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Assessing and Achieving Value in Health Care Information Systems
Chapter 15
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Learning Objectives• To be able to discuss the nature of IT-enabled
value.• To review the components of the IT project
proposal.• To be able to understand steps to improve IT
project value realization.• To be able to discuss why IT investments can fail
to deliver returns.• To review factors that challenge the realization of
IT value.
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Outline
• The definition of IT-enabled value• The IT project proposal• Steps to improve value realization• Wht IT investments may fail to deliver returns• Analyses of the IT value challenge
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
The Definition of IT-Enabled Value
• Is both tangible and intangible• Can be significant• Can be diverse across IT proposals• Can be diverse within one proposal• Appropriate analysis techniques depend on
the nature of the value
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Value Diversity
• Tangible (can be expressed in terms of money)• Increased revenue• Reduced labor costs• Reduced utilization of ancillary services
• Tangible (can be measured in terms of process improvements)• Fewer errors• Faster turnaround• Reduced time to get an appointment
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Value Diversity
• Tangible (can be measured in terms of strategic importance)• Growth in market share• Reduced turnover• Improved patient satisfaction
• Intangible• Improved decision making• Improved collaboration• Increased agility
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Analyses Varies by Type of Value
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser
Type of Value Type of Analyses
Infrastructure Improvements
Ability to meet organizational goals, e.g., agility
Mandated
Least expensive approach
Cost reduction
ROI/NPV
New products and services
ROI/NPV and sensitivity analyses
Quality improvement
Change in service measures
Major strategic initiative
All of the above and management “hunches”
The IT Project Proposal• The proposal is the cornerstone of the IT value
examination• Defines intended value• Presents application• Reviews related changes, e.g., process re-engineering• Reviews costs
• Sources of value information• Consultants• Conferences• Colleagues• Publications• Vendors
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Common Proposal Problems
• Fractions of effort• Reliance on complex behavior• Unwarranted optimism• Shaky extrapolations• Phantom square feet• Underestimating the effort• Fairy-tale savings• Failure to account for post implementation costs
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Steps to Improve Value Realization
• Make sure that the homework was done• Require formal project proposals• Increase accountability for investment results• Conduct post implementation audits• Celebrate value achievement• Leverage organizational governance• Shorten the deliverables cycle• Benchmark value• Communicate value
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Why Does the IT Investment Fail to Deliver Returns?
• Fails to clearly link IT investments and organizational strategy
• Asks the wrong question• Conducts the wrong analysis• Does not state its investment goals• Does not manage outcomes• Leaps to an inappropriate solution• Mangles the project management• Fails to learn from studies of IT effectiveness
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
What Questions Should We Ask the Business Sponsor?
• What are the steps and investments, including IT, that we need to take in order to achieve our goals?
• Which “business” manager owns the achievement of these goals? Do they have our confidence?
• Do the costs, risk and timeframe for the implementation of the set of investments, including the IT investment, seem appropriate given our goals?
• Have we assessed the tradeoffs and opportunity costs?• Are we comfortable with our ability to execute?
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Value Happens When Value is Managed
Days in A/R
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Qtr 3-96 Qtr 4-96 Qtr 1-97 Qtr 2-97 Qtr 3-97 Qtr 4-97 Qtr 1-98 Qtr 2-98 Qtr 3-98 Qtr 4-98
Days in A/R
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
What Causes Value?Brown and Hagel, 2003
• Innovation in business practices• Economic value results from incremental
innovations rather than “big bang” initiatives• Strategic value results from the cumulative
effect of sustained initiatives to innovate business practices
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
Summary
• IT value is complex, multi-faceted and diverse• The project proposal is a core means for
assessing value• There are many factors that can dilute value• There are steps that can be taken to improve
the achievement of IT value
Health Care Information Systems: A Practical Approach for Health Care
Management 2nd Edition Wager ~ Lee ~ Glaser
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