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Part I: A Steady Hand

September 28, 2009
by Mark Hagland
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Smart CIOs are shifting priorities to keep finances in the black without losing sight of overall goals

David muntz

David Muntz

For hospital and health system CIOs, crafting a budget that will meet future needs is now more difficult than ever. In large part, this is due to a confluence of factors that makes any certainty illusive. Among those elements are: the combination of increasing uninsured ED visits and decreasing elective procedures; the transitions to ICD-10 and HIPAA-5010; the movement to healthcare reform that will likely involve a shift to value-based purchasing under Medicare; and the lack of clarity around HITECH reimbursement as meaningful use and certification comes into focus.

Then there is the constant swirl of developments in the healthcare IT vendor market, not to mention the ever-shifting dynamics of local healthcare market competition. With all those puzzle pieces in the mix, no CIO could be faulted for feeling a bit panicked.

Figuring out how to optimally spend IT dollars in the next few years is a challenging prospect. And that is precisely why many CIO leaders are counting on the same operating principles and strategies that have kept them grounded in the past to serve them during these uncertain times.

“My take on all this is that these elements are simply accelerating a focus on what we should be doing all along,” says Baylor Health System Senior Vice President and CIO David Muntz. “So to me, there's no big surprise in this; if there's a difficulty at all, it's the order in which we might be required to do things.”

In fact, says Muntz, who helps lead a 14-hospital, 3,000-bed system based in Dallas, “I actually think this is a good-news situation. If I had to focus on the negative, I would say that if you can't rush to get the carrots, you should at least try to avoid the sticks.” By that, he is referring to the penalties that will be incurred for failing to use an EHR in a “meaningful” way as required under HITECH. The need to look at the broader picture in healthcare, Muntz adds, means scanning the horizon for the emergence of such important concepts as the medical home and accountable care groups, and putting the IT foundations in place to support concepts such as those that purchasers, payers, and policy-makers are moving toward.

Lac tran

Lac Tran

So, Muntz says, “My advice is to take a deep breath and to continue doing the things you were already doing, if they were the right things.”

John Glaser, Ph.D., senior vice president and CIO of the eight-hospital Partners HealthCare system in Boston, advises caution during this deep recession. “At the end of the day, organizations operate on a philosophy of either conservatism or aggressiveness. Fundamentally, I would tell people this is not a bad time at all to be fiscally conservative. The markets are recovering, but it's still tight out there; so you have to be conservative with capital and operating expenses; that's just smart and prudent. On the other hand,” he says, “There could be opportunities here, and these things happen when they happen. If we see opportunities, I wouldn't be the turtle who pulls in his limbs and hides.”

Tim zoph

Tim Zoph

For Lac Tran, senior vice president and CIO at the three-hospital Rush University Medical Center in central Chicago, that translates into an acute awareness of the need to carefully prioritize, and in some cases, re-prioritize IT projects, while still adhering to core strategic principles. As a result, says Tran, “We're doing a lot of deferring to subsequent years of projects that are of lower priorities. And we're definitely cognizant of areas that touch on regulatory requirements.”

Among those areas are the transitions to ICD-10 and HIPAA 5010. “We have task forces in both of those areas,” Tran notes, adding that he believes ICD-10 will have a far bigger impact on his organization, as it will require all of Rush's coding professionals to be retrained (and to have their retraining documented), as well as requiring its physicians to be trained in the new coding system.

Fortunately, in other areas, such as preparing to request federal funding under ARRA-HITECH, Rush is well-positioned, Tran notes, as the organization has been live with CPOE for nine years already. “All these things are just helping us to get to where we need to go, faster,” he says.

Cutting a path

Industry experts see an interesting split screen when it comes to budget prioritization at hospitals across the country. Leading organizations have already made progress down the following roads:

  • The alignment of organization-wide IT spending with the patient safety, care quality, efficiency, and effectiveness goals of the organization;

  • The advent of IT as a facilitator to process improvement and a support for organizational cultural change;

  • Intensive clinical IT development, especially with regard to EMR and CPOE implementation;

  • The rise of the CIO as a thought leader and change agent within the organization;

  • The evolution of the strategic budgeting process as an affirmation of change agency.