Most Health Systems Still Lack Long-Term Digital Strategy

The survey of CIOs and other executives examined digital health maturation and how patient care organizations are strategizing for the future

Healthcare’s digital transformation is still in the early stages of maturity relative to other sectors, but CIOs do understand the imperative to drive digitalization, according to a new report from advisory firm Damo Consulting.

The report’s findings were revealed in focus group discussions with nearly 40 CIOs and senior health IT leaders who are members of the College of Health Information Management Executives (CHIME). When asked to define digital transformation in healthcare, 60 percent of respondents said it is about using digital technologies to reimagine business processes and customer experiences, while others stated that it means delivering healthcare when, where and how consumers want it; or using data, analytics and artificial intelligence (AI) to improve outcomes.

According to the researchers, today, health systems fall into four key models of digital adoption: reliance on electronic health record (EHR) systems to drive digital engagement 

(Model 1); digital strategy singularly focused on virtualization of care 

(Model 2); stand-alone digital initiatives are driven by internal demand 

(Model 3); and strategic investments in long-term digital health platforms (Model 4).

Full Report (download pdf)

“I think it’s very difficult still to define (digital) because everything’s
kind of tied together.”

Health systems in Model 1 are focused on maximizing the value of their EHR investments. An example of that is improving patient access by promoting the use of the MyChart functionality in Epic. Health systems that embrace this the model also prefer to rely on their EHR vendor’s product roadmap as a guide to their own digital roadmaps. In Model 2, health systems take a particular capability like telehealth and commit to virtualization of care at the enterprise level. Despite challenges with reimbursement models, telehealth has been effectively deployed for acute care by many health systems. Express Care and Telestroke are widely prevalent models in virtual care delivery today most health systems, especially smaller and mid-tier ones, operate in Models 1 and 2 and only the nation’s largest health systems are operating in Model 4. The majority of CIOs in the focus group, however, acknowledge that all enterprises need to shift to Model 4, the findings revealed.

“In my discussions with health system CIOs, what emerged is that not only are most health systems in the early stages of adoption, but there is no clear consensus on what digital transformation looks like or how to achieve it,” said Paddy Padmanabhan, CEO, Damo Consulting. “Most health systems consider their EHR system as their digital strategy or are developing standalone solutions on an as-needed basis, without a long-term digital strategy in mind.”

In Model 3, health systems address digital transformation by way of a series of stand-alone digital health initiatives that are funded and implemented based on internal demand. However, these digital projects are undertaken mostly in response to near term priorities and do not necessarily align with enterprise business strategy. Health systems in Model 4 develop a comprehensive enterprise-level digital a strategy that considers stakeholder priorities across functions and departments. Digital transformation leaders evaluate IT infrastructure needs and secure funding commitments for a multi-year digital transformation roadmap in line with enterprise priorities. Health systems in Model 4 also, look to pick strategic technology partners besides EHR vendors to execute on their digital roadmaps. Today, most systems, especially smaller and mid-tier enterprises are operating in Model 1 and Model 2, with larger organizations operating in Model 2 and Model 3. Leading health systems are in Model 4. Importantly, CIOs acknowledge that all enterprises need to shift to Model 4, especially if the health system is embracing at-risk payment models. Payment reform is in various stages, depending on the markets; however, a large percentage of the payer mix is going to be at risk for most health systems in the future. Being able to manage care in this context is a huge driver to go beyond incremental initiatives and develop an enterprise digital roadmap. Health systems that take on risks for patient population also need integration across all settings where patients might receive care. For health systems that operate in multiple markets, a key consideration is the regional strategy in their overall enterprise strategy as there could be important drivers in the regional markets worth recognizing. The mix of patients at a health system often serve to determine to what extent a health system can push the adoption of digital health programs and consequently drive priorities.

Meanwhile, while the adoption of digital transformation is slow and a clearly defined strategy is unclear, most healthcare CIOs recognize the valuable role it can play. Key trends driving its adoption include increasing competition and reduced reimbursements, along with the focus on patient experience and improving access to care for patients.

Health system CIOs in the focus group who are developing patient engagement applications expressed that they are actively looking at monetizing the capabilities by offering them to peer systems that are yet to make the investments. According to one CIO, “I think any digital transformation strategy has to have an affordability component because reimbursement rates are going down and we have to work smarter.”

What’s more, the majority (36 percent) of the CIOs in the focus group indicated that their organizations do not have a digital function, and by default, the digital function sits with the CIO. According to one specific CIO, “We don’t really have that (digital) function here. But if our board was asked who it would fall under, I could see them all saying it would be part of the CIO’s role.”

According to Padmanabhan, “It also comes down to whether health systems can afford to have another senior executive in a CDO role, given the current state of digital maturity and the lack of interest in creating even more C-level roles. Our focus group of CIOs believes most health systems are not large enough for two separate roles. This is in sharp contrast to other sectors such as banking, that have had full-time CDO roles for a while.”

Further, 46 percent of responding CIOs say that their enterprise digital strategy is their EHR system, closely followed by those that build or buy point solutions based on need (45 percent). Less than 9 percent are implementing an enterprise platform in partnership with a major technology firm.

“Based on these figures, it becomes clear that there is no single vendor platform that meets all needs and today, health systems must build their own stacks,” added Padmanabhan.

At the dawn of the HIT and EHR milieu, all EHRs were poorly designed and lacking usability. The federal government in its haste to force adoption incentivized physicians and hospitals at the price of penalties for those who did not comply (decreases in reimbursement). High ranking Department of Health and Human Services and CMS designed a system of 'meaningful use' based on metrics of MACRA and later MIPS. Billions of dollars were invested in flawed systems, and unproved metrics. "Big Data" became a buzzword, and an icon for aberrant analysis. (Garbage in, garbage out)

Report: Most Health Systems Still Lack  Long-Term Digital Strategy:

Report: Most Health Systems Still Lack Long-Term Digital Strategy:eanwhile, while adoption of digital transformation is slow and a clearly defined strategy is unclear, most healthcare CIOs recognize the valuable role it can play. Key trends driving its adoption include increasing competition and reduced reimbursements, along with the focus on patient experience and improving access to care for patients.

Health system CIOs in the focus group who are developing patient engagement applications expressed that they are actively looking at monetizing the capabilities by offering them to peer systems that are yet to make the investments. According to one CIO, “I think any digital transformation strategy has to have an affordability component because reimbursement rates are going down and we have to work smarter.”

What’s more, the majority (36 percent) of the CIOs in the focus group indicated that their organizations do not have a digital function, and by default, the digital function sits with the CIO. According to one specific CIO, “We don’t really have that (digital) function here. But if our board was asked who it would fall under, I could see them all saying it would be part of the CIO’s role.”

According to Padmanabhan, “It also comes down to whether health systems can afford to have another senior executive in a CDO role, given the current state of digital maturity and the lack of interest in creating even more C-level roles. Our focus group of CIOs believe most health systems are not large enough for two separate roles. This is in sharp contrast to other sectors such as banking, that have had full-time CDO roles for a while.”

Further, 46 percent of responding CIOs say that their enterprise digital strategy is their EHR system, closely followed by those that build or buy point solutions based on need (45 percent). Less than 9 percent are implementing an enterprise platform in partnership with a major technology firm.

“Based on these figures, it becomes clear that there is no single vendor platform that meets all needs and today, health systems must build their own stacks,” added Padmanabhan.