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December 11, 2006
Is it the start of a movement? Not quite, but indicators show that more hospitals are finding there’s no place like home for IT projects. It may be too soon to call it a bona fide trend, but there is a change underway within some hospital IT departments, where they are bucking tradition and handling projects internally rather than outsourcing them to vendors or consultants. The reasons vary. In some instances, facilities want to maintain better control over what they consider the most important aspects of their IT infrastructure. In others, it’s a desire to reduce reliance on vendors for ongoing maintenance and, in some instances, to reduce costs. “The main reason change comes is either through failure of vendors/consultants—of which there are many—or because CIOs [chief information officers] feel that they need more control because the IT project is strategic to their mission,” says Shahid N. Shah, CEO of Netspective Communications, LLC and “The Healthcare Guy” blogger. “I see the combination of the two as the cause for this change; failure of consultants makes CIOs realize they are responsible and they start to take control because the failures caused strategic issues.” In the past, hospitals typically had vendors handle the majority of their technology needs. In some cases, it was because they simply did not have sufficient expertise or personnel in house. In other cases, IT was not considered a strategic part of the facility’s mission and therefore not a high enough priority to dedicate the dollars needed to build and maintain a robust IT department. However, “when technology is strategically important to the mission of a hospital, like in an academic center or similar place, then you see hospitals outsourcing less and taking more control,” Shah says. “When they do relinquish control to vendors and consultants, they do so because they don’t see it as being important to their mission. It’s just a cost of doing business.” A Strategic Advantage Marshfield developed and implemented integrated computer technology for patient care more than two decades ago. By the early 1990s, when few other providers had even heard of electronic medical records, they were already in widespread use at the clinic. In 2004, Marshfield began rolling out wireless tablet computers, with the goal of creating an entirely chartless environment by 2007. Because the clinic was so far ahead of the technology curve, it had no choice but to handle IT internally. “Until the mid-1990s, viable commercial options for large clinics were not available,” says Marshfield CIO Carl Christensen. “Any of the [large clinics] that had any kind of sophisticated information systems did it themselves out of necessity. That is how it got started and we’ve been perpetuating that here ever since.” Today, Marshfield’s IT organization is divided into two parts: a traditional information systems group, with approximately 150 employees, and an internal software development company that employs approximately 150 and is run as a separate entity. The implementation team is currently focused on completing the chartless initiative, while the development group is working on creating the next-generation systems Marshfield will need to stay ahead of the curve. “I’m often asked why, now that there are viable systems supporting large clinics, we continue to do this internally,” says Christensen. “There are a couple of reasons. One is we are continuing to provide good value. But more importantly, where we are right now is a step or two ahead of the rest of the industry and we want to stay there. The healthcare IT industry is focusing on implementing electronic medical records and we are well past that.… Our efforts now are on building and implementing decision support systems for the point of care, as well as population-based decision support systems. If we were on a vendor package, we feel that we would not be getting the kind of support we need for those projects because they are all focusing on EMRs. That’s where the money is.” Like Marshfield, Southeastern Regional Medical Center (SRMC), a 429-bed private not-for-profit hospital in Lumberton, N.C., handles the majority of its IT projects internally. Unlike Marshfield, however, it has only done so in a significant way for the past five years, since CIO Douglas Goodman came on board. Since then, his internal team of approximately 30 people has handled projects ranging from implementing clinical documentation and payroll and accounts payable systems to time and attendance, home health, and clinic-based information systems. For SRMC, the benefits of internal IT project management go far beyond financial. “We have better control of our fate by doing it internally. When we develop the expertise to manage the project, we can better control the outcome,” says Goodman. “We develop the expertise; we develop the buy-in and ownership. Those are very important pieces of a successful implementation.” By managing projects internally, the IT department develops and retains critical institutional knowledge which can easily be lost when projects are outsourced, he adds. That, in turn, puts them in a better position to manage and maintain their systems, as well as to make the best decisions on upgrades, replacements, and priorities. “One of the real concerns I have with outsourcing—and I’m not pointing at anyone in particular—is that the knowledge transfer isn’t always there. We bring in a subject matter expert and they do a wonderful implementation, but when they leave, the expertise goes with them. So six months down the road, we’re doing things exactly as we were trained, but then we have some staff turnover and the people who are now doing it don’t understand why,” Goodman says. “By developing that internal expertise, you have people who are vested in the product, processes, and solutions. “We can make decisions from a global perspective because we know everything about our organization, whereas each vendor, justifiably, wants their upgrades done,” he adds. “We can marry the two and see where our dollars are best spent. The best use of our money is not the newest technology or the newest bell or whistle. The best use of our money is to make the best use of the money we’ve already spent.” Overcoming Concerns, Gaining
Buy-In “Even if a CIO is convinced that a project should be done internally, they often don’t have either the budget or the manpower to make it happen, so many projects fail in hospitals just like in other sectors,” says Shah. “However, when hospital projects fail, they don’t just impact financial performance. They can actually degrade health services or put patients’ lives at risk, in extreme cases. Many CIOs would rather hire outside personnel since they are reluctant to take internal risks, and I don’t blame them. “The primary obstacle is easily the lack of experienced and competent project managers,” Shah continues. “Without the right project managers, there is poor project definition, requirements gathering, and communications among stakeholders. And we all know that if you don’t have good definitions, there is no such thing as good execution. Another obstacle is lack of belief that technology can really affect financial performance or clinical excellence. Sure, folks talk about tech improving things but deep down, there are very few executives who view technology strategically and therefore don’t staff or fund it appropriately.” The importance—and challenge—of top-notch project managers is also echoed by Goodman, who pointed out that the project manager is the