Making the Business Case for HIT

HealthLeaders Media Staff, April 28, 2009

Chief information officers are not always a member of the CEO's inner circle. In fact, only a quarter (25.23%) of CEOs listed a CIO as members of their senior executive team, according to the 2009 HealthLeaders Media Industry Survey. But the passage of the American Recovery and Reinvestment Act of 2009 may have just elevated their position. The federal government's $36 billion incentive package to install electronic health records means that more CIOs will report directly to the CEO and help set the strategy of the organization.

The role of the CIO has been evolving during the past several years beyond a position that focuses solely on technology and is viewed as the "keeper of information resources." In the April issue of HealthLeaders magazine ("Not Just Techies Anymore"), we examine how that role has evolved during the past several years. Now more than ever, CIOs are helping drive the operational strategy for the organization, says Asif Ahmad, vice president for diagnostic services and CIO for Duke University Health System and Duke University Medical Center. "If you look at the for-profit sector, most of the time the person who is running operations is also responsible for making sure the technology works," he says. "Healthcare needs to follow in those footsteps."

Thirty-nine percent of CIOs already view themselves as a "key leader who contributes to overall organizational strategy," and another 39% saw themselves as an important operations leader, according the HealthLeaders Media survey.

Some of the chief information officer's new job responsibilities include:

  • Learning clinical operations in order to deploy clinical solutions.
  • Thinking strategically four or five years down the road.
  • Serving as a link between technology and the physician/nursing staff.
  • Focusing on how technology works in the context of the business of healthcare.

CIOs will have to step out of their comfort zone and focus on the business aspects of healthcare if they want to secure their seat at the table. In the coming months, they will have to make a business case for the technology components their organization needs to qualify as a "meaningful user" of EHR technology and secure the reimbursement offered in the stimulus package, which could amount to millions of dollars for health systems and $44,000 for individual doctors. Trust me, no CEO or CFO wants to leave that money unclaimed if they can avoid it. So if you aren't already fluent in the language of the CFO, you better get practicing.

Traditionally, focusing on the financial ROI of a clinical technology system hasn't always been a necessity for CIOs. Nearly 27% of CIOs said financial ROI was not factored into the decision to purchase clinical technology, and about 61% said potential financial return is measured but doesn't influence the final decision, according to the HealthLeaders Media survey.

Of course healthcare organizations want to buy the best clinical technology for their patients. That goal hasn't changed, but healthcare facilities can no longer afford to ignore the ROI of large technology purchases, either. According to a survey by the American Hospital Association, 43% of hospitals say they expect losses in the first quarter, up from 26% for the first quarter of 2008. That is probably one of the reasons why 66% of CIOs expect to be asked to make further cuts in IT spending before the end of 2009, according to a recent survey of healthcare CIOs.

When constructing the business case for health information technology, it is essential that CIOs know the total cost of ownership, said Andrew Wiesenthal, MD, associate executive director for clinical information support with The Permanente Federation, during the recent HIMSS annual conference on Chicago. That means the licensing fees, hardware, and the development costs. It is also important to know the cost of training and what impact changing the workflow will have on physicians and nurses. There is a learning curve to these systems and productivity will likely decline—at least initially.

In order to sell the technology that can ultimately help improve patient care and reduce costs, "CIOs and IT staff have to learn how to speak the language of finance," says Wiesenthal.

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