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Capitalizing on the growing convergence of healthcare and technology

Michael Corey, Mark Yowe

October 2005

Technology has long played a critical role in improving and advancing healthcare. Take the introduction of the Brain CT Scan in the 1970s. The new technology allowed doctors to see slices of the brain that were otherwise impossible to obtain. Despite the expense and the fact that it presented a steep learning curve that required a change in practice, the Brain CT Scan was adopted throughout the United States by both large and small hospitals in less than a year.

Yet, more than 30 years later and despite the pervasiveness of information technology and the Internet, if you were rushed to an emergency room with a head injury, it is unlikely that the doctors and nurses could access your critical medical history. This begs the question, if the healthcare industry has openly embraced certain technological advances, why has it been hesitant to fully adopt clinical information systems technology?

“For decades, the healthcare services industry has lagged behind the technological changes that have revolutionized banking and manufacturing,” said Paul Kortschak, chief executive officer of MedicAlert Foundation International, a 24-hour emergency medical information service that works together with a bracelet or pendant. “Automated teller machines are able to use a common operating platform that allows information to pass between multiple banks, giving people instant access to their money; but 85 to 95 percent of physicians still use paper for patient records.”

Acknowledging the advent of new technologies and the aging “baby boomer” generation, more and more healthcare organizations are investing in new technologies to benefit the entire industry — everything from remote patient monitoring and e-prescribing to customer relationship management tools and robotics. Faced with growing financial pressures on profit margins, limited access to capital, increased competition, rising medical costs and changing consumer expectations, healthcare organizations practically have no choice but to accelerate their investments in information technology.

Healthcare organizations today require leaders who truly understand how to overcome resistance to change and, ultimately, are able to manage the issues that often impede the speed of IT adoption.

Driving the convergence

Increasing patient safety, improving the quality of care and upgrading efficiency issues to address the rising costs of healthcare are accelerating the convergence of technology and healthcare.

“Increased stakeholder scrutiny on quality demands that the new IT infrastructure and the technology respond to their interests in outcomes information. It is finally time that the healthcare industry and the hospital, in particular, go through the industrial revolution with respect to the use of technology. Our industry is probably the last frontier,” said Lee Domanico, chief executive officer of El Camino Hospital, the first hospital in the U.S. to use computerized order entry more than 30 years ago.

The fundamental objective for the convergence of healthcare and technology is to improve the quality of care and patient safety. Each year alone, drug-related adverse events kill an estimated 770,000 Americans. In addition to the creation of “smart drugs” that will improve the quality of drug interaction, robotics and internal sensors are other areas that hold great hope for improving patient safety. For example, Cardinal-Pixis is an early-model robot that dispenses medication on hospital floors to improve control of narcotics in order to limit the number of medical errors.

While these technical innovations are exciting, often igniting the public’s imagination, IT enhancements and the seamless sharing of patient information can be equally beneficial. “By providing faster medical information, doctors and nurses are making care decisions in real time. Our electronic records are available simultaneously to all areas rather than having one paper chart making the rounds between physicians on one patient. We continue to aggressively acquire technology to minimize the chance for human error,” said Domanico.

“Having critical information readily available or accessible will contribute to patient safety and global health. By eliminating adverse drug effects, providing digital imaging quicker or simply providing necessary medical history, it allows the provider to make a better treatment decision,” said Kortschak. As part of this strategy, MedicAlert soon will be launching a worldwide database that will allow a citizen of any country to be able to carry their personal electronic health record information in the language native to their country of origin and in local languages if they are traveling.

In addition, IT can maximize operational and financial performance by streamlining business processes and automating information flow among patients, healthcare providers and payors. Internet hook-ups in hospital rooms allow for patients to interact with doctors more easily, minimize the number of non-medical tasks conducted by nurses, educate patients on their conditions and, overall, improve patient satisfaction. Electronic supply chain management also helps keep adequate inventories and costs low; yet less than 20 percent of U.S. hospitals have computer order entry.

IT also can help maintain an acceptable quality of life for older people — as well as those with disabling conditions — who want to avoid dependency if combined with the necessary care services and other adaptive strategies. Until now, most technology resources have gone into developing emergency and life-sustaining technologies versus “tools for living,” such as satellite monitoring, which can help those in their homes or assisted living communities with continued autonomy.

In the long-term, improved efficiencies and higher quality care will help to slow the rise of healthcare costs for both patients and providers. “At El Camino, technology is used if it is able to do at least one of three things: increase revenue, reduce costs and/or provide an obvious increase in safety and clinical outcomes. But in a hospital environment, it is often difficult to capture ’hard’ savings as the benefits oftentimes accrue to the payor or the employer as opposed to the hospital itself. In the end, you have to have faith that you are doing the right thing,” said Domanico.

Overcoming inherent resistance

The healthcare industry is roughly 10 years behind other industries when it comes to adopting technology. IT makes up 10 percent of the budgets for biotech and pharmaceutical companies, but a mere 2 percent to 5 percent for healthcare services.

According to Dr. William Stead, associate vice chancellor of health affairs for Vanderbilt University Medical Center, the healthcare industry readily embraces technology — especially medical technology — when the technology allows the profession to do something that they could not accomplish without it and, just as important, the incentives are aligned.

“The adoption of clinical information systems, however, has not been as widely accepted,” said Dr. Stead. “The systems are not very interoperable. In part, this reflects the fragmentation of the market and the common business strategy of integrating within a suite of products instead of making products that can ‘plug and play.’ It also reflects the nature of clinical information. With the exception of a few well-defined items, such as diagnostic codes, drugs and basic lab tests, the meaning of clinical information is not sufficiently explicit to be understood by computers.”

