1. Duke Beijing Healthcare Leadership Forum
DURHAM, NORTH CAROLINA
APRIL 26, 2007
USING THE U.S. EXPERIENCE
TO IMPROVE H.I.T. INVESTMENT
RESULTS IN CHINA

2. AGENDA THE DORENFEST GROUP AND ITS CHINA BUSINESS APPROACH
THE U.S. HEALTHCARE INDUSTRY AND ITS USE OF INFORMATION TECHNOLOGY
CHINA CAN BENEFIT FROM THE U.S. H.I.T. EXPERIENCE
A GOOD APPROACH FOR SUCCESSFULLY IMPLEMENTING MAJOR I.T. SYSTEM UPGRADES AND CHANGES
DISCUSSION

3. THE DORENFEST GROUP HEALTHCARE CONSULTING AND INVESTMENT FOCUS
OFFER HEALTHCARE IMPROVEMENT SERVICES TO SUPPORT A MORE POSITIVE WORLD FUTURE
HELP HEALTHCARE ORGANIZATIONS TO IMPROVE HEALTHCARE SERVICES WHILE REDUCING COSTS BY IMPROVING WORK PROCESSES, MANAGEMENT SYSTEMS, SERVICES TO PATIENTS, AND QUALITY OF MEDICAL CARE
IN 2006 THE DORENFEST GROUP FORMED THE DORENFEST CHINA HEALTHCARE GROUP, BASED IN SHANGHAI, TO BRING OUR SKILL, TECHNOLOGY, AND CAPITAL TO CHINA IN A TWO-PHASE PROGRAM
WE ARE NOW OPERATING IN PHASE 1 OF THIS PROGRAM, OFFERING A VARIETY OF CONSULTING, TRAINING, AND EDUCATION SERVICES TO THE CHINA HEALTHCARE SYSTEM
WE EXPECT TO ENTER PHASE 2 OF OUR ACTIVITIES IN CHINA IN 2008 WHEN WE WILL BEGIN TO MAKE INVESTMENTS IN WELL-DEFINED, GOOD BUSINESS PROJECTS, IN PARTNERSHIP WITH CHINESE HEALTH BUREAUS AND HOSPITALS

4. BRIEF SUMMARY OF SHELDON’S PAST EXPERIENCE IN H.I.T.
FORMED COMPUCARE 1969; CEO
FORMED SHELDON I. DORENFEST & ASSOCIATES, LTD. IN 1976; CEO
LONG, RICH HISTORY OF MAJOR CONTRIBUTIONS TO HEALTHCARE I.T. UNDERSTANDING AND PROGRESS
WAS RECOGNIZED AS THE LEADING SOURCE OF INFORMATION ABOUT HEALTHCARE I.T. AND A LEADING HEALTHCARE CONSULTING FIRM
KEY BUSINESS UNITS INCLUDED THE DORENFEST INTEGRATED HEALTHCARE SYSTEM DATABASE™ AND HOSPITAL OPERATIONS IMPROVEMENT AND MEDICAL SUPPLIER CONSULTING
SOLD THE DORENFEST INTEGRATED HEALTHCARE DELIVERY SYSTEM+ (IHDS+) DATABASE™ TO HIMSS ANALYTICS IN JULY, 2004

5. BRIEF SUMMARY OF SHELDON’S PAST EXPERIENCE IN H.I.T. (CONTINUED)
DONATED SHELDON I. DORENFEST & ASSOCIATES, LTD. TO THE HIMSS FOUNDATION TO FORM THE DORENFEST INSTITUTE FOR HEALTH INFORMATION TECHNOLOGY RESEARCH AND EDUCATION
THE DORENFEST INSTITUTE CONTAINS A LIBRARY OF HISTORIC DATA AND PUBLICATIONS FROM 1986 THROUGH 2004 WITH HIMSS ANALYTICS DONATING THE NEXT CURRENT YEAR OF DATA ANNUALLY
PROVIDES FREE DATA FOR RESEARCH PURPOSES ELECTRONICALLY AND IN PRINT TO UNIVERSITIES, STUDENTS, FEDERAL, STATE, LOCAL GOVERNMENT AS WELL AS GOVERNMENTS OF OTHER COUNTRIES
PROVIDES A VARIETY OF FREE REPORTS ON TRENDS IN H.I.T. USE
ENCOURAGES ONGOING RESEARCH INTO USING I.T. TO IMPROVE HEALTHCARE

