Peking Union Medical College Xiehe Hospital

1. Peking Union Medical CollegeXiehe Hospital Beijing, China June 21, 2012 The Dorenfest China Healthcare Group and Its Work in China

2. The Dorenfest Group 40 years experience in HIT Offer healthcare improvement services through a variety of businesses. Software Hospital Operations Improvement for over 300 Hospitals Consultation with over 200 Technology and Software Vendors in Health Created the Product That Became the HIMSS Analytics Database Our work focuses on improving patient care and operational efficiency through better change management Work process improvement Management systems improvement Improvement in services for patients Improvement in quality of patient care

3. Dorenfest Has Helped with More than 300 Healthcare Providers in Other Countries

4. Some Dorenfest Hospital Projects

5. Dorenfest Has Helped with More than 200 Healthcare Technology and Service Vendors

6. Some Dorenfest Healthcare Supplier Projects

7. Dorenfest’s Investigation of China Healthcare in 2005-2006 Dorenfest investigated China healthcare in 2005 and 2006 by visiting 17 cities, meeting with healthcare leaders, and visiting over 100 hospitals We observed a major opportunity in China HIT to help Chinese hospitals and health bureaus to do better with their IT improvement efforts Chinese healthcare leaders wanted to “leapfrog” the world in IT use, and to do that, they needed to make a number of changes in how IT was managed By learning from early adopters about what they did right and what they did wrong, and doing more of what they did right and less of what they did wrong, China can benefit from the experience of the world to do much better in HIT We created a consulting, education, and training company to bring the experience of the world to China to help the Chinese healthcare leaders to learn faster and accomplish their goals of “leapfrogging” the world in IT use

8. China Healthcare Leaders Want to Leapfrog the World in IT Use Chinese hospitals and health bureaus are carefully considering how to be more successful in taking next steps forward in IT use There is a recognition that for China to accomplish its objectives in HIT requires the following: Learning quickly from the global experience Overcoming resistance to change Knowing how to manage change Doing more of what the rest of the world did right and less of what they did wrong to avoid mistakes other countries have made and China is still making Developing more expertise in these areas of need quickly

9. How Did the Rest of the World Get to Their Present Level? • 1. The U.S. started first, made a huge amount of error from inexperience, and has created an advanced, but very inefficient HIT program • 2. The next group of adopters, including Canada, Europe, and Australia, did better than the U.S. by learning from the U.S. experience • 3. Later adopters in Asia, such as Hong Kong, have accomplished the best results in the shortest period of time by paying very close attention to the experience of others and doing more of what they did right, and less of what they did wrong

10. What Are the Key Success Factors in HIT Use in the Rest of the World? • 1. Good front end methods for buying and implementing new HIT systems, with a focus on functional specifications and user buy-in • 2. Physician and user leadership with the involvement of many physicians and users • 3. Good integration tools to support the purchase of software products from different vendors in a more seamless way • 4. Software products with user modification tools that match the needs of the hospitals and can easily be upgraded to reflect changes and new rules • 5. Careful learning from their own experience and the experience of other countries to minimize mistakes in the process of buying and implementing HIT systems

11. The Development of HIT in China Chinese hospitals began to computerize in the early 1990s The initial focus of computer efforts was on financial systems In the early 2000s, Chinese hospitals began to implement IT for clinical systems Many software solutions are now available, with well over 1,000 smaller software companies now operating in the HIT market in China Between 2005 and 2010, China hospital spending on IT grew from 5 billion RMB in 2005 to 16 billion RMB in 2010, and to 21.5 billion RMB in 2011 This rapid growth in spending will continue at an even more rapid pace over the next several years

12. Factors Contributing to Future Spending Growth in China HIT Redundant, expensive, and error-prone hospital work processes led to the initiation and development of HIT in China Fueled by the Ministry of Health (MOH) guidelines for health IT development issued in 2003, calling for all cities in China to implement RHNs and digital hospitals by 2010, hospitals began to purchase clinical systems in a variety of areas In 2009, China Healthcare Reform was passed, and a stimulus spending program of almost one trillion RMB in new spending was initiated to support Healthcare Reform Improved use of IT is one of eight pillars of the new China Healthcare Reform. The 3521 project national vision for HIT was summarized in the twelfth five-year plan for HIT to provide the framework for HIT and RHN development in China from 2011 to 2015. Focuses of HIT development include: Improve hospital IT systems leading to digital hospitals Implement electronic health records (EMR and EHR) Create the second wave of RHN development to provide data sharing throughout cities, provinces, and at a national level IT systems to support expanded healthcare insurance

13. What Are the Key Factors Impeding Success in Chinese Hospital IT Use? Low investment in the 20-year period 1990 to 2010 caused slow progress in HIT Weaknesses in the approach to buying and implementing new IT systems has created unnecessarily redundant work processes, poorly integrated systems, and unhappy users The current foundation of HIT efforts in China, including software and hardware platforms, and integration tools, is in need of improvement to support the accomplishments of China’s vision for HIT improvement

14. What Are the Key Factors Impeding Success in Chinese Hospital IT Use? (Continued) The weaknesses in approach to buying of HIT software products in China followed a similar path to how earlier adopter countries started their HIT efforts. Most of the world has learned from their own bad experiences to find better ways to buy and implement HIT systems On many occasions hospital and health bureau leadership, not yet knowing what they do not know, are continuing to make similar mistakes to the past. By paying much greater attention to what worked and did not work in early adopter countries of the world and using more of what worked and less of what did not work, Chinese hospitals and health bureau leaders will make much greater progress toward their vision and “leapfrog” goals

