If a consultant offered to recommend five changes that would significantly improve your organization's bottom line, would you listen?
I suspect most of us healthcare executives have already hired third parties to do this with varying degrees of success. Here are my recommendations -- and I won't send you a bill.
These five changes in your approach to information technology will decrease expenses and increase revenue opportunities. Of course there are other important actions to take, but these five are not difficult and will have an immediate impact.
1. Develop an executive team with horizontal responsibility for information technology. The responsibility for the success of any new project should be shared equally among top managers, not placed mainly on the chief information officer. Healthcare organizations invest millions of dollars in technology, but executives often do not identify the measurable return on investment or ask for the participation of the top managers responsible for using the technology productively.
A horizontally inclusive executive team not only should approve the investment but also should understand and jointly recommend a measurable return. All major projects should be measured against the projected return, and the entire executive team should share responsibility for achieving it.
I recommend tying the executive team's compensation to achievement of the outcome. If an executive is willing to commit the organization's assets, is he or she personally committed?
The executive team is responsible for all the corporation's resources, and the executives on the team already are responsible for success in their respective areas of responsibility. However, this leads to "positioning," or focusing on individual areas of accomplishment.
If the outcome is measured relative to the total enterprise, all resources will be deployed with the same goal of maximum overall return. Unless rewards and processes are aligned, decisions will be based on individual responsibilities.
The CIO should be responsible for managing the selection, design and process of technology, just as the chief financial officer is responsible for the financial resources. However, the team should be jointly responsible for the results.
The nine Arkansas facilities of St. Louis-based Sisters of Mercy Health System and an affiliate, Washington Regional Medical Center in Fayetteville, Ark., recognized the need to strengthen their management of information. The CEOs of the facilities identified a need to revisit not only obvious information infrastructure changes such as computer hardware and software but also the systemwide management processes that influence and guide the development.
They knew that to implement and support the information systems necessary for the facilities to remain healthcare leaders, they would have to make a substantial investment. The executive leadership decided to create a limited liability company called Mercy Information Services.
All facility data centers and staff were consolidated into this one structure. Standards were created addressing hardware, software, data definition, data rules, business processes and the governance of Mercy Information Services.
A study revealed the approach would create a more robust infrastructure capable of responding quickly to business environment changes and would reduce information technology expenses by more than $28 million within the first five years.
2. Require all requests for resources to have a measurable outcome. If you invest money in a mutual fund, you expect a minimum return. It's the same for any other investment. There may not be an immediate dollar return, but eventually the measured outcome must boost the bottom line. If you do not establish a goal and include measurements that reflect progress toward that goal, the risk is high that the maximum return will not be realized?
I'm sure everyone is familiar with the phrase, "If you cannot measure it, you cannot manage it." Measurement should be an integral part of formulating a project, but it also should be used after the initial implementation. If a project is approved based on an increased revenue opportunity, for example, the measure should be incorporated into next year's budget process.
3. Remove the word "personal" from all computers. They may be universally known as PCs, or personal computers, but desktop and laptop computing devices are company assets -- tools to be used in accomplishing a business's mission. A company asset should be used where it can have the greatest impact.
If someone has a portable computer but the position or original justification for requiring portability has changed, for example, the computer should be exchanged when another valid request is made for a portable computer. In addition, the brand or type of computer should be based on achieving an outcome, not on someone's personal preference. We do not purchase telephones on a personal basis. Why should other assets be different?
This change in approach to decisionmaking will lower total costs. In the previous example, a laptop computer is more expensive than a desktop model. Purchases of duplicate or higher-cost equipment and early obsolescence of inventory are symptoms of leaving "personal" in the acquisition and asset management process.
4. Choose your vendor partners carefully, setting aside high-level relationships. Resist the desire to personalize your decision: The chairman of a software company today may be the chairman of the competition next year. The selection of solid, well-capitalized vendors helps preserve an information technology investment and reduce the likelihood that an information system might have to be replaced later.
If a system does have to be replaced because of poor initial decisionmaking, the change in systems will increase costs and take valuable business development time. History shows that in terms of time and expense, replacing an existing system requires two to three times the effort and cost of the original installation
A contract should reflect the goal, performance measurements, software or hardware prerequisites, risk-sharing and payment milestones. Those terms, plus other normal considerations, should be in the formal contract, not isolated in "side letters" outlining agreements or promises. Sometimes we forget that this is business, not a personal matter. Asking for proper documentation will help prevent relationship problems later.
5. Focus on standards as the basic fabric of support for a high degree of data reliability. Adhering to established or developing industry standards gives organizations the flexibility to respond to changes in the business environment. And it focuses investment on information technology development rather than the support of duplicative computer system maintenance. Standards should be followed for computer hardware and software and for areas such as data compatibility and consistent support of best business practices.
A vision and implementation plan for common information systems across a healthcare network should guide efforts to procure products and integrate information technology resources. That's the way to achieve maximum return on your information systems investments, especially with advances in the use of Internet technology to remotely deliver computer applications and spread information around a computer network.
These efficient and uncomplicated advances can significantly affect an organization's bottom line. But without the proper standards, a company can have difficulty incorporating the innovations.
The consequences of failing to address standards early are illustrated by the phrase, "Pay me now or pay me later." These examples of fallout from shortsighted planning add significant costs:
* Increased labor expense because of the need for multiple sets of technology skills.
* Business interruption because of incompatible technology and the glitches that can result.
* Harmful effects on business processes because of differing rules on how to represent and treat data.
* The prospect of having to implement changes using different methods in multiple information systems instead of the same way throughout.
Larry Blevins is president and chief information officer of Mercy Information Services, the Fort Smith, Ark.-based corporation responsible for information services at the Arkansas facilities of St. Louis-based Sisters of Mercy Health System.