6. DORENFEST ACTIVITIES IN OTHER COUNTRIES
CONDUCT MARKET STUDIES AND CONSULTING ASSIGNMENTS ON USE OF INFORMATION TECHNOLOGY IN HEALTH CARE IN A NUMBER OF COUNTRIES
CONDUCT WORLDWIDE STUDIES COMPARING THE STATE OF THE ART IN HEALTH CARE I.T.
CONTINUOUSLY MONITOR AND UPDATE OUR UNDERSTANDING OF WORLDWIDE HEALTH CARE I.T. THROUGH A VARIETY OF ONGOING ACTIVITIES:
IN-PERSON AND TELEPHONE DISCUSSIONS WITH NUMEROUS HOSPITAL EXECUTIVES AND I.T. SUPPLIER PERSONNEL
REVIEW OF I.T. IN USE AT HOSPITALS THROUGHOUT THE WORLD
WORLDWIDE EDUCATIONAL SERVICES

7. DORENFEST INVESTIGATION OF HEALTHCARE IN CHINA
VISITED 17 CITIES IN CHINA
VISITED WITH HUNDREDS OF LEADERS IN THE HEALTHCARE INDUSTRY IN CHINA TO LEARN ABOUT HEALTHCARE REFORM IN CHINA – ITS PROGRESS, ITS PROBLEMS, AND ITS NEXT STEPS
VISITED WITH OVER 100 HOSPITALS TO GAIN AN UNDERSTANDING OF HOSPITAL OPERATIONS IN CHINA, THEIR CURRENT STATUS, AND OPPORTUNITIES FOR IMPROVEMENTS
VISITED WITH PROVINCIAL AND CITY HEALTH BUREAUS TO LEARN WHAT THEIR GOALS ARE FOR THEIR PROVINCIAL AND CITY HOSPITALS
VISITED PRIVATE HOSPITALS TO OBSERVE THE RESULTS OF HEALTHCARE REFORM PRIVATIZATION EFFORTS IN CHINA
VISITED WITH COMPANIES SELLING PRODUCTS AND SERVICES TO THE HEALTHCARE INDUSTRY IN CHINA AND WHAT THEY BELIEVE ARE APPROPRIATE NEXT STEPS FOR REFORMING THE CHINESE HEALTHCARE SYSTEM
EVALUATED A GROUP OF HOSPITAL MANAGEMENT AND OWNERSHIP OPPORTUNITIES THAT WERE PRESENTED TO THE DORENFEST GROUP TO BECOME MORE FAMILIAR WITH THE ALTERNATIVE WAYS TO PROCEED IN BUILDING A “MODEL HOSPITAL” IN CHINA
DEVELOPED A STRATEGY FOR BRINGING DORENFEST SKILL AND EXPERIENCE TO CHINA

8. A FEW CONCLUSIONS ABOUT THE CURRENT ENVIRONMENT IN CHINESE HEALTHCARE
THERE WILL BE RAPID GROWTH IN HEALTHCARE SPENDING AND THERE IS A STRONG DESIRE TO IMPROVE HEALTHCARE SERVICES
THERE IS A DESIRE TO MOVE TOWARD INTERNATIONAL STANDARDS FOR SERVING THE GROWING MIDDLE CLASS AND WEALTHY POPULATION
THERE IS LIMITED SKILL IN CHINA TO ACCOMPLISH CHINA’S HEALTHCARE IMPROVEMENT OBJECTIVES
FOREIGN SKILLS ARE CONSIDERED IMPORTANT AND A FEW UNIVERSITIES AND HOSPITALS, SUCH AS DUKE, ARE HELPING BY BRINGING THEIR SKILLS TO CHINA
BRINGING OUR HEALTHCARE SERVICE IMPROVEMENT SKILLS TO CHINA WILL BE VALUABLE TO CHINA AND A GOOD BUSINESS FOR US

