Wager chapter15 2nded-000

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

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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