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Selling Your Soul: Part Three

December 29, 2009
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By now, many of you are probably thinking, “What exactly is Harvey on about? It sounds like he’s grumbling about outsourcing gone wrong. How bad could it be?”

Well, let me tell you…

I mentioned earlier that I’ve spent quite a bit of time lately looking at “facts on the ground” inside some acute care hospitals. The conventional wisdom is that it’s the hospitals that really have it all together when it comes to managing IT. It’s not hard to find hospital and integrated delivery systems that have done an exemplary job of leveraging IT to excel at providing care and returning value to their bottom line.

But I’m also struck by the extent to which there are the “haves” and the “have nots” among those systems.

Why is it that we see hospitals of all sizes, but especially in the mid-size to large category, that appear to have more money than they know what to do with, that are building palatial facilities, and that are gobbling up competitors at will; while others struggle to keep the doors open? Why do some have IT operations that would be the envy of any business anywhere, while others are a train wreck? Is the latter the cause, or the effect of the former?

I am legitimately interested in others’ insights regarding the disparities. As we seek to build a healthcare delivery system that properly balances costs and outcomes, it will be increasingly important for us to understand the dynamics of the haves and have nots.

If I were doing a scholarly study of the issue, I’d begin with the hypothesis that the biggest difference between the haves and the have nots would be the overall quality of their management and leadership. And that’s where we come full circle to leadership’s commitment to IT as a key tool and enabler of organizational success.

Let me paint you a picture of an organization that has sold their soul and will pay the price accordingly. The scenario that I’m describing is a composite and does not portray any one organization, but I’ll assure you that all of these circumstances do occur in the wild.

Leadership is under qualified, isolated, and inbred.

Perhaps the organization experienced rapid growth in years gone by and outgrew the leadership’s ability to manage. Maybe the leadership style worked for the organization when the healthcare environment was different, but as the industry has experienced tumult and upheaval, leadership was not able to adapt themselves and their organization to the change.

Add to this a lack of leadership accountability. The relationship between the board and executive leadership is overly cozy. The chief executive may have actually come from inside the board to begin with and continues to lead a board that is basically self-perpetuating.

Qualifications? You’d be surprised at how many community hospitals are run by people with limited experience or education in healthcare management. The scenario above of the board member ascending to CEO? That person is more likely to be a successful banker or business owner than an experienced healthcare executive.

That does not preclude them from being successful, but it does mean that they have to force themselves to get out- get involved in industry groups, see how people that are recognized leaders in the industry approach the issues, make sure that they know and understand what the issues are today and are likely to be next year. Take another degree if necessary.

Those who are unwilling to humble themselves and admit what they don’t know will almost certainly refuse to hire talent that threatens them. Developing internal talent is great and should be the rule, but it’s also important to cross pollinate new ideas into the organization from time to time. And if your strategy is to develop your people from inside, you better be developing them. Not making sure their abilities stay one step behind yours.

Leadership is playing outside of what expertise they do have.

Suppose that the organization has managed to find someone who’s a pretty good finance person. They know how to read a balance sheet and have a good understanding of cash flows, expenses, and how third party payments work in healthcare. They become an effective CFO.

Oh, yeah, Mr. CFO, did we mention that IT is also part of your portfolio?

I know that some people will assume that I’m just being self-serving here, but the traditional idea of IT being an afterthought, and an appendage of the organization’s finance division just doesn’t get it anymore- especially in health care and especially when clinical systems are growing more critical.

I love finance guys. If I was stuck in a business foxhole, I’d want our CFO right by my side. But their brain works differently than mine does. You don’t want me making sure that we make payroll. It’s a rare CFO that you want guiding your EMR selection process.

There are exceptions; organizations where IT is part of Finance and is apparently functional. Bo Jackson was a good football player AND a good baseball player.

Bo doesn’t come along very often.

Leadership understands just enough about something to be dangerous.

The farther you migrate up the food chain in an organization, the more things you need to know about, but the less opportunity you have to understand things well. The result can end up being the “eight miles wide and six inches deep” syndrome.

I half jokingly talked last time about the guy who reads an article in the general business press about outsourcing and decides to do it. Well, it’s not really a laughing matter.

Especially if the hospital has an account manager from their key vendor who is also responsible for sales to existing customers on commission. And the vendor is surveying their mature market and trying to decide where the next revenue stream is going to come from so they can meet this quarter’s analyst projections. “I’ve got a hammer to sell, so I’m sure that your problem must be a nail.”

That’s how it starts. I’ve got the buzzwords- integration, outsourcing, utility computing, interoperability, one throat to choke. I don’t know much about IT myself, but I can’t admit that. Good IT people are hard to find, and if I could find them I sure don’t want to bring in someone who might dilute my authority. Mr. ReallyBigCo, can you help me?

