoTech Strategy - 10 CEO Resources, Hospitals & Health Networks, February 20, 1998, pp. 50-52.

8. _________, About Health Data Management, Faulkner & Gray Inc., 1998.

9. Mary Chris Jaklevic, Medical Data Accessible on Internet, Modern Healthcare, May 6, 1996, p. 82.

Related World Wide Web Sites:

A. National Committee for Quality Assurance (NCQA)

B. The Healthcare Information Systems Directory

C. The Online Directory of Medical Software

D. Health Data Management Journal

E. National Library of Medicine

F. Modern Healthcare Journal

The Managed Care Resources, Inc. team has over 150 years of combined experience in the development and implementation of managed care services. Please visit our home page to learn more about how we can assist you with your managed care needs. We also invite you to contact us with questions or comments.

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