9. THE DORENFEST GROUP VISION FOR CREATING A MODEL HOSPITAL IN CHINA
PROVIDES IMPROVED QUALITY OF CARE TO ITS PATIENTS
OPERATES AT A HIGHLY EFFICIENT LEVEL THROUGH EFFECTIVE USE OF SYSTEMS AND BETTER WORK PROCESSES
OFFERS ITS SERVICES TO PATIENTS AT AN AFFORDABLE COST
CREATES A HIGHLY SATISFIED PATIENT POPULATION WITH THE PATIENTS OBSERVING A NOTICEABLE IMPROVEMENT IN THE SERVICES AND TREATMENTS PROVIDED BY THE HOSPITAL
UTILIZES APPROPRIATE DIGITAL TECHNOLOGY TO CREATE A STATE OF THE ART “DIGITAL HOSPITAL”

10. CHINA BUSINESS OPERATIONS
HOSPITAL MANAGEMENT CONSULTING
OPERATIONS IMPROVEMENT
STRATEGIC PLANNING FOR NEW I.T. SYSTEMS
I.T. SYSTEM SELECTION
I.T. SYSTEM IMPLEMENTATION
WORK PROCESS IMPROVEMENT
MANAGEMENT TRAINING
OTHER SERVICES
GENERAL MANAGEMENT CONSULTING FOR HEALTHCARE COMPANIES
MARKET ANALYSES
PRODUCT STRATEGIES
MARKET RESEARCH
HOSPITAL CONTRACT MANAGEMENT
WORK WITH HOSPITALS NEEDING NEW MANAGEMENT (INTERIM OR LONG TERM)
IMPLEMENT NECESSARY MANAGEMENT PERSONNEL AND SUPPORT SYSTEMS
HOSPITAL OWNERSHIP AND IMPROVEMENT

11. CURRENT STATUS OF DORENFEST GROUP CHINA
FORMED DE RUI YI LIAO ZI XUN, A WFOE BASED IN SHANGHAI IN 2006
RECENTLY COMPLETED PHASE I PROJECT TO HELP SHENZHEN HEALTH BUREAU PLAN ITS REGIONAL HEALTH NETWORK AND DIGITAL HOSPITAL PROJECTS
DEVELOPING OTHER PROJECT ACTIVITIES
REVIEWING CANDIDATES TO IMPLEMENT MODEL HOSPITAL VISION
NOW BUILDING A MANAGEMENT TEAM
DEVELOPING PARTNERING RELATIONSHIPS TO DELIVER SERVICES
REVIEWING SOFTWARE SYSTEMS IN CHINA AND OTHER COUNTRIES TO DEFINE THE BEST SOFTWARE AVAILABLE FOR IMPLEMENTATION IN CHINA TO PARTNER ON I.T. PROJECTS FOR HOSPITAL CLIENTS

12. DUKE BEIJING HEALTHCARE LEADERSHIP FORUM
THE U.S. HEALTHCARE INDUSTRY AND ITS USE OF INFORMATION TECHNOLOGY

13. U.S. HEALTHCARE COSTS AS A PERCENT OF GDP ($ IN BILLIONS)
20.0%
$4,043.6
20%
GDP
1970-
2004
(not ‘75)
$ 75.1
245.8
426.8
696.0
990.3
1,299.5
1,877.6
$1,987.7
15%
$990.3
$1,299.5
$696.0
$426.8
10%
$245.8
$75.1 5% 0%
1970
1975
1980
1985
1990
1995
2000
2005
2015
CMS Forecast
SOURCE: CENTERS FOR MEDICARE AND MEDICAID SERVICES

14. OPPORTUNITIES TO IMPROVE THE HEALTHCARE DELIVERY PROCESS HAVE BEEN PURSUED FOR MANY YEARS
GREAT REDUNDANCY OF INFORMATION
HIGH ERROR POTENTIAL
LACK OF TIMELINESS
HIGH COST
ORGANIZATION COMPLEXITY

15. HOSPITALS SEEK THE E.H.R. AS THE HOLY GRAIL THROUGH FOUR GENERATIONS OF I.T. SYSTEMS
FINANCE SYSTEMS (1970s)
LIMITED CLINICAL SYSTEMS (LATE 1970s AND 1980s)
MORE ADVANCED CLINICAL SYSTEMS (1990s)
ELECTRONIC HEALTH RECORDS (2000s)

