More than 75 percent of C-level executive healthcare leaders believe that digital innovation is important to an organization’s long-term strategy, but more than half acknowledge that they are holding off on innovation due to lack of capital and fear of creating unintended operational burdens.
Those were among the findings of a survey on the state of digital innovation within hospitals and health systems conducted by the American Hospital Association (AHA) and AVIA, a Chicago-based consulting firm that helps hospitals focus on innovation. The primary survey goal was to understand the current state of digital innovation priorities, activities, and barriers across a wide range of provider organizations.
Primarily, the responses reveal a contrast between digital innovation aspirations and on-the-ground results. According to hospital and health system CEOs who responded the survey, several factors can significantly accelerate digital innovation, including providing sufficient IT resources.
The survey yielded 317 responses from 44 CEOs and 273 other innovation leaders within hospitals and health systems. The survey reflects responses from a range of healthcare providers, representing 48 states, with 86 percent respondents from urban areas and 14 percent from rural areas. Sixteen percent of respondents are academic medical centers; 39 percent are hospitals with under 200 beds, 31 percent between 200 and 399 beds and 30 percent more than 400 beds.
“Hospital and health system CEOs and leaders believe that the effective use of digital solutions is critical to future success. But substantial barriers to leveraging digital technologies remain, including resources, funding, and operational capacity,” the report authors wrote. What’s more, the report authors note that provider organizations that have accelerated the digital innovation process have removed barriers and developed a clear path from identifying a need to launching a pilot to scaling a solution.
“These leaders also report an intense desire to improve collaboration,” the report authors wrote, citing one respondents who said, “we need to share and learn from one another as quickly as we can when an innovative solution has been successful.”
Looking at the business imperative, three out of four hospital and health system CEOs and innovation leaders said digital innovation is important because it has strong ties to long-term strategy and competitive differentiation. More than 75 percent of hospital CEOs and innovation leaders believe that innovation must include partnering with other innovative organizations.
The top 5 digital innovation priorities for health systems are patient-generated data and customized services, network utilization and management, referral management and in-network retention, social community support, and convenient patient access (including telemedicine), the survey found.
Roadblocks to Digital Innovation Success
Looking at barriers, the survey results indicate that leadership buy-in is no longer a roadblock to digital innovation success, as 75 percent of leaders say that digital innovation is a priority at their health system. However, leaders report capital constraints, plus the financial uncertainty that persists due to pending policy changes. In addition, 60 percent of leaders say that they have no seen a large enough ROI from previous digital solution investments, and 25 percent of leaders claim that their organizations have derived the full value of digital solutions that they have implemented in the past.
Respondents also report that implementation operations are a significant barrier to unlocking the full potential of digital innovation. Less than half of respondents report that they have a standard process to bring an innovation to pilot and only half have a process to then take that pilot to scale.
Respondents also cite insufficient staffing and resources as a high barrier, as well. Specifically, 70 percent of hospital and health system CEOs do not believe that their IT department has sufficient resources to effectively support digital innovation. There can also be process or culture roadblocks. Respondents reported that half of the time a digital innovation is identified to fill a need, it does not receive a pilot project. “Leaders report that on average it takes 23 months from identifying a digital innovation need to scaling a digital solution to meet that need (henceforth known as R2S; recognition to scale). Hospitals and health systems that are driving innovation quickly are able to get from R2S inside of 12 months,” the report authors wrote.
The survey responses indicate that four factors significantly accelerate digital innovation within hospitals and health systems: providing sufficient IT resources, creating a flexible budget cycle, dedicating a funding pool, and reserving a portion of each service line leader’s budget for digital innovation.
When all four factors are present, hospitals and health systems execute innovation 52 percent faster, shortening the time to impact by a full year, according to the report authors. Top performers are nimble and confident, removing operational barriers by dedicating funding and resources to innovation.
Looking more closely at “top performers” compared to other hospitals and health systems when it comes to digital innovation, the survey results indicate that organizations are able to scale 17 percent faster is they have a dedicated pool of funding for digital innovation. What’s more, organizations can scale 17 percent faster if they have a mechanism for funding digital innovation opportunities outside of the budget cycle. And, organizations are 22 percent faster at scaling innovation if the hospitals reserve a portion of each service line leader’s budget for digital innovation. Finally, hospitals can be 23 percent faster at scaling innovation if the hospital believes their IT departments are sufficiently resourced to support digital innovation.
The report authors recommend that hospitals and health systems that are slow to get digital innovations to scale should target two immediate areas to accelerate innovation activities—investing in IT resources and implementing a flexible budget cycle for operations staff. Organizations that identify as fast to fully scale a solution should now prioritize their efforts in areas such as directing digital innovation funds to prepare for risk-based contracts.
“Successfully scaling innovation is a strategic imperative, and these survey results crack the code,” Eric Langshur, CEO and co-founder of AVIA, said. “We now know that top performers share traits that allow them to accelerate innovation 52 percent faster than average organizations, shortening time to impact by a full year. It’s never been more essential or accessible to take action.”
The results of the survey indicate that there is growing consensus among healthcare leaders around the key components of innovation. While the majority of leaders agree on the need to build innovative partnerships and almost half (42 percent) believe in testing and scaling externally-developed digital solutions made by small to medium-sized solution companies. However, their perspectives begin to diverge around clinical research and investment opportunities, with one notable exception—leaders of AMCs. “These leaders unsurprisingly respond with significantly greater interest in clinical research and investment opportunities,” the report authors wrote.
The survey results also indicate areas of importance where hospitals have already invested in digital innovation. Thirty-two percent of healthcare leaders have already implemented a solution in the area of benefits management, 30 percent have implemented a solution in primary care delivery and utilization and 26 percent have made digital investments in convenient patient access, including telemedicine. What’s more, about one-third said they have already made digital investments in operational efficiencies and improvements, and 26 percent have made investments in care transition and post-acute sites of care.
Twenty-nine percent of healthcare leaders are planning to or have already built an innovation center in the next 18 months, and half of AMCs are planning to have already built an internal innovation center. Larger hospitals are particularly interested in this pursuit, as 72 percent of these organizations have an innovation center or plan to build one.
Hospital and health system leaders are looking to apply digital innovation to impact five key outcomes metrics—better of quality of care, improved patient safety, reduced costs, enhanced patient experience and improved physician experience.
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