To combat these concerns, healthcare organizations are starting to work toward greater standardization. For example, MedicAlert is investing in state-of-the-art technology infrastructure to support information interoperability with all healthcare stakeholders. The hope, according to Kortschak, is to create a “super highway” infrastructure that will be the basis of the company’s growing role as an e-health source.

In addition to the current lack of standards and coordination among the various parties, Dr. Stead also points out the majority of commercially available systems that support administrative transaction processing do not adapt well to clinical use, that the clinical information systems are difficult to set up and, finally, that the business model is wrong. Vendors are rewarded for selling, not for implementing or ensuring that their clients receive value.

“There has never been a strong business case made for administrative system adoptions. Without the proper ROI justifications, it’s hard to overcome user resistance,” said Domanico. “Available money has gone to medical technology versus infrastructure technology.”

Without the proper infrastructure, the healthcare industry has been wary of taking the financial risks. Installing a typical system in a hospital for electronic records, etc., costs an average-sized hospital $8 million and $1.3 million a year for maintenance. Interestingly, most of the spending is being done to develop less expensive technology, especially for hospitals and health systems.

According to Kortschak, the cost of accessing the right tools is the biggest obstacle to the adoption of technology. “Currently, only 5 to 15 percent of doctors use electronic medical records and many physicians work in small practices with few extra resources or ties to large medical institutions. Where is the financial incentive to invest in the expensive software and hardware? The tricky part is coming up with a business model that motivates physicians and hospitals to invest in electronic medical record systems that are interoperable,” he said.

Patient privacy also is a major concern in the adoption of technology. The healthcare industry needs to work on improving and addressing security concerns — from private information on the web to creating personalized medicine based on patients’ pre-disposed conditions — in order to get further buy-in from stakeholders.

“Put this all together and it’s not surprising that the adoption of certain technologies has been slow,” said Dr. Stead.

Having the right leadership

While the ultimate goal of the convergence of healthcare and technology is to improve patient safety, it is critical to note, however, that technology is not the end-all-be-all. Healthcare organizations — be it providers or vendors — need senior leaders who can maximize the benefits of technology and their IT team, but not view the deployment of technology in a vacuum.

“If you insert technology in the old way of working, it makes things worse as often as it makes things better. Healthcare leaders need to come up with a new combination of people, processes and technology that makes a fundamental improvement,” said Dr. Stead.

“Healthcare is the U.S.’s largest single economic sector at $1.3 trillion per year, yet it still operates like a collection of small businesses, which it is. There is a wealth of executive talent that has embraced challenges of this magnitude — building the e-commerce infrastructure for the Internet, for example,” said Kortschak. “Seasoned veterans from Silicon Valley, large health plans, pharmaceuticals, biotech and healthcare delivery organizations all fit the profile of what’s needed for today’s market.”

Today’s healthcare organizations need executives who are able to balance the benefits of technology while managing the many inherent challenges to the adoption process. Most importantly, they require strong leaders with the financial acumen to provide measurable benefits. Healthcare executives who hope to excel in this new, aggressive environment also must bring multi-business experience, a quality-focused approach, change management expertise and courage to their organizations.

The complexity surrounding the adoption of technology, especially in regard to clinical information systems, requires passionate leaders, those able to motivate high-performance teams and impart a clear sense of direction to the organization. “We need to attract entrepreneurial thinkers who continually demonstrate a commitment to the business and dedication to its success,” said Domanico. “This is critical, particularly in recruiting physician technology champions.”

He added, “At El Camino, we’ve tapped into the consumer retail area to establish an organizational retail mentality for servicing the customer, who is our patient. We also are looking toward the financial services area, specifically credit cards, where information technology is important in producing large volumes of data with very few mistakes.”

The success of technology often rests on leaders’ ability to build cooperation among all team members, execute on change and understand the components of organizational design that promote change. “Healthcare organizations should be tapping into executives with solid experience in organizational development, organizational psychology and work reengineering, coupled with experience in quality improvement,” said Dr. Stead. “In addition, the operations research field has people steeped in how to model complex systems and how to identify early points of failure in a process — both critical for healthcare organizations.”

Building alliances, especially with vendors, is part of this organizational management process. At El Camino, they developed multi-year agreements and consolidated some large relationships such as in the imaging space to Siemens and in the IT administration systems with Eclipses. The hospital uses enterprise systems like PeopleSoft, where before they had multiple vendors; with fewer but larger players in this area, their pricing is more competitive and the vendors can sell more of their offerings to the hospital, which allows it to scale faster and creates a win-win situation for both parties.

Conclusion

The aging population with its inherent demand for healthcare services — coupled with the birth of new technologies — is making the deployment of new technologies an increasingly important factor for success of healthcare organizations. To capitalize on this growing convergence, healthcare organizations require leaders who can not only manage the issues that often impede the speed of adoption, but who also are comfortable embracing the ambiguity related to the cost-benefit analysis often surrounding technology.

“To be aggressive in technology today, healthcare leaders need to be believers and be a little ahead of the curve,” said Domanico. “They truly need to believe that making fair investments in technology will lead to be better outcomes for payors, physicians and patients.”

Critical competencies for healthcare technology champions

LEADERSHIP

Strong and passionate; can lead and motivate high-performance teams
Continually demonstrate a commitment to the business and dedication to its success
Excellent organizational and communication skills
Personal and professional integrity

MULTI-BUSINESS EXPERIENCE

Experience as a leader in a complex, diverse organization; track record of successful
Effective working in matrix management-oriented environment
Ability to work in a fast-paced environment

VALUE-ADDED SOLUTIONS