The emergence of generative artificial intelligence (Gen AI) and large language models, like OpenAI’s ChatGPT or Google Gemini, has spurred a renewed focus on the use of cutting-edge technology in healthcare. Healthcare payers, providers, and state Medicaid agencies are racing to deploy Gen AI and other technologies to improve patient outcomes, reduce costs, improve patient engagement, streamline administrative operations, and simplify compliance. While Gen AI holds tremendous potential to improve healthcare, we should heed the lessons learned by recent waves of technology: deploying technology—including Gen AI—in isolation of a broader business strategy is a recipe for underperformance. Optimizing the return on technology investment requires taking a structured approach to integrate technology strategy with business strategy.
Investing in health IT is essential to meet innovation challenges. Technology can enable the scale, reach, speed, and the consistency needed to thrive in today’s fast-changing landscape. Moreover, as workforce shortages persist, technology must become a “force multiplier,” allowing healthcare practitioners and other healthcare staff to focus on what they do best. In today’s changing business and social environment, there is no choice but to embrace health IT.
Investments in health technology, however, have often fallen short of expectations. For years, CEOs and chief information officers (CIOs) have lamented the poor return on substantial investments in health IT. For example, in a recent EY study, 70% of hospital executives report they have not seen an ROI from investments in digital health. A few years ago, only 10% of health professionals surveyed by Health Catalyst assessed the ROI on Electronic Health Records (EHR) investments as positive or better. Mis-investing in technology has long-term implications for any organization. Over-investment in technology reduces ROI and diverts resources from more productive uses. Under-investment in technology can undermine effectiveness, reduce productivity, and weaken patient engagement. So, optimizing technology ROI is essential to driving effective outcomes.
One challenge with IT investment is that measuring ROI in healthcare is an inherently difficult calculation. In addition to financial returns, the hoped-for return on technology investments is an improvement in patient outcomes, which may not translate into immediate financial benefits. Another challenge is that fragmented healthcare systems make it difficult for any single organization to gain system-wide efficiencies that drive a positive ROI.
However, an often-overlooked challenge to optimizing IT investment is thinking of IT strategy as something separate from, rather than integrated with, the business strategy. In healthcare, executing nearly every business strategy requires leveraging IT. To optimize the ROI in health tech investments, organizations must align and integrate their health IT strategy with their business strategy.
Organizations often take one of two different approaches to technology. In some cases, they cede responsibility for the IT strategy to the CIO, perhaps because technology can seem imposing, and the CIO speaks the language of IT. In these cases, the IT strategy may reflect imperatives important to the IT shop—for example, consolidating on a common tech stack or replacing a software component—that do not support or advance the business strategy.
In other cases, organizations develop a business strategy in isolation of a technology strategy—they define their business strategy, then look for technology to support it. This approach leads to a business strategy that either cannot be realistically supported by available technology or does not exploit technology effectively. Under either approach the result is the same: Failing to integrate and align your tech strategy with your business strategy will undermine the value of your technology investments.
To optimize the return on their technology investments, healthcare organizations should take a structured approach to aligning their technology strategy with their business strategy. HMA works with health care organizations to:
- develop or refine their business strategy,
- develop an integrated technology strategy fully aligned with that business strategy,
- assess their existing technology,
- develop a strategic roadmap to modernize technology,
- support technology procurements, and
- support technology implementations.
HMA will be at MESC 2024 August 12-15, and if interested in learning more about this approach, come see us at Booth 450. Or for more hands-on exploring of how this can work for an organization, join us at these two pre-conference sessions at HMA’s Fall Conference on Unlocking Solutions in Medicaid, Medicare, and Marketplace, October 7-9 in Chicago. The session on Navigating the Medicaid 1115 Demonstration Processes will give nuanced understanding of CMS’ criteria concerning budgeting, implementation, evaluation frameworks and administrative supports, along with strategies to effectively navigate through the approval process. Another session on A Framework for Thinking About – and Using – AI Effectively will share real-world examples of successful AI implementation, their impact on business outcomes, and lessons learned. Both will examine how HMA works with clients to integrate their technology strategy into the overall company strategy.
For more information, contact our IT experts below.
