3 CIO Strategies for IT Cost Management

CIOs of seven leading healthcare organizations came together for an IT Cost Management and Value Realization Summit, where the CIOs provided insights for cost management in the healthcare industry.

The report covering the summit — prepared by Laura Kreofsky and Impact Advisors in collaboration with Chuck Appleby and Scottsdale Institute — provided the following three strategies for health IT cost management highlighted by the seven CIOs. 

1. Enterprise standardization. The CIOs agreed enterprise standardization of the tools and services used for interoperability needs to be a priority in the healthcare industry as a means for cost savings. Through standardization, the more than 4,000 software applications that exist today that allow for communication among systems could be reduced to a much smaller number, and the 37 different interface engines in use could be consolidated into one, said Mark Barner, CIO at St. Louis-based Ascension Health.

Although standardization would create efficiency and result in cost savings across the healthcare industry, the report noted standardization will be difficult to achieve due to end-user pushback. In order to overcome the resistance to industry standardization, there needs to be shared commitment to and ownership of cost reduction efforts among healthcare executives to achieve the savings envisioned, according to the report. 

2. Vendor management. Managing vendor relationships and agreements is another way healthcare organizations can cut IT costs. Ascension Health has already put this strategy into action by renegotiating participation in its group purchasing organization, which now requires an administrative fee from vendors.

The CIOs noted outsourcing support for certain systems to vendors can also lead to IT cost savings. Altamonte Springs, Fla.-based Adventist Health System has utilized this strategy by outsourcing its electronic health records support to Cerner.

3. Restructure, retain and develop staff. All of the CIOs agreed staff responsible for information system maintenance is the most important — and often the most expensive — component of any healthcare organization's IT budget. Investing in staff to run EHR infrastructures has a continual operational financial impact, said Jay Anderson, CIO at Chicago-based Northwestern Memorial.

Rather than overall staffing reductions to cut costs, the CIOs recommended retraining current skilled staff and enhancing their training to better enable them to understand and manage EHR issues. 

Restructuring within an organization can also lead to cost savings, and many of the CIOs noted consolidation of IT committees as a cost cutting strategy. In many cases, the consolidation allows IT departments and healthcare organizations to make IT decisions more quickly and efficiently.

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