CIOs From Adventist Health and Spectrum Health Share IT Cost Management Strategies

CIOs of seven leading healthcare organizations came together for a CIO Summit on IT Cost Management and Value Realizations. Impact Advisors in collaboration with the Scottsdale Institute, published a report covering many of the cost management strategies discussed at the Summit.

All of the CIOs at the Summit also participate in the Scottsdale Institute IT Benchmarking program to compare their IT costs and organizations with peer health systems.

Alan Soderblom, CIO at Roseville, Calif.-based Adventist Health, and Grand Rapids, Mich.-based Spectrum Health CIO Patrick O’Hare — two of the CIOs who participated in the Summit — provide additional insight into many of the strategies outlined in the report.

"IT needs to be a part of value in healthcare," says Mr. Soderblom. Adventist spends $130 million each year on IT, and "it is my job to make sure those dollars are spent very efficiently," he adds.Alan Soderblom

All of the CIOs who participated in the Summit agreed restructuring within a healthcare organization can lead to IT cost savings. At Adventist, "we've been moving toward consolidating our IT data center," says Mr. Soderblom. Consolidating the IT data center has resulted in cost savings, and the consolidation has also permitted the organization to provide better service by allowing Adventist to make IT decisions more quickly and efficiently, he adds.

There is pressure on CIOs to cut IT costs, and all of the CIOs who participated in the Summit agreed cutting IT staff is not a good option to achieve that goal. Rather, the CIOs believe retraining current staff to enable them to perform more skills is a better option. Mr. Soderblom said he has not done any significant IT staff reduction at Adventist. The organization has focused on training and developing current employees, he adds.

Mr. O’Hare of Spectrum Health has implemented a similar strategy — he says Spectrum is "always looking at development and education of staff." Rather than contracting all services out, sometimes it is better to offer services internally, which requires being creative in developing existing talent in an organization, he says.

Through Spectrum’s employee development program, IT staff receive vendor specific training. Spectrum also created an elaborate "career scaffolding" rather than a traditional career ladder. "We really try to encourage mobility at Spectrum," says Mr. O’Hare. Our program takes a comprehensive approach to try and engage the staff around their careers with us, he adds.OHare photo

To cut costs associated continuing education of IT staff, Adventist implemented an internal IT development program this year. "We decided to internalize to provide more training at a lower cost," says Mr. Soderblom. Every week, IT employees at Adventist receive an update containing educational opportunities offered through the organization. Additionally, the IT employees teach a "power hour" class each week covering various IT topics and issues, he adds.

Not only does internalizing employee training help Adventist cut costs, but Mr. Soderblom believes the training programs will drive up employee satisfaction. Adventist has a low turnover rate at around 8 percent, and "I think the internal training and educational opportunities will help keep that turnover rate low," he says.

Another area where healthcare organizations can achieve costs savings is in negotiation of vendor contracts. Because maintenance and purchase of third party services make up such a large part of health IT costs, healthcare organizations "have to be aggressive in their negotiation and purchase of third party product," says Mr. O'Hare.

Although Adventist has made strides in the use of IT and also cutting the costs associated with the technology it uses, "Adventist is not where it would like to be in demonstrating value in health IT," says Mr. Soderblom. Historically, Adventist used other organizations’ studies to track the value of investing in health IT, but now Mr. Soderblom says he has ideas on how to measure value. "I think it’s important for all organizations to invest in their own studies to be able to articulate the value they're getting for their budget dollars," he says.

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