The payers, providers, pharmacy benefit managers and healthcare solution providers that comprise the U.S. healthcare industry are lagging behind other industries, such as banking and consumer products, when it comes to digital transformation.
This is partly due to the nature of the healthcare business, with its strict regulatory environment, but also due to the fact that the healthcare industry did not experience pressure to “go digital” until several years ago, particularly in developed countries, where aging populations with strong healthcare demand have pushed costs into the stratosphere, creating greater need to be more efficient in healthcare delivery. Most recently, COVID-19 demonstrated the need for a more interoperable and global industry to manage public health dangers that have long been underestimated.
As healthcare companies look to digital technologies to satisfy growing demand and solve gaps in overall performance, there are two questions they must answer: what fundamental, foundational steps are necessary to prepare our IT infrastructure for digitization, and what steps are necessary to build a platform for digital healthcare?
How to Prepare Your IT Infrastructure for Digital Healthcare
Before healthcare companies begin a transformational digital journey, they must define success. As simple as this sounds, a staggering number of enterprises skip this first, critical step. The old slogan of S.M.A.R.T. objectives (which guide businesses to create and follow plans that are specific, measurable, achievable, relevant and time-bound) is as relevant today as it has been for been for decades. Healthcare organizations that define S.M.A.R.T. objectives for their business are more successful in achieving their goals.
Once the objectives have been defined, critical success factors for achieving that success are:
· Ensure you have the capability to measure success. FinOps installations are an evolving discipline in healthcare. Healthcare organizations require a real-time, single-pane-of-glass dashboard for end-to-end hybrid cloud spend monitoring, management and alerts.
· Do not overlook the commercial construct that will need to be operationalized with hyperscalers. Pricing models and price points are evolving at warp speed. The three large hyperscalers are aggressively entering the healthcare market, and healthcare companies that are not educated on the latest deals can lose a lot of money. Look at implementing FinOps to measure and steer cloud consumption and fully leverage pay-as-you-go.
· Map out your enterprise architecture and business capability requirements. Digital healthcare requires thinking clearly about your future digital services, products and innovative processes as well as your current IT landscape. Even if your IT infrastructure is outdated, it is the backbone of your current and future operations.
· Shift toward a cloud-first approach but recognize that most healthcare entities will be hybrid environments for the foreseeable future. Most new applications are cloud native. However, many companies struggle with shifting their legacy applications to new platforms (especially enterprise resource planning, electronic health records and claims systems). The investment and risk are both high, adding challenges to compliance implications like good practice (or GxP) guidelines and data privacy.
· Consider the technical aspect of the transformation. Streamline the existing IT landscape by standardizing IT infrastructure, including the data center/cloud, workplace and network.
· The network itself deserves attention and expertise. Additional SD-WAN and 5G capabilities must be harvested across the network. These new technologies will ensure continued flexibility and the ability to access data where you need it.
· Not every project will yield cost savings. If every project is required to bring cost savings, it is very difficult to drive platform investments. Interestingly, companies are more willing to invest in startups with uncertain outcomes than in strengthening their own core capabilities.
· Thinking clearly about IT infrastructure also requires thinking about cybersecurity. Healthcare companies are being attacked with increasing frequency. Companies must protect their assets and intellectual property. Along with specific cybersecurity initiatives, cleaning up the application portfolio and standardizing the IT infrastructure will help substantially increase cyber resilience.
· Make strategic investments. Once you’ve determined your required business capabilities, enterprise architecture and corresponding technology alliances and strategic partners, execute strategic investments that move you closer to those objectives.
How to Build a Platform for Digital Healthcare
Once the technical, commercial and operating models are in order, enterprises can build a digitized healthcare platform, following these five steps:
1. Rationalize your application portfolio. The amount of technical debt in healthcare has risen substantially over the past several years. Enterprises must simplify the environment in advance of infrastructure transformation. A careful look at the application portfolio almost always reveals some that are not needed anymore (quick wins), along with many duplicates or even triplicates. Reducing the number of applications to support will immediately reduce the infrastructure workload and the complexity of operations (with fewer database versions to support, for example).
2. Streamline the IT organization. Carefully assessing who is doing what will help you see through the jungle and make faster decisions. For example, you could centralize IT infrastructure and shared applications operations while moving specific applications closer to the respective business departments. Once you have smaller and more focused departments, look at agile practices and consider what to keep in house and what to outsource. (Ask, “What are my key differentiators?” to help rationalize your application portfolio.)
3. Reduce the variety of IT services. Do you really need so many different database services, or can you operate with fewer? Do you really need so many different computer services and workstations? It requires some thought to reduce complexity without sacrificing business outcomes, but it is worth it. A good way to judge is by looking at the business value. Why is a special IT service needed? Are there difficulties or downsides to leveraging existing IT services instead?
4. Shift to scalable platforms. Reduce the number of software versions, databases and operating systems, to further reduce the cost of potential vendor support extensions and increase cyber resilience. This step is about gaining the last piece of efficiency, after the previous steps have yielded great results.
5. Streamline your operations. Finally, the vendor landscape needs to be rationalized and new service providers should be brought into the ecosystem as appropriate. As the market continues to evolve, sourcing should be evaluated simultaneously with all the preceding steps. Organizations should not limit themselves to current vendors but should truly understand the range of service and platform provider capabilities before any long-term commitments are made.
The platform and infrastructure necessary to deliver the many promises of digital healthcare must be capable of being scaled across an enterprise and its ecosystem. Healthcare firms must carefully assess, understand and follow the overall IT strategy and the specific needs of their business as they build applications and the standardized infrastructure that will make it possible to fully pursue digitization.
With standardized infrastructure and scalable applications, healthcare firms can build new products and services (with additional revenue streams) based on the existing portfolio at a faster pace than the competition; scale proven and valuable services; leverage all data across the enterprise and deploy existing and experienced teams with a clear focus, and ultimately deliver better healthcare outcomes.
Bob Krohn is a partner at ISG with extensive background in healthcare business process optimization, organizational design and execution including the direct oversight of numerous outsourcing contract negotiations. Bob has been recognized as a Digital Expert and is a regular speaker and blogger on emerging trends in healthcare.
Kevin Spiekermann is a principal consultant at ISG with several years of experience in the healthcare and life science industry and even more years of infrastructure transformation. He has a proven track record of supporting clients in large projects transforming their IT from a technological, organizational, process and sourcing point of view. He has worked mostly in Europe but also in the U.S. and Singapore.
