KPMG Leader: “The Healthcare CIO is in a Very Tough Spot”

Jan. 13, 2017
The pressure continues to mount on healthcare CIOs. What can they do to best navigate the road ahead?

Last fall, findings from a Harvey Nash/KPMG CIO survey across various industries revealed that more than half of healthcare CIOs anticipate increases in IT budgets in the year ahead, though these same patient care organization leaders reported they also face significant skill gaps in data and analytics, project management and change management.

As Healthcare Informatics Assistant Editor Heather Landi reported in November, the Harvey Nash/KPMG CIO survey consisted of 3,400 CIO respondents across a number of industries and in 82 countries. The healthcare industry sector snapshot provides survey responses from 190 healthcare industry CIOs. The findings indicated that healthcare IT budget growth is outpacing other sectors. “In addition to the 52 percent of healthcare CIOs who see increases in IT budgets in the next year, 35 percent expect unchanged budgets, and this compares with 45 percent of CIOs across all industries anticipating an increase in IT budgets and 33 percent expecting IT budgets to remain unchanged,” Landi reported.

Nonetheless, it’s noteworthy that although 80 percent of healthcare CIOs said they see a growing strategic role in their organization, just one-third of healthcare companies reported having an enterprise-wide digital business strategy and vision. The survey also revealed that the healthcare sector lagged industry averages in key technology skills. Healthcare companies face the greatest skills shortages in big data/analytics, project management, change management and security and resilience. And, healthcare CIOs reported greater skills gaps in these areas compared to the all-industries average, Landi reported.

“Despite significant increases in IT spending in recent years, the maturity of IT investment in healthcare is still lagging versus other industries and healthcare companies know they need to catch up,” Vince Vickers, KPMG LLP’s healthcare technology leader, said in a statement with the release of the survey. “Healthcare organizations have significant operational cost pressures now more than ever, and there is an opportunity to close that gap quickly with disruptive technologies and analytic tools that open the door to the notion of the ‘creative CIO.’”

To dive deeper, Vickers recently spoke with Healthcare Informatics Managing Editor Rajiv Leventhal about the report’s findings, what the biggest takeaways were and how CIOs’ operations and processes will change moving forward. Below are excerpts of that interview.

This survey featured thoughts from a lot of CIOs across all industries, with nearly 200 just from healthcare. The slight majority of healthcare CIOs see increases coming in their IT budgets. What were your takeaways from this?

I don’t think anything from this survey is too surprising. Having data is obviously helpful to validate the anecdotal stuff you hear every day. I meet with two to three CIOs every week, so it’s good to get the formal data to validate your thoughts. While Harvey Nash and the survey has been great for us, that pool of healthcare [they use] is pretty far reaching, so keep in mind that it’s not just providers or payers—converged life sciences fall into it, too. We are going to be much more targeted on the provider side going forward by taking a subset of this survey and playing that back via our CHIME relationship, who we do surveys with every year. If we get half of CHIME participants to respond, so 200 or 300 healthcare provider organization CIOs, it will be very interesting to see that data.

For the CIOs planning budget increases, where will they be directed? What are the biggest areas of need?

This is more anecdotal; this specific questions we have are what we are asking CHIME to validate. So this is more of my gut feeling before we get these survey results, but cybersecurity is huge right now and we expect that trend to continue. Everything around the cloud is big; I am really finding it interesting how much activity we have now with assessments and road mapping around cloud application work. It seems like we have a group that has gone out and spent a ton of money, effort and energy on their EHRs, and there certainly is an ongoing optimization exercise occurring there, and because the cost pressures continue to mount, [folks] have pivoted. They are challenging themselves to figure out how to move to a cloud-based app that reduces support spend and also helps continue to get value out of relationship with the software vendor with “regular automated updates” as opposed to large expensive upgrades. I find it interesting that just 18 months ago, we would have CIOs and CFOs with strong objections to the cloud due to security, but because of the cost pressures now, they are looking very seriously at it. This is a very active marketplace for us and I expect this CIO survey to validate that.

Vince Vickers

How can one resolve, or at least mitigate, the concern over security when at the same time move to the cloud?

We have a great cybersecurity team at KPMG, and often when I bring them in, the discussion gets moved over and deferred to the security officer, or whoever is head of security for the healthcare organization, and their first question usually is, “How can someone be more secure than what I am dealing with internally?” If we are talking about organizations like Amazon, Oracle and Microsoft, those who have been living in this space now for many years, what is it that makes you think as a regional health provider, you are more secure, you have more advanced protocols than them, and you have the ability to hack proof your system better than them? They do this for a living, remember. We have candid conversations once this happens, and quickly move away from that being an objection. The cloud isn’t free of security issues, but the issue is patient care and helping your customer, and these organizations wake up every day thinking about how to secure your data, so you might want to admit they will do a better job with that than you will by yourself.

This survey also revealed that the healthcare sector lagged in key technology skills such as data analytics and security, compared to other industries. What do you make of this?

I think there are multiple parts to this, and I am seeing a change that’s exciting in regard to healthcare having been a laggard in IT spending relative to other major industries [but not as behind anymore]. If your IT budget, with respect to your revenue, is hovering around 1 percent—versus financial services which is around 8 percent—you are not going to get the highest quality and best people, generally speaking. That is obvious. But we have made great progress, and I’m looking forward to more change here.

Another thing that’s new in the last 12 months is that there is a lot of out-of-industry hiring going on for IT, and embracing new ideas and non-industry expertise. You might not see that as much at the community hospital system or regional health system, but when you move upstream to bigger health systems—the innovators and leaders—while, yes there are nuances specific to healthcare, the days of me interviewing someone and requiring they have 25 years of healthcare experience on their resume are over. We want fresh skills, new thought processes, and people who can bring innovation seen in other industries to healthcare.

Keep in mind, this is all relative in terms of progress; it’s not shifting overnight. Ninety-nine percent of the professionals at the past CHIME Fall Forum have been in the healthcare space for decades. Anecdotally, I can talk about a number of health systems that have brought in CIO leadership outside of the industry. Two things are happening: you have business professionals wanting out-of-industry innovation, but you also have a skill gap that exists. How many of these people can you actually find at an application support level that have the experience? By default, you almost have to embrace outside-of-industry support. Even 18 months ago, I rarely saw people embracing this.

With all this in mind, how much added pressure is being put on CIOs?

The CIO is a really tough spot to be in right now; they are a nucleus of the change that’s going on in healthcare. Whether it be the forced movement towards EHRs and the pressure that came with that, or the need to reduce operational costs and spending, so further automating—they are in the crosshairs of all that. CHIME is a good support network out there for these folks. Financial services and retail have made massive shifts from some variation of what healthcare is going through. At one time they were very paper-based, and their business has had to shift away from clerks at banks and brick and mortar mall-based activity to an internet-based sales model. How do we take that and leverage those people for healthcare? It’s about expanding the base for who the candidates are to support it.

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