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

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

Patience and Perseverance

Automating a hospital's clinical and administrative processes can bring significant financial returns. You just have to identify what you want to achieve, set the metrics and mechanisms to measure success, balance discipline through the life of the project with flexibility to adapt to new opportunities, and objectively review what worked and what didn't. Remember, the financial returns associated with health IT projects are not always immediate and direct--especially with enterprisewide clinical systems. But that should not stop you from making the commitment to track progress toward those hard-to-measure intangible returns, in addition to the financial returns that are easier to measure. In the end, such an effort will raise your entire organization's awareness of what it means to effectively implement a new health IT system.

AT A GLANCE

With many types of financial investments, the hospital financial community has long-established, and relatively straightforward, practices for projecting and measuring returns. Not so with health IT investments, however, where returns can be difficult to identify and quantify and even harder to track. Yet the success of such an investment depends on measuring the returns-whether they be tangible or intangible, short-term or long-term--because effectively tracking returns is the only way to be sure of achieving them.

ACTION STEPS FOR HEALTH IT INVESTMENT SUCCESS

Four steps are key to effectively defining and measuring return from a health IT investment.

Define specifically what you expect from the investment. Are you looking simply for staff reductions? Improved productivity? The ability to produce a better product or offer a higher quality service? A reduction in liability or risk in the products or services you currently offer? In some cases, returns that cannot be easily measured quantitatively may nonetheless be the most important returns to consider.

Evaluate returns using the most appropriate metrics. Such metrics may be easy to track, such as staff reductions. But it's also important to identify metrics for measuring intangible benefits, such as improved physician satisfaction and reduced employee turnover. Also, be sure to include both short-term and long-term returns, because an IT investment, if managed properly and accompanied by appropriate organizational and workflow changes, almost invariably takes time to have an impact.

Make the evaluation of returns and change management an integral part of the project management and reporting process. As the project proceeds and you learn more about the new system's capabilities, consider whether additional returns should be expected or the timeframe for achieving a return should be changed. Are staff who are being trained to use the system discovering new ways to perform their work more productively? Is the investment affecting areas that were not initially identified, and is this effect positive or negative?

Retrospectively review your original investment plan and projected returns. Look back! Not all IT investments achieve the type or level of return originally expected, so learning from the differences between expected and actual returns is important. Make sure that reviews of past projects are collaborative--the failure of an IT investment to deliver expected returns is seldom one individual's or department's fault, Use the results of the retrospective assessment not to punish mistakes but to improve your understanding of what to expect from current and future IT investments.