Strategic planning for Healthcare IT

Healthcare Financial Management, Jan, 2005

Did you hear the one about the hospital that planned to save $125,000 a month in nursing costs by computerizing medical administration records and ended up, instead, having to hire a systems analyst with a nursing degree to set the system up? Don't wait for the pun&line, says Vince Ciotti, principal at HIS Professionals, LLC, Santa Fe, N.M.; it's no joke. "This system," the vendor explained, "can save nurses 20 minutes a day." So the hospital did some simple calculations--500 nurses times 20 minutes a day equals 5,000 hours a month, times $25 an hour--and concluded that they could save $125,000 a month.

Eventually, the hospital came to realize that calculating the costs and benefits of information technology (IT) on the basis of fractions of an FTE was simply not a realistic approach. Furthermore, many of the frills that had seemed so attractive on the trade show floor couldn't be used without upgrading the hospital's current computer system--a project for which it had not budgeted. On the other hand, it turned out that the new system, even without using the bells and whistles, made it possible to cut both the nurse turnover rate and the rate of medication-related errors--something the nursing staff members themselves could have anticipated, had anybody thought to ask them.

A victory for IT, or a failure ? That depends on what strategic objective the hospital was trying to achieve, Ciotti points out. But that is something nobody had actually flared out. And that is precisely what makes IT strategic planning so critical in today's healthcare industry.

Business and consumer groups, labor, government regulators, clinicians, and reimburse ment sources--everybody, it seems, is ratcheting up the pressure on today's healthcare organization to lower costs, improve patient care and safety, and enhance services. Information technology by itself will not relieve those pressures. But without it, everything else grinds to a halt. That's because information--lab results, invoices, medication orders, health records, insurance forms, invoices, clinical protocols--is the lifeblood of the organization: creating, processing, analyzing, storing, protecting, retrieving, and communicating it.

The good news about IT is that supply is more than keeping pace with demand. Advances in hardware, software, and communication capabilities enter the market every day, more and more of them tailored to the special needs of health care.

The bad news about IT is that it can be wildly expensive, complex, and unproven. It's not standardized, so that different systems and components tend to be incompatible. The people whose jobs it will affect frequently feel threatened by it and will probably require major training. And the people who understand it are usually trying to sell you something that may or may not make sense for your organization.

Good or bad, IT is here to stay and IT strategic planning is no longer a choice. It's an imperative. Do it right and you stand to improve safety, effectiveness, patient centered care, timeliness, efficiency, and equity. For example, studies show a correlation between IT investment and hospital performance, including slightly lower mortality and complication rates. better access to capital, and significantly shorter lengths of stay.

Here's the best news of all: Doing it right isn't as difficult as you might think.

Getting Ready to Plan

Experts list a number of factors that should be in place before a healthcare organization begins to develop a strategic plan for IT, many of them common to planning efforts of all types in all fields:

* Strong commitment at the executive level

* Tried and trusted communication methods that foster broad input and feedback

* A culture that is accepting of change

* Transparent decision-making processes

* Clearly defined criteria for sorting through proposals

* Ample time for research, discussion, and review of may or issues

* Opportunities for decision makers with nontechnical backgrounds to educate themselves in key aspects of IT as appropriate

Strategic Alignment Is Key

Most important is the one element most often missing: An organizational strategic plan. Unless it is aligned with the organization's overall business and clinical goals, strategic planning for IT is an empty, or worse, dangerous exercise, like building without a foundation. Instead of thinking in terms of IT-enabled business or clinical initiatives, you can easily fall into the trap of funding one unrelated IT project after another that may or may not promote the organization's primary agenda, and may even conflict with it.

And yet the majority of healthcare organizations either do not have an overall strategic plan or have one so broad and vague as to be meaningless, according to consultants in every part of the country. Jim Adams, executive vice president of advisory services for Healthlink, Inc., a Houston-based consulting firm, describes going into organizations "that have spent millions of dollars on IT systems without really understanding how it's going to help the organization. It's pretty much a leap of faith, one that those same organizations would never take in any other area of investment." It would be, says Adams, like building a new facility without having a specific purpose for it in mind.