Returns, not burns: how to ensure successful health IT investments

Healthcare Financial Management, Jan, 2005 by Ben Melson, Randy Thomas, Lynn Harold Vogel

Dealing with Change

Ensuring" a project achieves the initially projected financial returns becomes a management challenge as the project gets under way. Perceptions and assumptions about an IT project can change almost from the start, and the investment returns initially identified for an IT system can change as well. Such changes are likely to occur as you learn more about the system's actual capabilities in your environment and discover additional, unforeseen benefits. Always be willing to reexamine your initial assumptions about the projected return on investment, and make adjustments as necessary.

Avoid the pitfall, however, of allowing the focus to shift from tracking the initially projected returns to negotiating a continually changing "path to the dollars," in which the projected returns change with every unanticipated turn. Even if you must modify the initial model, you should continue identifying and measuring the initially projected returns from the IT investment. To this end, it's helpful to keep to your original set of metrics. You can always add metrics as the systems additional unanticipated capabilities become apparent. For example, your focus for implementing a positive patient identification system for bar-coded bedside medication administration might be reduction of adverse drug events. However, you may realize over time that the system has the added benefit of improved patient satisfaction because patients feel safer.

The challenge of monitoring progress on a health IT investment highlights the difference between such an investment and most business ventures. If you are a CF0 and are considering investing in a business venture, it's customary for you to prepare a pro forma statement. If the pro forma doesn't look good, or if the venture doesn't measure up to the pro forma early on, you probably would not hesitate to discontinue the venture. Once an IT investment is under way, however, it's likely you will have changed organizational processes, trained as many- as several hundred people to change their behaviors, and invested several million dollars. There's no easy way to call a halt to such a project. Although it's not out of the question to simply stop the investment, many healthcare organizations find such a decision too painful. They often are more inclined to increase their initial investment or simply try to "muddle through," in the hope the expected return will come eventually.

Again, the best way to avoid such circumstances is to start with clearly defined projected returns and to make a commitment to implement all the workflow changes required to take full advantage of the new technology. Refocusing implementation efforts on those process changes that directly effect the project objectives (that is, the metrics) is one of the best ways to get a derailed investment back on track.

The Retrospective Review

It's good business practice always to perform a thorough retrospective review after each IT investment to determine the extent to which expected returns were actually achieved. Too often, hospitals fail to ask objectively, "Was this project really worthwhile?"