Sure, son. You want to play the blues? Let me just tune that guitar for you…

Fast forward five years:
  • You have a small, rudimentary IT staff. All were promoted from inside the organization. None has even an associate degree in IT. You don’t send anyone to as much as a webcast.
  • Your critical applications are almost all from ReallyBigCo, but they’re on different platforms and at different version levels.
  • Interfaces keep your applications talking to one another. You are dependent on ReallyBigCo for minor interface tweaks.
  • Despite all the money you’re paying ReallyBigCo for support, your IT people still seem to have more work to do than they can get done.
  • A couple of years ago, you made the decision to let the departments provide their own tier one and tier two application support because the IT people weren’t able to. The departments are expected to come to you and let you know when upgrades are needed.
  • There have been almost no upgrades in the past two years. ReallyBigCo is warning of unsupported versions.
  • You have 140 servers in your computer room, and aren’t sure what most of them do. Some are seven years old. Some are running NT Server.
  • You’re thinking about expanding PACS and were wondering about how much space is left on your SAN. You ask the IT guy that was trained when they delivered the box two years ago and he tells you he’ll need to call ReallyBigCo and ask them.
  • You’re paying several hundred thousand dollars a year for remote server management. You have an ugly virus outbreak and learn that none of your servers has had a patch for 15 months. ReallyBigCo says that they sent emails about coordinating down time for patches, but they never heard anything back.
  • You know security is important. You’re paying ReallyBigCo another $100K or so to manage your network and they tell you to make sure you have formal security processes in place. So all firewall exceptions have to be signed off by your CEO.
  • The CEO doesn’t know what a firewall is, so he approves all the requests you send him. (Or none of them.) Once approved, you have to put in a case with ReallyBigCo to make the change for you.
  • Your telecom provider comes to you with attractive offerings for your Internet connectivity, but you’re not sure you should step out. After all, you’re paying ReallyBigCo to provide your Internet service.
  • Those upgrades you need? They can’t be done on those seven year old servers you’ve got. You’ll have to replace them all. ReallyBigCo sends you a quote- hardware, licensing for new features you’ll certainly want, services, augmented services for things that the customer usually does, but that you don’t have anyone to do for you. The total cost would build you a new surgical suite.
  • Did I mention that your organization has lost money three years in a row, most of your reserves are gone, and your bond holders are getting irritable?
  • You complain over beers to your buddy from the local factory about how expensive computer hardware is. He just placed a similar order direct with the manufacturer but paid 30% less. He says, “Surely ReallyBigCo gets as good pricing from that manufacturer as I do? You guess they’re making profit on what they resell you?”
  • You have an IT governance committee, which you chair. Your ReallyBigCo account manager schedules the meetings, attends, and does most of the talking. The main subject is which ReallyBigCo products you are going to implement when.
  • Some of the products you bought two years ago aren’t yet implemented.
  • Your back is against the wall. You’re afraid systems are about to grind to a halt, but there’s no money to upgrade. The CEO was at a meeting last week and just asked you if you’ve heard anything about “Meaningful Use.”
  • Back to ReallyBigCo you go. “We’re paying you guys a LOT of money, and our IT is a wreck. Now the money is all gone. What can we do?” It just so happens that ReallyBigCo now has a Remote Hosting offering. No capital expense. Easy monthly payments.
  • You’re thinking that you probably need to do this hosting thing quick, so you schedule ReallyBigCo to do a presentation. Directly to your Board. The Remote Hosting sales guy shows up with a slide deck that graphically depicts your out of date servers and ancient software versions. It’s hard to paint a picture that’s worse than the truth, but this guy comes close. The Board sits quietly for a minute, then one of them looks at you and asks, “How could it have gotten this bad?”
  • The final quote comes in for Remote Hosting. Six years. Seven million dollars. Eighteen months transition.

The security guard waits in your office and helps you carry out your boxes. He’s wearing a long, black wool coat against the winter chill and his face is a little flushed. As you follow him out, you realize that he smells faintly of smoke.

Hyperbole? Not a bit.

Now, clearly, the picture I’ve painted goes far beyond strategic outsourcing and marches right up to incompetence (if not malfeasance.) It’s safe to say that every one of the principles I listed in the last post was violated in order to get into the mess I described here.

What about you? Do you have experiences with a “have”? How about a “have not”.

Do you know of organizations that have gone the route of comprehensive outsourcing and maintained a first rate IT operation? That have an exemplary reputation for care delivery and financial success?

How much, and what kind of expertise is required in-house, regardless of what services are being purchased?

Any other anecdotes to illustrate what happens when you sell your soul?

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