15. Cashiering (Vendor 2) General Accounting (Vendor 2) The Current Computing Environment in a Typical Large Complex Chinese Hospital Today Sample Current Systems (High Level View) Office Automation Systems Core Vendor (Vendor 1) Major Financial Systems Major Ancillary Systems Major Clinic Order Management Inpatient ADT and Billing Performance Assessment System (Vendor 13) Financial (Vendor 2) R.I.S./PACS (Vendor 4) Inpatient Physician Workstation Policy Exchange Platform (Vendor 13) Outpatient and ER Registration L.I.S. (Vendor 3) MD Workstation (Vendor 2) Webport System (Vendor 13) Outpatient Physician Workstation Outpatient Pricing and Charging Pharmacy (Vendor 2) Blood Bank (Vendor 3) Major Admin Systems Hospital Website (Vendor 13) Inpatient Pharmacy L.I.S. (Vendor 3) Material Supply Bar Code (Vendor 3) Medical Ins (Vendor 9) Outpatient Pharmacy Smart Card OR/Anesthesia (Vendor 5) Medical Ins (Vendor 10) Lab Price System Ultrasound (Vendor 6) Patient Consultation Survey Medical Records (Vendor 11) Inpatient Insurance Interface Stomatology (Vendor 7) RF Card Producing Sub-System Human Resources (Vendor 12) Instrument and Equipment Management Many Other Niche and Specialty Systems Inpatient EMR (Vendor 8) Note: Chart taken from a couple of real hospital situations with each vendor or product family shown in a different color

16. The Competitive Environment 1. There are over 1,000 small software vendors active in China HIT 2. The market segments with the most vendors are HIS, PACS, RIS, LIS, and EMR 3. All HIT vendors in the market started in a city and most are still operating in that city or a small region around the city. Many of these smaller local vendors have a dominant market share in the area they service. Some HIT vendors are becoming more national in scope 4. Many vendors in the hospital computer systems market offer heavily customized solutions rather than products. These heavily customizable solutions create greater dependency on the software vendor and are more difficult/expensive to keep current when vendors release new software updates periodically 5. Chinese hospital leaders would like to see a new generation of HIT software developed for the country to assist in helping them accomplish their “leapfrog” objectives

17. Major Areas of Future Development and Opportunity in the China HIT Market • 1. Application software will become more productized with greater tools to support the growing use of IT in hospitals • 2. New application software to serve the not yet automated areas of clinical work processes are emerging very quickly • 3. Integration tools to facilitate the development of an improved IT environment will emerge • 4. Data analytics products and support tools to facilitate better data analysis, reporting, and decision making will emerge as Chinese Hospital Managers grow in sophistication • 5. New service and implementation approaches are beginning to emerge • General contracting for entire efforts with some company software and some partner software • Front end planning, buying, and implementation services purchased from independent third parties to help hospitals make better buying decisions and create more successful implementation of software

18. Today Chinese Hospital HIT Investment Is Spent Differently Than the Rest of the World SOURCE: CCW Research

19. To “Leapfrog,” Chinese Hospitals Needs to Improve Quickly in the Following Areas The creation of IT plans The buying of IT systems The implementation of IT systems Change management to gain benefits and improvements from new IT systems

20. The Dorenfest Group Is Bringing Needed New Skills to China 1. Hospital Operations Improvement and Change Management 2. IT Program Improvement, Problem-solving, Strategy, and Planning 3. New Approaches to Buying IT Systems in a Stronger Partnership with Users 4. New Ways to implement IT Systems

21. Examples of Dorenfest Projects in China The Dorenfest China Healthcare Group was formed in 2006 to offer consulting services to China Hospitals and Health Bureaus. We have worked with over 25 hospitals and health bureaus to help them use information technology more effectively and have consulted with a variety of Western companies Some health bureau clients for RHN and digital hospital planning Shenzhen Chongqing Some hospital clients Peking University Third Hospital Foshan City First People’s Hospital Shanghai Changning Maternity & Infant Health Institute Rizhao City People’s Hospital

22. Examples of Dorenfest Projects in China (Continued) Helping clients from other locations bring their skills to Mainland China Hong Kong Hospital Authority IMS China Microsoft China Philips Healthcare China Helping Chinese companies Donglian – Hangzhou East Associates Heren Health Simcere Pharmaceuticals

23. Dorenfest Education in China – Tongren Hospital, Beijing 2005

24. Dorenfest Education in China – Zhejiang Medical Association 2009

25. Creating More Success in the Current China Healthcare Environment • 1. There is much momentum for change. More money will be spent and better results are mandatory • 2. Because of limited investment for many years in China HIT, Chinese hospitals have created a poor foundation for implementing its HIT vision of the future, and have made many of the same mistakes that the U.S. made in its early adoption of HIT • 3. Now China is at a crossroads. It is spending much money to accomplish a very grand HIT vision • 4. But more careful front end planning at every level of the country – from the hospital to the health bureau to the national level – must be done to support the execution of what could be a wonderful vision if successfully implemented • 5. By recognizing what the rest of the world learned from their successes and failures, and doing more of what the rest of the world did right, and less of what the rest of the world did wrong, China will be able to make much faster and better progress in the future of HIT implementation

26. THANK YOU. FOR MORE INFORMATION CONTACT: SHELDON I. DORENFEST OR XIAO LIU THE DORENFEST CHINA HEALTHCARE GROUP SUITE 908, NO. 45 HUAIHAI EAST ROAD, SHANGHAI PHONE: 021-51001821 WEB SITE ADDRESS: www.dorenfest.com E-MAIL ADDRESS: info@dorenfest.com SHELDON’S E-MAIL ADDRESS: sheldon@dorenfest.com XIAO’S E-MAIL ADDRESS: xiao.liu@dorenfest.com