Hospital CIOs, executives share pain points in technology cost management: 4 takeaways

Hospitals and health systems can achieve major efficiencies and cost savings by implementing new technologies. However, these technologies can also drain money from a healthcare organization if not properly implemented, managed and tracked.

This article is sponsored by Canon USA.

To better understand cost management issues surrounding healthcare technology, Canon USA continually reviews feedback from its nationwide reseller/dealer channel — who regularly engage hospital clients. Their observations share numerous obstacles hospitals face when trying to assure premium healthcare delivery and purchasing technology and it’s associated costs. 

Randal Kendrix, The US Healthcare Business Development Manager at Canon USA, and Charles Lamb, CEO of Triagetech LLC, joined more than 25 hospital and health system leaders to discuss these findings and identify pain points surrounding healthcare technology costs during a Sep. 21 roundtable at the Becker's Hospital Review 3rd Annual Health IT + Revenue Cycle Conference in Chicago. 

Here are four main challenges leaders discussed.

1. A complicated contracting and purchasing process

They shared that hospitals often develop overly complicated requests for proposals, often to satisfy compliance regulations or assuage concerns about security. However, these complex RFPs are often ineffective or disregarded by many technology vendors. A significant percentage of resellers said hospital RFPs are too demanding, and more than half said they will no-bid or discard these types of RFPs. 

"We saw a 135-page RFP to buy a printer. It had enough legal language in there that vendors just threw it out," said Mr. Lamb. "We believe there is a cost to that for the hospitals."

The vice president of revenue cycle at a large health system on the West Coast said the two biggest factors fueling this complexity in purchasing and contracting are security and privacy. 

"There have been many recent data breaches, that are scaring the daylights out of all of us. We're all worried we'll be the next health system in the papers," he said. "So that's a big driver for these long, complicated, drawn-out contracts."

Compliance rules and regulations also lead to complicated contracts, according to the vice president and CIO of a large nonprofit hospital in the Northeast. "In many cases, our RFP processes are driven by compliance rules, which can be arcane and goofy," he said. "These aren't always value-adding."

2. Limited insight on the benefits of technology purchases 

Hospitals do not have a standard or effective way to assess the potential return on investment of technology purchases or measure how "well" they're using the products, according to the vice president of revenue cycle for a large health system on the West Coast.

"We probably use a fairly low number of functions and features on our EMR, but we paid full price for it, and we pay the annual subscription fees. That's our biggest cost," he said. "RFPs are so useless right now because there's no feedback to the original business case. No one is held accountable for why we spent that money."

The revenue cycle leader said vendors should not only install the technology, but also help hospitals and health systems see the full benefits of the solution. He believes technology companies should offer a benefits realization mechanism as part of product installation. 

Mr. Kendrix echoed the need for vendor support when it comes to healthcare technology.

"The No. 1 statement I hear when I visit doctor's offices or hospitals is: 'We are healthcare workers, not technology experts,'" he said. "Your hospital's EHR may have thousands of functions, but if staff members don’t utilize them, that's lost value for the healthcare organization."

3. Planning technology investments for a constantly changing future

Hospitals must look at technology as a long-term, evolving investment, rather than a bandage to solve an immediate need, according to the vice president of the EMR applications program for a nonprofit health system on the East Coast.

"We often try to add technology as a permanent solution, instead of using technology as part of the solution," she said. "That's something we fail at in healthcare."

The East Coast vice president said healthcare leaders should assess whether the solution can meet their needs today and in the future as healthcare — and technology — transform. 

"What do we need from this system or solution in the future?" she said. "It can't just be about today."

However, the CIO of a major hospital operator in the South said annual strategic planning offers a more pragmatic approach to technology investments than planning for far into the future.

"If you really want to be nimble and agile, a five-year plan might get you into a situation where you commit to something and get stuck. The hospital could be forced to pour more money into a solution that doesn’t fit the needs, instead of stepping back and saying, 'This was a bad idea, let's cut our losses and move on,'" he said.

4. Keeping track of product lifecycles

Overseeing the product lifecycles for thousands of technology solutions across a hospital or health system poses an extremely challenging task few healthcare organizations can manage without significant resources.

Repairing or replacing products at the end of their lifecycles can also rack up a large expense for a hospital, according to the executive vice president of finance at a large nonprofit health system in the West.

"Departments will go ahead and repair something that costs twice as much as replacing it because they don't have enough capital dollars, but they have the operating dollars," he said. "So they're fixing things they should be replacing. It's a massive issue."

Numerous leaders echoed the finance executive's struggle to manage product lifecycles, and Mr. Lamb highlighted the potential consequences of ineffective lifecycle tracking. 

"The 100,000 products you're trying to keep track of — that's risk," he said. "Either financial risk or clinical risk if a product dies, and you can't deliver the care a patient needs."

© Copyright ASC COMMUNICATIONS 2021. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.