Ask a roomful of healthcare executives to identify hurdles in information systems purchases, and the list quickly adds up.
There's the search for proven product availability and the knotty evaluation process. Once the groundwork is done, executives have to build consensus for one product against a backdrop of changing business requirements. And the choice has to fit well with existing computer systems.
But the biggest hurdle to overcome is the question of value. Tangible benefits for the buck. Payoff for the pain.
That's the alarm sounded by respondents to this year's MODERN HEALTHCARE survey of information systems trends (See chart, this page). It's a different world from the days when a hefty purchase such as a computed tomography scanner could be justified by estimating length of payback from fees.
Top healthcare executives have done enough homework to conclude that an information system project will yield specific benefits, says Tim Zinn, president of Zinn Enterprises, a Chicago-based healthcare information technology consulting firm.
But they aren't getting much help from vendors as they try to define and explain what a system can do -- not just the software features but the results. "They believe it has tangible value, yet they can't convince others of it," he says.
This inability to be articulate on tangible benefits leads them to rely on the more nebulous idea of strategic value as a "cop-out" argument to get a project past a board of trustees, Zinn says. It's not consistent with their belief in tangible value, but it's all they've got, he says.
Besides the search for benefits, executives also have to consider how much spending is too much, regardless of how logical and comprehensive a computerization plan is.
Best-laid plans. Mark McGinnis remembers the strategic plan drawn up by a consultant several years ago for West Jefferson Medical Center in Marrero, La. The effort was a fine one, except for one detail: the price tag.
To implement all the recommendations, West Jefferson would have to spend $45 million over five years, says McGinnis, the hospital's chief financial officer. The plan was shelved while executives sought a better way to spend capital.
"It's almost an endless hole," says McGinnis of information system investment. "How much do you want to pile into it?"
The frustration can increase when providers consider recent experience with pricey purchases. Information systems apparently haven't been meeting the expectations vendors created when their representatives pitched promises to customers.
Of the respondents in this year's survey that have purchased a clinical system, nearly half say the benefit didn't live up to what was promoted during the sales process (See chart, p. 86).
But the promised benefits tended to be more intangible than tangible. "Vendors don't have good tangible benefits to quote," says Frank Cav-anaugh, national director of Cooper & Lybrand's integrated healthcare consulting practice.
And their sales pitches often aren't concerned with giving quantifiable ammunition to decisionmakers, Zinn says. "Vendors are just trying to get a story out there. They aren't interested in (the difference between) tangible and intangible benefits," he says.
That diffusion of message can create confusion about what is being promised. "Intangibles are subject to the eye of the beholder," Cavanaugh says. And if there is confusion about expectations, the benefits are likely to be disappointing, Zinn adds.
Tangible value. But healthcare executives have definite ideas about the tangible value an electronic record can and should produce. The greatest value, according to the survey, is improved outcomes measurement, followed closely by reduced labor costs from ordering and transcribing (See chart, this page).
If vendors promoted programs that matched executive priorities and then shared some of the risk of delivering on those priorities, they could remove some frustration and recrimination from the equation, Zinn contends.
McGinnis says West Jefferson is rapidly constructing new information capabilities by enlisting an outside "general contractor" and holding the firm to promises that must be kept during a relatively short period.
As one of the first customers of a clinical system called TDS 4000, the hospital has been "computer literate" since the late 1970s, McGinnis says. But in recent years, the organization grew to include six physician clinics, outpatient facilities and mental health and home health services.
West Jefferson recognized it had to upgrade technology, but it didn't want to jump into something that wouldn't yield its money's worth. So in the early 1990s, the hospital chose a strategic course: doing nothing.
"(Information systems were) starting to move so fast that we made a decision to bring our purchases to a standstill with the thought that we would leapfrog the (prevailing) technology," McGinnis says.
During the pause, "we went out and studied the world," looking for a promising technological path and a vehicle to navigate it.
One key decision was to hire Alltel Information Services, the vendor of the TDS system, to upgrade that system and accomplish a list of other projects laid out in a two-year contract. Alltel's healthcare division has since become part of Delray Beach, Fla.-based Eclipsys Corp.
Normally the company seeks a five-year contract, but West Jefferson insisted on two years to keep up the pressure to perform well enough to get the contract renewed. "It's a way to hold each other's feet to the fire," McGinnis says. The hospital also turned its information systems staff over to Eclipsys, which then doubled the size of the work force. The contract price includes those labor expenses.
Terms of the contract weren't disclosed. But the hospital, with current annual revenues of $130 million, is spending about 3% of its total operating budget on information systems. And it has projected spending $3 million to $6 million a year during the next three years.
The risk-sharing aspect of the contract is satisfying both sides so far. "They have a flat rate of payment, and they have to perform certain duties," McGinnis says. "If they make boatloads of money and we have all the resources I need here, then so be it."
Respondents in this year's survey overwhelmingly agreed that risk-sharing arrangements would shorten the lengthy cycle of consideration that precedes a purchase decision. Of the 65% that agreed it would make a difference, one in four estimated it would lop more than a year off the process (See chart, this page).
Zinn says the weighted average length of estimated time savings for all respondents is 9.1 months, a significant shortening of a process that now takes between 18 and 30 months.
And it could help networks move more quickly to the stage at which their information systems are truly positioned to work for them, he says.
McGinnis says even though his computerization plan is under control, it's sometimes hard to see the value being derived during continual implementations. "It seems like everything we're doing is building a foundation for what's coming," he says.
Yet if it isn't done now, the hospital won't be able to meet a goal of linking physician offices and trading valuable data in three to four years. "If you don't have the foundation, you're not going to be able to get to the next level," McGinnis says.