March 5, 2018

What’s the Healthcare CIO’s Role in the Buy versus Build Dilemma

Sheila Talton

What’s the Healthcare CIO’s Role in the Buy versus Build Dilemma

With the focus on cost containment in healthcare, there has been significant growth in outsourcing clinical and patient care services. The top five most-outsourced patient care services are: anesthesia, emergency department staffing, dialysis services and diagnostic imaging. Outsourcing is the preferred solution to reducing costs, while maintaining quality. Health systems have chosen to specialize in what they do best, and partner with others to deliver other necessary services. Since most healthcare organizations have very few data scientists on their staff, why are they still thinking of building their own analytic solutions?

What are the critical role and skills of the healthcare CIO? The number one skill for most healthcare CIOs is the ability to guide IT in support of corporate growth, usually through mergers and acquisitions (M&A) activities. The 2018 CEO and CIO surveys both cite growth as the top business driver for IT. Other critical skills include the ability to integrate merged or acquired health systems into an existing health system, to seamlessly interface with other health systems that are becoming part of the business ecosystem, or to divest portions of the health system when needed.

The pressures of cost reduction and understanding how to migrate to value versus volume for revenue/reimbursements will drive the CIO to continually evaluate their technology portfolio, including people resources. The healthcare CIO should always be asking, “What can we buy versus build?” Why is this critical? It’s not just the cost to build technology solutions internally it’s speed as well! Health systems can’t afford to take years to get the benefits that actionable data can provide to manage costs and avoid penalties that reduce reimbursements. A solution that meets 75% of the business needs that can be implemented in months versus years will pay for itself, usually breaking even or better in less than a year. If a project involves prescriptive or operational analytics (for example, if the results will be tied to a business process or a set of jobs), there is also a need for a team to manage the change process, which is critical to realizing the benefits. Because there are numerous full-time roles, it’s usually impossible to do this with your internal teams alone. Both time and the need for maneuvering political waters are also important factors to manage, and often this is done better with external consultants. Lastly, the success rate of internally building software, algorithms and technology solution rollouts is drastically low for health systems. Success defined as finishing on time, on budget and delivering at least 75% of the intended business value has been difficult for health systems to accomplish.

Another area that is often the subject of “build versus buy” discussions is the use cloud-based infrastructure for solutions. Healthcare CIOs have adopted and accepted the benefits of using cloud for data access, speed and cost reduction. The cloud has overtaken legacy systems in terms of data access. The cloud allows organizations to lift the data from many different sources and provides full access to that data in a way that was not previously possible with legacy systems. For example, the cloud allows patients or physicians to access any data living in the cloud wherever and whenever they need it, and easily accessible from multiple devices. When it comes to legacy systems, certain computers and devices need to be networked to a physical server, which makes access very difficult and costly to maintain.

The role of the CIO is one of a quarterback, supporting and responding to digitalization and consumerism in healthcare, and continually integrating and divesting new technologies and skills. All this while balancing necessary resources/solutions needed to run the health system and evaluating when it is best to “buy versus build.”

Remember, there’s no right answer that fits all healthcare organizations’ needs at any one given time. There are many factors that determine the right answer. In fact, most decisions span a three-year window because of the changing needs in healthcare and the speed at which technology is evolving. So, take heart healthcare CIO – you’re not tied to one option and the decisions are at best five years, but likely three years. The best approach to your decision process is to have guiding business principles for making the “buy vs. build” decision and one of the guiding principles has to be speed!