Healthcare IT



The changing role of hospital CIOs
Why the need to articulate their strategy has now topped their priority list


 

In today’s ever-evolving healthcare landscape, hospital CIOs can no longer afford to simply serve as order-takers who fulfill requests in support of clinical or business operations; instead, a report from Booz & Company, argues that they must focus on developing a clear IT strategy to improve patient outcomes and efficiencies.

Today, hospitals and health systems worldwide are facing a plethora of challenges; these include aging populations, evolving disease profiles, increasing demand by patients for quality care, mounting cost pressures and an uneven distribution of expert resources. In addition, healthcare delivery is shifting from a focus on specific health episodes to a continuum approach, with a greater emphasis on education and prevention. Luckily, however, technol¬ogy may hold the key to addressing many of these seemingly overwhelming changes. In effect, the adoption of IT and IT-enabled medical equipment can radically improve the quality of care and create greater operational efficiencies.

According to management consulting firm Booz & Company, to capitalize properly on such potential, hospitals will need to undergo a significant transformation. This begins with the development of a clear, holistic IT strategy that is aligned with the organization’s clinical practices and overall operating model. And, of course, the hospital CIO should be the driving force behind this approach.

The changing face of healthcare delivery

Now more than ever, the inevitable spread of technology in hospitals – and its strong potential to improve care, reduce costs, and streamline operations – is spurring CIOs to become entrepreneurs and strategic enablers for the enterprise, and so, move beyond their former role as mere providers of services.

After all, CIOs have the technical expertise needed, and their positioning within the organization gives them visibility across functions and between clinical operations and business operations. “In this new role, CIOs can be far more proactive and innovative,” says Ramez T. Shehadi, a Partner with Booz & Company, leading the firm’s Digitization platform. “They can educate their colleagues about new technologies. Moreover, at a fundamental level, they can shape the IT agenda for the overall organization, choosing platforms and systems that will ultimately lead to better outcomes and improved business performance.”

This is a considerable shift from the traditional role CIOs have played within hospitals and provides them with a significantly expanded mandate. Indeed, traditionally, the CIO fulfilled requests from clinicians, administrators, and the hospital board, and kept the IT function running as a second-line support service for the overall organization.

Challenges to overcome

In the notoriously non-nimble hospital environment, real change does not come easy. Developing a transformative IT agenda is a sizable challenge for several reasons. First, CIOs are not starting from a blank slate and hospitals are often bound by existing commercial relationships with IT vendors and providers. Hospitals currently have a wide range of existing hardware, software, and medical devices – along with legacy clinical and business systems.

“Many of these systems function, in effect, in silos and are not interoperable, which prevents CIOs from designing a more integral system that can better meet their hospitals’ specific IT needs,” explains Jad Bitar, a Principal with Booz & Company. “Replacing those systems is also not a realistic option in many cases because of vendor contracts that lock hospitals into agreements, along with potentially high switching costs.” In addition to such internal constraints, the external environment has a profound impact on how hospitals can or need to operate.

For example, in the U.S., the Obama administration in 2009 introduced a stimulus package of around US$20.6 billion in financial incentives for healthcare organizations to shift to electronic medical records (EMRs) for Medicare and Medicaid patients. This had an immediate impact, as CIOs quickly reached out for these grants and implemented EMR systems. Such regulations will likely continue to evolve, creating a moving target for hospital CIOs.

Third, data storage is a growing challenge, thanks to the increasing digitization of medical information, via technologies such as EMR and Picture Archiving and Communications Systems (PACS). Regulations at the national level, supervisory agencies, and hospitals’ own legal teams typically mandate keeping electronic documents and records, including emails, for periods ranging between 7 to 10 years – if not indefinitely. The proper retention of this data allows healthcare organizations to perform complex analytics that improve preventive care, treatment, and operations. The last – and perhaps most significant – challenge is that strategy development has traditionally represented only a small component of the CIO’s realm of responsibility. Instead, IT departments are generally tailored to handle operations, with limited skills pertaining to IT planning and management. “These are sizable issues, but the oppor¬tunities are correspondingly large,” states Dr. Walid Tohme, a Principal with Booz & Company. “Technology’s impact may be even greater on healthcare than on other industries because of its potential to vastly improve patient outcomes and healthcare operations. It can increase efficiency, reduce costs and save lives.” Although advances come faster than many organizations can keep up with, CIOs that can get ahead of these advances will give their organizations a clear competitive advantage.

Formulating the strategy

For hospital CIOs embarking on such a transformation program, a hospital IT strategy and a master plan are critical to set the path and ensure proper guidance during the execution phase. “The key is to get it right from the start,” says Shehadi.

