Healthcare CIOs Must Make Better, More Enlightened IT Decisions

For too long, healthcare providers have treated the IT department as a cost center, a source of nonperforming capital. As operations and finance dictate how the IT budget is spent, they drive technology strategy, often leaving healthcare CIOs out in the cold.

For healthcare to realize the innovation necessary to improve efficiency, that must change. This is especially as the United States continues its shift from a volume-based to a value-based care delivery model and - in the interest of curbing consumer healthcare costs - provider margins shrink.

It's a tall task, but, as noted by speakers at the College of Health Information Management Executives (CHIME) CIO Forum, a part of the Health Information and Management Systems Society's HIMSS 2014 conference, it's one that all organizations face - and the longer they wait, the harder it will be.

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CIOs Need to Put 'Hard Issues' on Table

For healthcare CIOs to regain control of the tech agenda, they can't be afraid to put "hard issues" on the table, says Dr. Saum Sutaria, director of healthcare systems and services for McKinsey. This includes the return on investment for electronic health record (EHR) implementation, which for some institutions can cost as much as $100,000 per hospital bed, he says.

Such a discussion can't wait. Healthcare isn't approaching a cliff - after all, Sutaria says, the United States spends trillions on it - but providers who opt to sit back and wait might find themselves going out of business before they actually realize the ROI of EHR. That's because, even though the money continues to flow, thanks to healthcare reform it will increasingly come from Medicare as opposed to commercial insurers.

[ Analysis: Why the EHR Market Is Poised for Disruption ][ More: Why Healthcare Providers Aren't Happy With EHR Systems ]

Providers that are able to make money off Medicare will enjoy "tremendous strategic flexibility," Sutaria says. They will accomplish this by improving efficiency - and they will accomplish that when they stop investing in infrastructure-heavy projects and embark on initiatives such as population health management to address inconsistencies so widespread that healthcare makes airline baggage handling look sensible.

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To make these initiatives happen, CIOs must engage users in new ways. Rather than tell physicians that 80 percent of their decisions are better-suited for computers or force doctors to bend to EHR systems, Sutaria says IT needs to demonstrate how "substantial change" can lead to better care decisions. "Why can't CIO directly engage ... and use the technology journey to drive change in operations?" he asks.

Better Leaders Make Decisions and Vice Versa

In large part, says Chip Heath, a Stanford University professor and author on business strategy, it's because people - not CIOs, not executives, but, well, just about everyone - makes bad decisions. What's more, they make these bad decisions while arguing that they are in fact good decisions. Think of how vehemently Decca Records rejected the Beatles, Heath says.

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To fix this, Heath tells CIOs to consider a decision-making process that sets aside the "villains" of narrow framing, confirmation bias, emotion and overconfidence. Instead, leaders should do the following:

• Widen your options. Teenagers make "whether or not" decisions. Businesses need to consider multiple alternatives at once - unless, of course, they want to act like hormonally crazed teenagers, Heath says.
• Reality test your assumptions. A job interview offers few predictive indicators of a candidate's potential; instead, you need to test people, Heath says. (The same goes for selecting and implementing technology.)
• Attain some distance. Americans think nothing of driving around to look for cheap gas prices, but many fail to save for retirement. Placed in a business context, Heath says, this means CIOs need short- and long-term perspective - whether a merger, product or idea that sounds great 10 minutes after it's conceived will still sound great 10 months or 10 years later.
• Prepare to be wrong. Van Halen's infamous brown M&M rider wasn't the act of a rock 'n' roll diva but, rather, a savvy businessman, Heath says. Such "tripwires" can uncover problems before they cause significant damage, delays and cost overruns.

Positive Change Isn't Far Away

Ronald Reagan and Tip O'Neill agreed on very little, but they spoke often. That's in part because they recognized that, sometimes, a decision on which everyone agrees isn't necessarily the right one, Heath says.

Keep in mind, though, that reaching across aisle doesn't have to involve reaching outside your organization. Leave the confines of your office, Heath says, and you'll be surprised at the best practices and innovations that you find. "The change you are trying to make is already happening in your organization."

Brian Eastwood is a senior editor for CIO.com. He primarily covers healthcare IT. You can reach him on Twitter @Brian_Eastwood or via email. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.

Read more about health care in CIO's Health care Drilldown.