16. HEALTHCARE REFORM BROUGHT INTEGRATED DELIVERY AND MANAGED CARE
Hospital A
Doctor’s Office
Government Reimbursement
Blood Bank
Home Health Agency
Hospital B
Patient Data
Insurance Payor
Nursing Home
Outpatient Clinic

17. H.I.T. MARKET TRENDS ($ IN BILLIONS)
$30.5
$28.0
$25.8
$23.6
$21.6
$20.0
$19.0
$18.5
$16.0
$13.6
$11.6
$10.0
$8.5
$7.5
Actual
Forecast 2006
ANNUAL
GROWTH RATE:
6.7%
13.3%
17.6%
16.0%
17.2%
17.6%
15.6%
2.7%
5.2%
8.0%
9.3%
9.3%
8.9%
8.9%
SOURCE: SHELDON I. DORENFEST & ASSOCIATES, LTD.

18. 1990's Systems and Surrounding Integration
POORLY IMPLEMENTED CHANGE HAS LAYERED REDUNDANT WORK STEPS ON TOP OF ORIGINAL INEFFICIENCY
GROWTH IN
REDUNDANCY 4x
Legacy I.T. Systems
Manual
New Thrusts of the 2000's
NOW 3x
1990's Systems and Surrounding Integration 2x
BEFORE I.T.=1x
TOTAL HOSPITAL WORK PROCESS

19. U.S. HAS MADE MUCH MORE PROGRESS RECENTLY
TODAY OVER 100 HOSPITALS HAVE IMPLEMENTED CPR WITH CPOE
MANY OTHERS ARE IMPLEMENTING CPR AND CPOE RIGHT NOW
I.T. IS A MAJOR TOOL FOR IMPROVING HOSPITAL PERFORMANCE

20. BUT U.S. HOSPITALS HAVE BEEN INEFFICIENT INVESTORS
OVERSIMPLIFICATION OF I.T. INVESTMENT CONSIDERATIONS (I.E., DID NOT KNOW WHAT THEY DID NOT KNOW)
POOR PROJECT PLANNING
IMPROPER ASSESSMENT OF SOFTWARE PRODUCT CAPABILITIES
IMPLEMENTED A SERIES OF “1/2 SYSTEMS” WITHOUT PROPERLY REDESIGNING THE WORK PROCESS
INDUSTRY MANAGEMENT DID NOT LEARN ENOUGH FROM PAST MISTAKES, AND THEREFORE, CONTINUED TO REPEAT THE SAME MISTAKES
THIS LEFT THE NATION WITH REDUNDANT, CONVOLUTED, EXPENSIVE, ERROR PRONE WORK PROCESSES THAT PRESENTLY CRIPPLE THE COUNTRY’S HEALTHCARE SYSTEM

21. DUKE BEIJING HEALTHCARE LEADERSHIP FORUM
CHINA CAN BENEFIT FROM THE U.S. H.I.T. EXPERIENCE

22. INTRODUCTION TO CHINA
WHEN I FIRST CAME TO STUDY THE HEALTHCARE INDUSTRY IN CHINA IN LATE 2004, ATTITUDES TOWARD H.I.T. WERE VERY CONSERVATIVE:
HOSPITAL MANAGEMENT WAS NOT HAPPY WITH I.T. SYSTEMS IN USE
FUNCTIONALITY OF APPLICATION SOFTWARE AVAILABLE FOR PURCHASE IN CHINA WAS VERY LIMITED AND THE MOST FUNCTIONAL SYSTEMS WERE SELF- DEVELOPED
THE SKILLS TO MANAGE MAJOR I.T. UPGRADES WERE FELT TO BE IN SHORT SUPPLY
AS A RESULT, HOSPITAL MANAGEMENT WAS HESITANT TO MAKE MAJOR UPGRADES TO I.T. SYSTEMS
AT THAT TIME, THERE WAS VERY LIMITED BUYING OF MAJOR NEW I.T. SYSTEMS IN CHINESE HOSPITALS
DURING THE PAST 2 YEARS, THE SITUATION HAS CHANGED
MANY HOSPITALS ARE CONSIDERING MAJOR UPGRADES OF I.T. SYSTEMS
BIG BUDGETS ARE STARTING TO BECOME AVAILABLE TO MOVE TOWARD DIGITAL HOSPITALS WITH ELECTRONIC MEDICAL RECORDS, PACS AND OTHER SYSTEMS
BUT WEAK APPLICATION SOFTWARE AND IMPLEMENTATION SKILLS ARE DELAYING PROGRESS