“This is because the initial moves in any transformation are always the most important and they have considerable influence over what is a multiyear process. It is precisely at this point that planning errors can have tremendous longterm effects on delivery and the budget.” Bitar echoes that statement, adding: “Correctly formulating the strategy means more than defining IT goals and building blocks to support the transformation.

It is also about rallying support inside the organiza¬tion and then building the neces¬sary momentum to take the hospital through the often difficult first steps.” Similarly, the strategy formulation pro¬cess accurately defines the manpower and financial resources needed for the transformation. The CIO can use the strategy as a tool to communicate with the hospital leadership to rationalize the necessary investment and effort, and obtain the board’s endorsement.

Finally, by providing clear and mea¬surable objectives along with resource requirements and critical milestones, the strategy helps the CIO to foster an environment of accountability in which all stakeholders are aware of the hospital’s IT path forward, the challenges ahead, and what is expected of each of them.

The “BOOST” approach

According to Booz & Company, successful CIOs use five key principles while draftdrafting a strategy, which together make up the “BOOST” approach. “By adopting these five principles, the CIO will establish a solid foundation and manage competing priorities and risks from the earliest phases of the project,” says Tohme. The “BOOST” approach: 

B – Determine the Baseline

The CIO must start by assessing the current baseline of IT capabilities across the organization, in terms of technology, organization, processes, and governance. By identifying legacy applications and suboptimal practices, the CIO can pinpoint what must be amended and what must be changed. In particular, the CIO should isolate pain points that prevent a close alignment between business and clinical requirements.

O – Align with Business Operations

Traditionally, both clinical and business users in a hospital complain that IT is not aligned with their needs. During this transformation process, the CIO must avoid this pitfall by engaging with operations early on in order to better understand the specific requirements from administrators and clinicians. With this understanding, the CIO can tailor the IT strategy to their needs and ensure that it is properly aligned with the hospital’s overall operating strategy.

O – Build up Organizational Capability

Transformations that rely on only technology and do not consider other organization elements are doomed to fail. A CIO can respond fully to users’ needs, install the best IT solutions, and then find that neither the IT department nor the business users can handle the flurry of technology-driven changes. By comparison, effective CIOs are able to innovate beyond technology, by understanding the inevitable impact that the process has on an organization, its operating model, and its business processes. The right approach ensures that a sufficient organizational structure is in place to support the delivery of IT services after the transformation is complete. It also establishes sufficient governance to properly align IT, clinical, and business functions, along with a proper management of risk. Last, this approach creates processes that allow the IT department to ensure a high level of consistency and repeatability in its activities.

S – Create a Strategic Implementation Office

IT transformation can be a wrenching, disruptive experience. It is a long-term endeavor that proceeds through a series of often challenging implementation phases. To smooth the path, the CIO should establish a Strategic Implementation Office (SIO), a robust governance mechanism that ties all the ends together, and that keeps the IT change program coherent and on track. The SIO augments traditional project management capabilities with strategic thinking and strong functional skills that can be applied throughout a project life cycle.

T – Track Costs during and after Implementation

This type of IT transformation requires a budget, and the CIO needs to guide the hospital board through the process of paying for the transformation during design, implementation, and beyond. A customized implementation plan will help provide the board with a forecast of how much it will cost to reach the target.

To conclude, IT transformations within hospitals are complex and potentially disruptive, entailing risks from a governance and technology standpoint. To mitigate those risks, CIOs need to develop a comprehensive IT strategy that ties in all the loose ends and presents a consistent playbook that they can always have on hand. For every CIO facing these challenges, the time to develop this playbook is now. Although strategy development is not within the typical CIO mandate, the BOOST approach offers guidance to achieve it. Properly defined, the playbook will prevent the transformation from being derailed by ad hoc operational crises, and thus keep the organization on track to achieve its longterm goals.

About Booz & Company

Booz & Company is a leading global management consulting firm focused on serving and shaping the senior agenda of the world’s leading institutions. The founder, Edwin Booz, launched the profession when he established the first management consulting firm in Chicago in 1914. Today, as the company approaches their 100th anniversary, they operate globally with more than 3,000 people in 57 offices around the world. The company believes passionately that essential advantage lies within and that a few differentiating capabilities drive any organization’s identity and success. They work with their clients to discover and build those capabilities that give them the right to win in their chosen markets. Booz & Company is a firm of practical strategists known for their functional expertise, industry foresight, and “sleeves rolled up” approach to working with their clients. To learn more about Booz & Company or to access their thought leadership, visit booz.com/me. The Ideation Center, Booz & Company’s leading think tank in the Middle East, is available at ideationcentre.com.

 Date of upload: 20th Nov 2013

 

                                  
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