The Non-Financial Costs of Digital Transformation in Healthcare
Dr. Michael Shenouda, CCO at Open Medical, shares his insights on how digital transformation in healthcare requires more than financial costs.
Image created by Rudy Chidiac. © Open Medical 2024. All Rights Reserved
Healthcare digital transformation comes with more than just financial costs, and healthcare organisations have to bear some of that cost if they are to extract the greatest value from transformation.
More than financial costs
Transformation costs are not just financial but also involve a commitment to change management internally, a well-thought-out communication plan, and a willingness to accept that the initial few weeks, even months, post-implementation may see a dip in output as staff adjust to the new technology.
This initial reduction in output is a necessary part of the transformation process. As the staff becomes more familiar with the new technology, their productivity will not only recover but will also increase to a level higher than what was achieved prior to the implementation of the new system.
But at the point of commissioning the transformation, you are making the investment without knowing the eventual result. It’s important to conduct preliminary research before committing—checking testimonials, reference sites, awards and recognitions—so you can make an informed decision.
It's also worth noting that not all transformations need to involve a sharp drop in activity. In projects that have a smaller implementation cost or a slower pace, the initial dip in productivity can be absorbed more readily. This is true for example, in departments that are not as stretched or where the workload is lighter.
Why pilots are not always the way to go
This balance between investment in initial cost and potential future return is why pilots are not always the best approach.
When a brand new product is launched, or when there is no real-world evidence to support its efficacy, pilots can be beneficial. Similarly, when entering a new market or geography, pilots can help embed the product in the market and demonstrate adaptability.
But when the technology has been successfully evidenced, commercially scaled and embedded in the ecosystem, demonstrated adaptability, and only needs to be localised for a specific organisation or iterated for their processes, a pilot is most often not needed. The core functionality and product remain the same.
A new chef at a restaurant may host some taster evenings while trying to establish a reputation and see what dishes resonate best with her guests, especially if this is her first big gig or she is starting in a new country. But once established in the location, she does not need to host taster evenings for every new recipe. She has already established what works in that specific dining environment. So, why continue with the taster menus once she's already proven her culinary skills and understanding of that dining context?
It is the same with digital solutions, and in fact, there are reasons to actively avoid piloting.
One of the main reasons is the investment cost. If an organisation has not invested in a solution, they are less likely to adequately resource and support the required change management and process improvement to make the solution a success. They are less invested in solving the inevitable challenges that will arise during the project. There is less incentive to succeed. Minor, often expected, hurdles become framed as insurmountable obstacles.
The supplier ends up shouldering much of the risk, which often leads to cost-cutting measures that can compromise quality. The organisation then gets less benefit or value from the product or solution, resulting in a lose-lose situation. Instead of elevating the exchange of value to the highest level possible between the parties, one instead creates an unhappy marriage, focused on self-protecting one’s interests at the expense of the other party.
A divorce is almost inevitable. Yet the care organisation still has to bear the cost of loss of productivity or change management, even if the project fails. Essentially, both the healthcare organisation and the supplier end up shooting themselves in the foot.
But if an organisation invests in a product and the company behind it, they are more likely to continue investing in the necessary change management, implementation, and embedding processes. Together, the parties can overcome any hurdles towards the shared goal of enhancing value exchange, and journey through the troughs towards the peak of productivity that the transformation promises to deliver.
Understanding the costs needed for success
This is why healthcare organisations need to fully understand the cost of transformation.
If you want it to succeed, you should be prepared to invest in it accordingly to achieve the desired results. Suppliers can, and often do, shoulder a lot of the cost. And in many cases, that is how it should be. But there are some things they simply cannot do that have to come from healthcare providers.
In order to avoid investing in transformations that will not increase output, it then becomes essential to set clear targets and key performance indicators right from the outset. Clearly articulate what you hope to achieve with the transformation so that everyone involved understands the end goal. Once these targets are set, it's equally important to ensure that they are met. The suppliers should also, rightly, be held accountable for the value they promise to deliver.
So, by understanding what you want to achieve with the transformation and what you’ll have to invest in, you can ensure that the transformation process is a success rather than a costly misstep. And healthcare providers and suppliers can work synergistically to maximise the value exchange between the parties.
