As healthcare technology grows more complex, financial executives need to pay attention to how much it costs.
Whether a health system is acquiring new technology or maintaining or upgrading its existing tech platform, a key point of concern for CFOs is technical debt. Budgeting for new expenses can be tricky in this economy, yet putting off a new acquisition or delaying needed maintenance could have a negative impact on security or clinical care.
While the sheer multitude of technology in a hospital or health system can lead to redundancies and vulnerabilities, consistently maintaining and modernizing them can improve security and help manage long-term costs. That's why experts advise developing a consistent process for managing technical debt
Strategies for Managing Technical Debt
CFOs need to collaborate with CTOs and CIOs on technical debt. They must evaluate where the organization stands, and what amount of technical debt is acceptable, depending on challenges, vulnerabilities and the balance sheet.
To get started, CFOs need to consistently track the performance of their IT systems. Consider creating a small task force, along with benchmarking, to evaluate IT systems and identify any performance gaps or slowdowns.
Agility is a key factor healthcare leadership needs to be able to pivot quickly. CFOs should meet with other executives, especially CIOs and CTOs, to assess what needs to be done and home much it will cost.
Trying to tackle every upgrade or replacement at once can be overwhelming, and costly. Instead, consider staggering these upgrades or replacements over a specified amount of time, and developing protocols for which projects need to be done first and which can be spaced out over time.
Additionally, if a health system works with IT vendors, it's important to establish what tasks vendors can and should handle and what projects should be handled internally.
The Cost of Technical Debt
The consequences of not staying on top of technical debt are extensive, including reduced operational efficiency, higher probability of errors, regulatory and compliance challenges, system downtime and security risks, rising costs, and compromised care quality.
CFOs who have experienced the penalties for not upgrading or replacing their IT systems know that the delay isn't worth it.
Laurie Beyer, CFO of Greater Baltimore Medical Center, shared when her organization experienced a cyberattack in 2020 due to outdated systems.
"It happened because we had old equipment that hadn't been updated, and the [hackers] could get in easily," Beyer said. "So we had to update all the equipment, get it up to 2021 standards."
Sergio Melgar, CFO of UMass Memorial Health, shared when he knew it was time to switch to a modern EHR system.
"A lot of these bad habits that have been formed by the individual silos could basically begin to be eliminated," Melgar said. "You have to modernize. If you stay current, you're going to ride this to success."
How to Measure Technical Debt
When evaluating where a health system stands with technical debt, CFOs need to decide whether it's more expensive to maintain technology in its current state, upgrade, or replace the system altogether.
On one hand, a health system could move quickly to upgrade, acquiring extensive debt but staying ahead of competitors and positioning the organization as a leader in the industry. On the other hand, a health system could move slowly, spacing its technical debt out and focusing on incremental improvements, thus reducing financial burdens. It's up to the CFO to determine which route is best for the organization.
Marie DeFreitas is the CFO editor for HealthLeaders.
KEY TAKEAWAYS
Delays in IT upgrades can drive up costs, increase security risks, and impact care quality.
CFOs must work with CTOs and CIOs to prioritize upgrades that offer the highest ROI and reduce risk.
It's crucial to regularly track system performance and benchmarks to decide when to maintain, upgrade, or replace IT systems.