The value of healthcare IT - Special Advertising Section - determining the value of potential investments in healthcare information technology

Healthcare Financial Management, Jan, 2003

Ensuring IT Value

After completing an ROI analysis, making the IT investment, and implementing it, healthcare leaders frequently cannot tell if a return on IT investments has occurred or conclude that their investments have not delivered a return because value has been diminished for numerous reasons, notes John P. Glaser, PhD, vice president and CIO of Partners HealthCare System. (14) These include poor linkage of the IT agenda and the organizational agenda, asking the wrong questions, failing to state the goals, failing to manage the outcomes and define solutions, and mangling implementation. His overview of reasons suggests the following proactive, six-pronged approach to evaluating IT investment opportunities to ensure their maximum value (Sidebar 4).

Link IT Decisions with Strategies

The first task involved in ensuring IT's value is to link IT investment decisions with organizational strategy. Organizational strategy identifies external market needs and defines those needs the organization wishes to fill through programs, services, or activities. Technologies must be aligned with organizational objectives. "The principle purpose of investing in IT is not overhead cost reduction but value creation. Cutting costs can contribute to profitability, but in the long run one does not prosper through shrinkage. The objective of all investments is to improve overall organizational performance," comments Paul A. Strassmann, former vice president of strategic planning for the Xerox Corporation's Information Products Group and currently, president of The Information Economics Press. (15)

Finance and IT leaders must explain to top executives and the board how IT relates to the full portfolio of services offered by the organization. (16) Offering physicians hand-held devices such as the initiative described earlier or offering a clinical decision making system are not IT issues. "(They are) strategic decisions about how the organization will function and what services it will offer," notes Stephanie L. Reel, vice president and CIO of The Johns Hopkins Health System, and her co-authors. (17)

Ask Appropriate Questions

The second task is to ask appropriate questions about IT investment opportunities and their linkage with organizational goals. John Glaser offers these questions: (18)

* What are the steps and investments, including IT, that we need to take or make in order to achieve our goals?

* Which business managers "own" the achievement of these goals? Do they have our confidence?

* Does the cost, risk, and time frame for the implementation of the set of investments, including the IT investment, seem appropriate given our goals?

* Have we assessed the tradeoffs and opportunity costs?

* Are we comfortable with our ability to execute?

Jeff Goldsmith adds these: (19)

* Does the hospital have the managerial and medical staff commitment and understanding to actually change clinical care processes?

* Can the IT staff "ride herd" on the vendors and ensure value for money in the IT installation process?