Health systems face increasingly thin operating margins. Yet they are still expected to drive towards the Quadruple Aim: to improve population health, patient experience and team well-being, while holding costs down. This creates some daunting tension for IT departments, as they feel the squeeze, too.
The IT department is uniquely positioned to help its enterprise stay out of the red, but at the same time it meets uncertain pressures of its own – as it contends with constricted budgets. And with those limited budgets, they face an increasing demand for more and expensive technologies.
According to Sumit Ganguli, CEO of GS Lab|GAVS, the losses hospitals are currently facing are unsustainable and untenable. “The total spend in labor costs, which constitutes almost 60% of healthcare IT, has gone up by around $4.25 billion — 60%,” he said. “Something has to give. This crisis needs to be solved through technology, through empathy and through some transformational work.”
Unfair Budget Benchmarks
Some of the traditional benchmarks that have been used to make sure IT departments are in line with what everyone else is spending are no longer valid, said Tanya Townsend, chief information and digital officer at Stanford Children’s Health, in a panel discussion.
“I think revenue models haven’t necessarily kept up with inflation, and so the pressure is just getting greater and greater in terms of how we in IT help find expense reduction opportunities,” Townsend said. “How do we create efficiencies for our clinicians?”
Shafiq Rab, MD, executive vice president, chief digital officer and system CIO, Tufts Medicine, said it’s all about balance. “Healthcare systems have a mission, and the mission is important. That’s why balance is important,” he said. “We have a new unique opportunity to reinvent ourselves, to think differently and innovate.”
IT departments are being judged against the old way of doing things, but the demands for generative AI are increasing, Rab said. “People are asking us to innovate, to create things; that pressure is there, and also for us to be more efficient. So people are looking towards us for that leadership, but at the same time we have to decrease cost.”
The tension between the demand to decrease costs along with the call for innovation is creating a whole new opportunity for IT departments to reinvent themselves, Rab said. “Every crisis creates a new opportunity. So we’re living in an era where we have a unique opportunity to do things that will actually catapult healthcare into a new way of delivery.”
Where to Start
Application rationalization is one of the first key opportunities – especially with the increased number of mergers and acquisitions. Her organization inherited one of everything, so it’s a huge opportunity, Townsend said.
Ganguli noted: “If we agree that we’re going through an existential crisis, and the core objective of healthcare providers is to provide efficient and high-quality care at the optimal cost; and if application rationalization is a corollary to that, then it’s important that we address that, and we address it through leadership, alignment and a heavy-handed attitude, as well.”
Another area of opportunity are upgrades. Best of breed used to be the common practice, until more integrated platforms came along. “So that’s another place to make changes, but it’s complicated,” Townsend said. “You don’t just kind of replace those things overnight. There’s a change management component.”
It takes a lot of negotiating and educating of management to come to an understanding, Townsend said. “If we are going to be buying all of these different systems, it does add to the expense. Going back to the traditional benchmarking model, you can’t expect me to necessarily hit a target when we’re adding new systems into our contracts, because the only other lever to pull then is your workforce … asking them to do more with less, which is also a tricky conversation.”
In the end, consensus is the best option, Rab said. “So the first thing is understanding that the people we work with, they are not in silo. That means the operations, the finance, the legal, the doctors, the nurses, we’re all one entity. We are one people,” he said. “Second, is that to do anything, we have to build consensus. Third, we have to have buy-in.”
One of the best ways to earn that buy-in is by focusing on ways to take the pain out of the lives of the people being served and replace it with something more innovative that decreases costs. That’s done through coordination, Rab said. “Healthcare is broken and in different places – everything is not together; but if you provide things together, all of a sudden there is value in it.”
To view the archive of this webinar — Opportunities for IT to Help the Enterprise Reduce Costs & Increase Value (Sponsored by GS Lab / GAVS) — please click here.
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