Satish Jha, a guest blogger for HCI, consults on leadership questions that are core to implementing and managing large-scale IT operations. His focus is on how management practices can be brought to bear upon the current state of information technologies to improve the patient experience, while keeping operations cost effective. President of JM Consulting LLC, Jha also chairs the eHealth-Care Foundation that provides Web-based patient, physician and hospital management services to small, community and public hospitals and physicians. Recently, HCI Editor-in-Chief Anthony Guerra talked with Jha about what it takes to be a superior CIO.
AG: In your experience, what is the main reason that some healthcare CIOs aren’t effective?
SJ: One issue I’ve seen with the hospital CIO role is that most of them have a
single-hospital view, or sometimes they make it to a system view. But they begin from the single hospital view and don’t graduate into managing a portfolio effectively. They see things in a very different way from most of Corporate America and those managing technologies for the Fortune 500. And one key issue is, they never get the critical mass of expense. For instance, a typical hospital CIO will have a budget of between $8 and $12 million if their size, for instance, is between150-300 beds. That budget doesn't allow you a whole lot, but the demand that is placed on the system is still phenomenal. In other words, if you have to manage 30+ applications with that little money, you can’t do very much.
Unfortunately, small hospitals do not really have the capacity to learn from the larger systems because they need scale. For instance, I would say some of the finest healthcare provider systems belong to much larger entities. I would also say they spend about $250-300 million, and above, per year, just on managing information technology components. But that’s spread across 30-40 hospitals. But if you have only one hospital, then simply trying to even provide the services which people have come to expect becomes a challenge.
Now, the much larger ones, they have a very different set of problems. What they do is they elevate it to a certain level and by the time they come down to distribute that, they have a problem of integration and distribution at both ends. So the question for the larger systems are certainly different, but, then again, even they don't come close to thinking in terms of the portfolio approach or strategic approach that allows Corporate America to be very efficient. From my point of view, the question is — are we able to take advantage of technologies that are available to reduce the cost, to improve efficiency, to optimize a customer experience that today’s technologies make possible. In this case, the customer is the patient, and the physician is not an administration person. The customer is also anybody inside the organization who offers an experience to the patient. The patient is ultimately the final customer in the whole chain of the technology experience.
All hospitals have different challenges, different issues, different problems, but when we talk about facilities that have above $100 million in terms of their annual IT spend, they are phenomenally different from single hospitals and small systems.
AG: So let's take this in segments. For the first group you mentioned, 150 to 300 beds and they have about $8-12 million to spend, you said that the largest problem those CIOs have is that they're not given the money to produce the results that are expected of them. Is that correct?
SJ: That's true. They have no capacity to spend beyond that, actually. Hospitals hardly ever do better than $1 million per bed. So even a 300 bed hospital earns about $250 million in revenue and $12 million is already almost 5 percent of their technology spend. And that is clearly high compared to most sectors in corporate America.
AG: What would your advice be to those CIOs in that group? Is it to make the case to the board and to the CEO that you need more money, or is it to try and pick the low hanging fruit, where you can accomplish some significant administrative things with some small price tags?
SJ: In fact, all the things you said. The right thing for them to do might be to think of networking with a second or third organization, which can create the technology needs across multiple hospitals. In other words, they have to find someone who can aggregate their needs and bring it to a level that a third party manages it for them as an extra entity, and then they are able to leverage the service of technology. Otherwise, given the money they have, they are primarily battling at a very, very basic level. They will not be able to scale up, they will not be able to go for an EMR, etc. No system that costs more than $1 million can ever be installed in a hospital with a budget of less than $10 million.
If they can’t get together with other hospitals to create scale, they go for low hanging fruit, they go for small systems, they go for occasionally trying to figure out how to take a leap forward, but that becomes too much for them to handle. The idea is to go out and create scale, by saying, ‘Hey, I can integrate with you for a solution on the lateral side.’ But if hospitals don't get that scale quickly, in a period of five years, there will be some kind of consolidation because of the cost structures and the technologies that they are unable to provide.
What happens on the competitive side is the small physician services are able to take care of technology at a much more modern level, a much more up to date level, from an extraneous point of view. If you go and try to look at the 10-15 doctor practices, they have tried to put together very practice-specific IT on the one hand, on the other, from a customer point of view, they're experimenting a lot more and also because their decision making is a lot simpler.
So some of these issues are being addressed using the ASP model. Wherever ASP is available, physicians are able to get onto new systems. But a hospital of 100-150 beds, they don't have a natural affinity for an ASP model of that kind because they feel from experience they can actually do better with technology in-house, but in reality they can't. So I would say the best choice they would have is to find a way of coming together with other hospitals or they have to find a way of rationalizing their applications.
If you have say, 40 hospitals, you may have 1,000 applications, and maybe a number of duplicate applications. So the whole portfolio becomes much larger. But even small hospitals can go up to 100 applications. Now that is a lot of applications for a small hospital with a team of 10-15 people in IT; it's not easy for them to know it all. So they depend hugely on the vendors, but vendors don't manage those systems. They only support them as needed and the support — because they are so small — is not very timely, they're not very responsive from that point of view.
I think that at the CIO level it’s important to think in terms of two or three year periods.
Secondly, that they can ask a third party to do it for them, or they can rationalize what they call portfolio applications, etc., because hardware is not an issue. Network is not an issue. Communication is obviously a question of maturity, what they have and how to handle that. But experience is an issue. And experience cannot be had by having people who come from every direction. Thinking ‘I have a hammer, everything I see is a nail,’ that doesn’t help them. Experience comes from thinking through things like management should, around the business questions of technology for healthcare providers. That is not happening, given the experience that I have had.
For instance, I have worked with over 40 hospital CIOs and I’ve been asked to help them start thinking at the next level. The problem is that most are essentially IT managers. The way they look at a problem in a hospital of 300 beds and below is like that of an IT manager. They never rise above that level to the way a CIO would look at the question. Some of them may have tackled it like a CIO, but the portfolio and budgets they have do not let them rise above the role of IT manager.
AG: How do you get them to think on that strategic CIO level?