Providers are taking longer to decide about purchases of information systems. That trend is killing time, draining resources and resulting in lost opportunities for vendors and their customers.
A new study by an industry trade group confirms what until now has been anecdotal evidence of molasses-like decisionmaking.
Several publicly traded software companies recently blamed slow decisionmaking for their failure to meet revenue and earnings targets. The problem is right up there with Y2K as a leading cause of declining sales.
The phenomenon affects more than vendors' quarterly results, however. When decision cycles for information technology purchases are longer, they create counterproductive situations, according to a study by the Center for Healthcare Information Management.
"The longer a decision cycle lasts, the more money and effort must go into that phase, reducing the resources available for research, development, implementation and acquisitions of additional goods and services," according to the survey of 69 healthcare information systems companies and healthcare consulting firms represented by the Ann Arbor, Mich.-based association.
But rather than blame customers, the study looked for-and found-much room for improvement in the way products are developed and information about them is communicated to providers. "If suppliers and consultants are serious about shortening (information technology) purchase decision cycles, changes must occur within these communities," the report concludes.
The study included separate surveys of vendors and consultants, and isolated the sticking points that caused the longest delays.
For vendors, providers' evaluation of product options took the most time, followed closely by demands for a request for proposals-a detailed compendium of technical and functional requirements that vendors must satisfy to be considered. Other big time-eaters were making final vendor selections and negotiating contracts.
For consultants, implementation of the software system took the most time, followed by vendor selection and product customization.
Consultants said their biggest challenges were improving providers' ability to make information technology decisions and enabling clients to make the best use of the technology products they've chosen.
The healthcare information systems industry is responsible for some of the problems it has articulated, says Carla Smith, CHIM's executive director. Often there is too much unnecessary variance in the software applications that must be customized for each implementation. For example, data fields for patient codes can accommodate a wide variety of digits and schemes. Industry leaders could standardize those details if they put their minds to it, Smith says. "Value is in features or functions. It's not whether a screen is green or blue."
Delays are caused by providers' difficulty in comprehending the technical complexity that vendor representatives throw at them. In effect, there's a language barrier. "Providers are unable and in some cases unwilling to speak in the same language as technology vendors and consequently require lengthy RFPs, consultants or technology teams to translate across the language barrier," the report says.
When providers are forced into delays because of the complexity in weighing different products and understanding how they work, they must commit more resources to the task and wait longer for a system that benefits them, Smith says.
Because products are changing so quickly, by the time providers decide on them, the products may not be the most up-to-date, she adds.
The problems have been a boon to healthcare consulting firms. Of the respondents, 70% said their annual growth rate during the past five years was 20% or better. And 75% said the average length of engagements had increased.
"This is, of course, great news for consultants, but it belies what may be an unnecessary inefficiency in the market for healthcare information technology products," the report notes.
In fact, the consultant respondents overwhelmingly identified the standardization of information technology products as the one solution that would most reduce the inefficiency in the market-even though that standardization would likely reduce providers' needs for consultants.
"Bolstered by the surprising support of a group of people who will not benefit from it, we continue to believe that standardization is an inevitability of this industry and that we would do well to prepare for and even encourage its arrival," the report concludes.