One common measure of success in IT has been based on dollars spent and time to return on investment. That approach can bring some level of visibility to our spending effectiveness, especially on the cost reduction side in headcount and overhead. But that kind of return isn’t really based on the value of information.
ROI fixation is probably less common today than 10 or 20 years ago in the days of enterprise resource planning and big software investments. Siloing ROI on an application investment just makes less sense in an architecture of many assets and channels.
Nowadays if we are lucky enough to work in an agile organization we are less desperate for a technology jackpot. We move, measure, benchmark and correct incrementally with third party information and adjust ongoing operating costs. Ideally, we’d be as analytically aware of the value of our output as our costs of input.
As value chains connect, another wrinkle and opportunity for success based on information is arriving in collaborative or comparative analytic views. I got a dose of this at HealthDataManagement’s Health Care Analytics Symposium in Chicago last week where I went to learn and watch some of my colleagues at work.
There is no overstating the complexity of health care today, but a repeated theme at this show was that for patients, providers and insurance companies to have a chance at health care reform, analytic information sharing will have to play a role. That's because market forces have made these parties hard competitors: for every dollar a payer doesn’t pay out, a hospital is less likely to perform a procedure; every approved procedure performed earns revenue for the hospital.
The new arbiters of success in health care are the outcomes that result from these billings and procedures. You see it both in mandates and federal dollars and within organizations where physicians are increasingly paid based on their success.
Not only transactions but outcomes that trigger investment call for comparative analytics that “inform collective wins for payers and providers,” said Jason Williams of RelayHealth. It’s information and analytically driven allocation of services and benefits to replace the redundant procedures and uncovered billing that presently shore up the industry.
“We’re all trying to do the same things, improve patient care and contain our costs,” said Swati Abbott of Blue Health Intelligence. “There is a movement to aligned incentives so both of us have to trust one another and use the same risk adjusted metrics to measure fair and square.”
The head of strategic alignment at insurer Aetna, Brian J. Kelly, M.D., said the dialogue is changing as the terms “payer and provider” are replaced by “risk-bearing entity.”
“In a high deductible plan those risk bearing entities are the health plan members,” Kelly said. “If you are a provider with high cost and poor quality you are going to have to reinvent yourself or the market is going to punish you.”
James Gaston of HIMSS Analytics added, “Metrics will be public and not shrouded in secrecy anymore … Competition from retailers like Walmart, Walgreens, CVS will make inroads with ambulatory services and a lot of people will look for that … Call it a threat or opportunity for the broader space.”
Even Tom Davenport, in his closing keynote at the event chimed into the need for analytic visibility in health care. “This distrust is going to have to go. If we’re not going to move to a single provider system we have to get this kind of collaboration going.”
Davenport has touched on this theme elsewhere because it’s not confined to health care; you can compare siloed interests in health care to those between R&D and M&A, or between HR talent management and budget hawks in finance. Think of the value chains of manufacturers, merchandisers, retailers and logistics in the consumer world. I still roll out my old supply chain litmus test from time to time: Does your company have separate VPs of procurement and logistics? If so, they are either competing or joined at the hip.
It’s going to be especially hard in health care, but all of us will need to be more aware of how our investments and returns affect the health and sustainability of our value chains and ecosystems.
(For many more thoughts on ROI, TCO and comparative analytics, check out last week’s DM Radio episode with guest analyst David Loshin.)