Sunday, August 12, 2007

Successful MMIS Implementations (Part 1 of 3)

Permit me to rise upon a soap box and talk a bit about how the challenges MMIS projects face in implementing these complex systems. This is the first of a three part blog entry. In this article I want to present the background of the MMIS industry. In the second article, I will list the challenges we all face. In the third article, I will pretend I'm king for a day and fix all of the problems!

Bear with me if you are on the "buying-side" of an MMIS procurement because it may sound like a vendor (i.e., the "selling" side) whining and complaining. The whining is unintentional but a few notes may leak in......

MMIS projects are large, complex, lengthy, expensive, and often political in nature. These characteristics and others make successful implementations difficult. With the advent of new technology and new initiatives like MITA, the level of difficulty is bound to increase. Many recent MMIS implementations have had challenges that necessitate a review of potential root causes.

MMIS procurement guidelines are largely dictated by individual state’s procurement law, even through the Federal government finances as much as 90% of acquisition costs. In addition, while state Medicaid programs vary widely, and states’ MMIS requirements vary considerably, majority of the states use the same approach for procuring MMIS Design, Development, and Implementation (DD&I) projects. MMIS projects are large projects on virtually every measure. Consider the following measures for MMIS DD&I projects:

  • State staffing ranges from 10 to 110 people;
  • Funding typically ranges from $30M to $100M (state and vendor combined);
  • Implementation timelines vary from 24 months to 36 months; and
  • Man-hour effort approaches one half of a million hours

Consider also that Medicaid regulation, policies, and business rules are extremely complicated and vary from state-to-state. These projects are also highly politicized. The dollar value and risks involve typically place MMIS projects within the top five of every state’s IT portfolio. The risks are high for all stakeholders: state; providers; recipients; vendors; and CMS.

State agencies are procuring Medicaid systems under fixed price contracts. The fixed price environment is having deleterious effects on the quality and value of MMIS projects for taxpayers, patients, and government officials. Recent project failures and distresses should give rise to serious analysis of what is causing these problems. And, in many troubled projects contract disagreements over money are major contributors to eroding relationships and present a barrier to project success.

(potential whine alert...)

In each of these examples, states use a fixed price contract to manage the relationship and performance of projects. Using fixed price contracts to manage such a large project with an incredibly high level of complexity and a large number of stakeholders creates an environment with an inequitable distribution of risk and reward.

That last bit might sound like whining but stay tuned...I'm not saying to do away with fixed price contracts....

Continued in Part 2...

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