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

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

To ensure objectivity, it's best to have an independent third-party perform the review. There's an inherent conflict of interest in having the returns reviewed by the same people who made the initial investment decision or led the system implementation. It will be hard for them to shift from the "sales" mode of promoting the project, where they are staking their position on the expectation of positive returns, to the "audit" mode of assessing whether their assumptions were correct. In the words of one industry observer, "It's like having the umpire and the batter be on the same team!"

Also, as was noted earlier, health IT investments often deliver returns over time. Even after an IT system implementation has been completed, the vendor will likely provide updates--sometimes on a monthly, quarterly, or semiannual basis. Sometimes, these enhancements can change the functionality of a system, which can affect the return on investment as well. The return on investment also may increase as staff' members incorporate the system's functionality into their workflow, and their knowledge of the system's features and functions increases.

With more complex systems, such as enterprise clinical IT systems, the project may involve so many long-term intangible benefits that it's difficult to determine exactly when the project could be deemed a financial success. This challenge underscores the need to start with a clear set of metrics, both tangible and intangible, at the outset.

There also is always the risk that the retrospective review of a completed IT project might lead you to conclude that the returns are insufficient to have justified the investment in the first place. Unfortunately, being the messenger with such a conclusion is often a thankless task. Be sure you always encourage an honest assessment, without threat of recriminations, and are ready to admit to and learn from mistakes.

The Importance of Accountability

As important as calculating and monitoring returns on a health IT investment is assigning responsibility to someone to see that the returns are achieved. When making this assignment, it's important to keep in mind that, with almost all health IT investments, the true source of returns is not the IT system itself, but what the system enables the organization to do differently. Moreover, these "enabling" effects usually occur in the business or clinical areas of the organization, outside the IT department. For this reason, accountability for investment returns should almost never reside with the IT department alone. Rather, such accountability should, in the very least, be shared between the IT department and representatives from the departments affected by the investment.

Assigning shared accountability addresses a consideration that's of paramount importance: The success of an IT project in achieving its intended objectives and return depends on how decisions are made and who is perceived as a project owner. Certainly, IT staff should be intricately involved at every stage, from initial planning through implementation, and ongoing for updates. But an IT investment that's perceived as "just another IT project," with no buy in and ownership from those who will be using the system, will almost certainly fail. Thus, ultimately, financial system investments should be led by financial staff, clinical system implementations led by clinicians, and so forth. Only then can you be assured that return targets will be appropriately identified and there will be an ongoing commitment to achieving them.