23. CHINA HEALTHCARE I.T. IS MOVING TO ITS SECOND GENERATION
CHINA HOSPITAL WORK PROCESSES ARE REDUNDANT AND ERROR PRONE WITH GREAT OPPORTUNITIES FOR IMPROVEMENT THROUGH APPROPRIATE USE OF I.T.
CHINESE HOSPITALS WOULD LIKE TO TAKE A BIG LEAP FORWARD IN IMPROVING WORK PROCESSES AND IN DIGITIZING ITS HOSPITALS
THE MINISTRY OF HEALTH’S GUIDELINES FOR HEALTH I.T. DEVELOPMENT ( ) CALLS FOR ELECTRONIC MEDICAL RECORDS AND REGIONAL HEALTH NETWORKS TO BE IMPLEMENTED PROVIDING MUCH MOMENTUM FOR HOSPITALS AND HEALTH BUREAUS TO INVEST MORE IN I.T. NOW
CHINA HAS NOT INVESTED A LOT OF RESOURCES IN I.T. SYSTEMS AND INFRASTRUCTURE TO GET TO ITS PRESENT LEVEL OF I.T. USE. WHILE CHINA WOULD LIKE TO CONTINUE THIS APPROACH AS IT TAKES ITS NEXT STEPS FORWARD, CHINA’S I.T. GOALS WILL REQUIRE GREATER INVESTMENT

24. CHINA HEALTHCARE I.T. IS MOVING TO ITS SECOND GENERATION (CONTINUED)
THERE IS CONCERN AMONG H.I.T. EXPERTS IN CHINA ABOUT THE READINESS OF H.I.T. SOFTWARE PRODUCTS, HARDWARE PLATFORMS, AND INTEGRATION TOOLS TO FACILITATE THE ACCOMPLISHMENT OF CHINA’S GOALS
THERE IS ALSO CONCERN AMONG H.I.T. EXPERTS IN CHINA ABOUT THE IMPLEMENTATION SKILL AND EXPERIENCE AVAILABLE IN CHINA TO TAKE THIS BIG LEAP FORWARD THAT IS NOW UNDERWAY
SO CHINESE HOSPITALS AND HEALTH BUREAUS ARE CAREFULLY CONSIDERING HOW TO TAKE THEIR NEXT STEPS SUCCESSFULLY
FOR CHINA TO ACCOMPLISH ITS OBJECTIVE SUCCESSFULLY REQUIRES THE FOLLOWING:
OVERCOMING RESISTANCE TO CHANGE
KNOWING HOW TO MANAGE CHANGE
LEARNING FROM THE U.S. EXPERIENCE
DOING MORE OF WHAT THE U.S. DID RIGHT AND NOT MAKING U.S. MISTAKES
DEVELOPING EXPERTISE IN AREAS OF NEED

25. DUKE BEIJING HEALTHCARE LEADERSHIP FORUM
A GOOD APPROACH TO SUCCESSFULLY IMPLEMENTING MAJOR I.T. UPGRADES

26. THE I.T. UPGRADE PROJECT SHOULD BE DONE IN PHASES
STRATEGIC PLAN
SYSTEM SELECTION WITH FINAL IMPLEMENTATION PLAN
SYSTEM IMPLEMENTATION

