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Can Healthcare IT (HIT) Deliver Value? (Part II)

January 31, 2014
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This is the second of two posts examining a value-based approach to healthcare information technology.

In my previous post on a value-based approach to healthcare information technology (HIT), I began by noting the emergence of the Value Equation as a key concept in reforming the U.S. healthcare system. This shift from volume to value will have an enormous effect over time, not least on how we think about and approach healthcare IT.

Increasingly HIT is seen as an enabler of the delivery of high value healthcare through provision of services and solutions coupled with an ever greater commitment to measuring the cost and the benefit of HIT initiatives.

The previous post grappled with focusing on solutions by using a multidisciplinary group to answer the tried and true framing question: "What is the problem we trying to solve?" I then went on to suggest a set of companion questions that can help determine how well a particular initiative aligns with organizational strategy. The goal, of course, is to provide governance and prioritization to insure that the organization is focusing on the right solutions at the right time.

So let’s pick up where we left off and look at different ways to measure HIT value and manage performance to achieve greater value.

What will we measure to show value?

If you are going to be value-based you better be able to measure cost, return on investment (ROI) and/or value on investment (VOI). My own observation is that HIT has been much better at forecasting and measuring cost than at ROI or VOI. In fact, while it is sometimes discussed, I rarely see any formal approach to ROI or VOI used.

Some of the best examples I have seen combine these elements:

Total Cost of Ownership – Estimated and then measured over time (years) and periodically “trued up” based on actual results.

Specific ROI/VOI Targets – Can you get clinical and administrative colleagues to commit to specific, measurable performance targets? How much will that new tech reduce Length of Stay and Cost per Encounter? How much will it reduce readmissions? How much will it increase patient or caregiver satisfaction? How many extra patients will you see? Are you willing to put your money where your mouth is and set future budgets based on those expected outcomes?

How will we mange performance to achieve value?

What’s more rare than specific ROI/VOI targets? A management plan explicitly intended to monitor and manage performance over time to achieve the expected results. To be blunt, if you don’t know where you expect to achieve value and you don’t have a specific plan to get there you probably won’t.

Mostly this comes down to a plan for Optimization. Frankly I am amazed at the number of organizations that overlook the need for optimization. I mean really! How often does any human endeavor achieve everything expected on the first go round?

This is where insisting on a good plan to measure ROI/VOI really pays off. A great way to prioritize optimization work is to look at gaps between expected and actual performance and then target your efforts at closing the gaps. And don’t forget, optimization includes people, processes and technology (more about that in future entries)

At this point you may be wondering how you might pull this off – particularly if this is not part of the culture of your organization already.  Does value-based HIT seem overwhelming? Too big to take on? Too busy putting out fires to think this way? I would argue those are symptoms of a lack of focus on value rather than barriers to moving in that direction.

Trust me. You can do this at home and you don’t have to do it all or do it on a large scale. If “big” is daunting, then start small. Try it on a small self-contained initiative. See if your CFO will donate some time or talent to a small pilot that really focuses on measuring TCO & ROI. Find project champions seriously committed to improving satisfaction and get them commit to a specific measurable goal. My guess is you will find willing partners. And be sure to include time and resources in your project plan for a few rounds of optimization – you will need them!

Thinking about solutions instead of “stuff”? Establishing metrics and specific goals for cost and outcomes? Minding the gaps in performance and trying to fill them thru optimization efforts? Now you are managing towards expected outcomes and on the road to real value!