one who interacts with all departments involved in an implementation project. They need to have all the project management skills that are expected from outside consultants, but they also need to walk a political tightrope and balance personal relationships with the overall organizational interests. In short, failure on the part of the project manager is simply not an option. “You have to have that organizational commitment from the top down, and you have to have that [project management] skill set,” Goodman says. “The worst thing in the world is a bad implementation. A bad implementation is like the bad apple that spoils the whole barrel.” Preventing a bad implementation also hinges on the caliber and quality of the internal IT staff. Recruitment, retention, and ongoing training to ensure they can continue to meet demand are challenges that confront even facilities such as SRMC and Marshfield that have long records of success in handling IT projects. But it’s not only IT skills that must be represented for true success; it also requires an in-depth understanding of how IT impacts the day-to-day activities within all departments throughout the organization. “IT departments need to have subject matter experts in their departments,” says Goodman. “The days of the small IT department with a few programmers and a few [database analysts] are over. We need to have nurses in our IT departments; we need to have lab techs and radiology techs in our department. Or we need to have IT people in those departments. That’s a critical component because we have to know the business issues that affect those departments and we have to be able to reconcile the day-to-day business grind issues with IT.” Going hand-in-hand with organizationwide representation within the IT department is the need for established processes and top-down agreement regarding demands on the IT staff’s time. Also critical is an established policy to govern maintenance such as upgrades and new releases. At SRMC, an IT steering committee has been created with representatives from all key departments. The committee meets quarterly and lays out the IT plan for the upcoming quarter. That, and a set policy for upgrades and releases, helps keep “scope creep” in check and allows for better time management. At Marshfield, they have implemented a process that takes the focus off IT and instead keeps it on the outcomes of the project at hand, even down to the basics of what various projects are called. For example, “decision support,” “referrals,” and “care management” rather than clinical information systems and customer relationship management software, says Christensen. “Healthcare in general has been so underserved from an IT perspective, and we have gone past the tipping point in our organization. At Marshfield, physicians, management, and staff all understand the importance of IT. Demand has gone off the charts,” he says, adding that IT “is really part of the fabric and culture here. I know we take it farther than we should because of that.… It’s working both ways. IT is engrained in the organization and the organization is engrained in the IS [information service] department.” Picking Up Speed? According to Goodman, although healthcare IT does have a greater voice than it did five years ago—and developments such as computerized physician order entry systems and the push for a national health record have gotten more parties involved with IT—there are still challenges to address. “I’m seeing a very slow movement in that direction. I think it will pick up speed, but outsourcing is too easy right now,” he says. “Everyone has trouble adding FTEs [full-time employees] … and a lot of CIOs use outsourcing as a way to supplement their staff, for lack of a better way to put it. But as people become more educated on the business aspects of this, and they learn that there really is a better return on doing it internally, the trend will grow.” Adds Christensen: “We’re just getting to the point where leadership within healthcare organizations is beginning to understand the importance of health information technology. That’s the first step. Once you’re at that step, you understand you have to build the right types of teams because it’s all about the people. In order to do that and to do it well, you need the right people and you need leadership support. My perception is that healthcare is starting to understand the importance of IT. Certainly there are early adopters who have already crossed the tipping point, but the industry as a whole isn’t there yet. Maybe in another four or five years.”
Sharp, a not-for-profit integrated regional healthcare system in San Diego, has long handled its own IT projects, in part to avoid paying high consulting rates and in part because it has the highly qualified team and project management organization necessary for success. Hospitals should first consider whether they have the right staff to handle the implementation. “Those with small IT staffs may not have the bandwidth or skills necessary for an effective implementation,” says Spooner, who is also chair of the College of Healthcare Information Management Executives. “If they don’t have the required talent in-house, then they need to evaluate their ability to recruit the implementation team and gear up for the project quickly,” he adds. For any facility considering bringing all IT projects back in house, Douglas Goodman, CIO at Southeastern Regional Medical Center in Lumberton, N.C., recommends first putting together a five-year plan for the organization then evaluating the amount that will be spent on the various projects required to fulfill that plan, whether through outsourcing or internal implementations. “If you look at the number of dollars you’ll spend and the change the organization will go through, and if you understand that you could have 10 or 12 different groups of people coming in to make the change happen, you can see how much more effective you’ll be if you have just one group,” he says. Goodman points out that, when outsourced, services can be as much as 50% of the total implementation contract. “Your staff, with their expertise, is going to be considerably less expensive and considerably more valuable,” he says. Even so, says Netspective Communications, LLC CEO and noted blogger Shahid N. Shah, it’s critical to ensure that your internal IT department is not overwhelmed with implementation projects that are not mission-critical. “It would depend on the project, the size of the facility, and whether they want to build their capabilities strategically for the long-term or just for one project. I would say they should never try to do anything in house that is not important long-term,” he says. “Community hospitals that are already stretched with just managing the projects that are already implemented should stay away from trying their own [projects] unless they have new investment dollars to spend. Academic hospitals, IDNs [integrated deliver networks], and larger facilities should try to develop the expertise. “Always think about how important the project is. Does it support the mission of the hospital or facility or does it just assist in a particular department or area where the benefits are more segmented?” Shah adds. “If the impact is limited, it’s OK to outsource it and then manage it internally. If the impact is large or is a strategic initiative, you should get help from outside to do some of the important aspects like requirements definition, but bring it in house quickly so that your own people can build their expertise.” — ESR
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