27. STRATEGIC PLANNING PHASE
ESTABLISH A PLANNING COMMITTEE
GAIN THOROUGH UNDERSTANDING OF THE CURRENT OPERATIONS AND WORK FLOW OF THE HOSPITAL
IDENTIFY OPPORTUNITIES TO IMPROVE OPERATIONS AND WORK FLOW THROUGH NEW I.T. SYSTEMS
DEFINE THE VALUE OF THE OPPORTUNITIES FOR IMPROVEMENT IN TERMS OF THE FOLLOWING AREAS:
REVENUE IMPROVEMENT
TIME SAVINGS
OTHER COST REDUCTION
REDUCTION OF ERRORS
OTHER QUALITY OF CARE IMPROVEMENTS
RAISING LEVEL OF PATIENT SATISFACTION
SELECT THE HIGHEST PRIORITY IMPROVEMENTS FOR IMPLEMENTATION
DEFINE THE NEEDED I.T. SYSTEMS AND CHANGES IN WORK FLOW PROCESSES TO ACCOMPLISH THE IMPROVEMENTS
DEFINE USER ATTITUDES TOWARD AND TECHNICAL LIMITATIONS OF CURRENT I.T. SYSTEMS AND DETERMINE REPLACEMENT REQUIREMENTS

28. STRATEGIC PLANNING PHASE (CONTINUED)
DECIDE WHETHER TO BUY OR DEVELOP THE I.T. SYSTEM UPGRADE
PROVIDE THE NECESSARY EDUCATION TO HOSPITAL MANAGEMENT, PHYSICIANS, I.T. USERS, AND I.T. STAFF SO THAT THEY CAN BETTER UNDERSTAND THE REQUIREMENTS TO SUCCESSFULLY MANAGE THE CHANGE
CREATE AN ECONOMIC ANALYSIS SUMMARIZING EXPECTED COSTS AND BENEFITS OF THE CHANGE PROGRAM
GAIN GENERAL APPROVAL FROM HOSPITAL MANAGEMENT TEAM
FINALIZE A STRATEGIC PLAN TO IMPLEMENT THE OPERATIONS IMPROVEMENT PROGRAM

29. SYSTEM SELECTION AND IMPLEMENTATION PLAN PHASE
ESTABLISH A SELECTION COMMITTEE OF KEY USERS, I.T. PERSONNEL, AND MANAGEMENT
PREPARE A FUNCTIONAL REQUIREMENTS DOCUMENT DEFINING THE OBJECTIVES, FEATURES, TECHNICAL REQUIREMENTS, AND ANY OTHER KEY CHARACTERISTICS OF THE NEW SYSTEM
PREPARE A TENDER REQUEST (REQUEST FOR VENDOR PROPOSALS)
DEVELOP EVALUATION CRITERIA AND APPROACH
COMPARE AND EVALUATE PROPOSALS
FOR LEADING SUPPLIERS: – CONDUCT VENDOR SYSTEM DEMONSTRATIONS USING PREPARED SCRIPTS – CONDUCT TELEPHONE REFERENCE CHECKS – CONDUCT USER SITE VISITS

30. SYSTEM SELECTION AND IMPLEMENTATION PLAN PHASE (CONTINUED)
MAKE FINAL SELECTION
BEGIN NEGOTIATING CONTRACT
DEVELOP DETAILED IMPLEMENTATION PLAN WITH OVERALL GOALS, ORGANIZATIONAL REQUIREMENTS, SPECIFIC TASKS, TIMETABLE BY TASK, AND STAFFING RESPONSIBILITY FOR EACH TASK
DEVELOP MANAGEMENT PROCESS FOR OVERSEEING THE IMPLEMENTATION
FINALIZE THE CONTRACT

31. SYSTEM IMPLEMENTATION
START IMPLEMENTING PLAN
MONITOR RESULTS
MAKE NECESSARY ADJUSTMENTS AND REVISIONS
KEEP A CLOSE WATCH ON PROGRESS TO MAKE SURE YOU AVOID MAJOR PROBLEMS

32. THANK YOU. SHELDON I. DORENFEST FOR MORE INFORMATION CONTACT:
THE DORENFEST CHINA THE DORENFEST GROUP
HEALTHCARE GROUP NBC TOWER, SUITE 2725
RENMIN ROAD NO N. CITYFRONT PLAZA. DRIVE
JINGTIANDI INTERNATIONAL TOWER CHICAGO, IL
SUITE 908 UNITED STATES OF AMERICA
SHANGHAI, CHINA PHONE:
PHONE: FAX:
WEB SITE ADDRESS:
SHELDON’S ADDRESS:
ADDRESS: