The Emperor’s New Clothes: Aligning Health IT Investments with Business Strategy

Bill Reid
Bill Reid

By Bill Reid, senior vice president of product, SCI Solutions.

Information Technology holds the promise to spur innovation in the healthcare industry. However, if IT investment is focused on simply meeting mandates and not on driving a specific differentiated business objective, then it begins to look a lot like what we are seeing today – extensive capital and resources spent on implementing and supporting IT initiatives that, so far, have provided little to no financial returns. But this does not mean that the promise of IT is empty. Instead, it calls attention to the need to look at IT not as a way to “check the box” and either collect federal incentive dollars or avoid eventual penalties, but rather as a key tool to remain competitive in the market as well as provide quality care.

In light of recent federal mandates under meaningful use regarding the implementation of electronic health records, many EHR vendors are now propagating the idea that their software is not only compliant with regulatory statutes, but is also a singular comprehensive and strategic IT investment. However, this is just half the truth.

Under the pressures of time and expiring incentives, many healthcare executives have leapt after EHR investments without understanding the real strategic reasons for making IT investments for their enterprises. Otherwise savvy and well-meaning healthcare leaders are allowing EHR vendors to convince them that an EHR is the answer to their business needs and will provide them with an edge over competitors in the market. In reality, EHRs fail to provide a competitive advantage once most or all hospitals in a geographic market have implemented the tool. How can an organization claim it is superior in IT if it is operating the same systems as every other provider in the market? EHRs must be approached as a one-time operational input or business asset similar to hospital equipment and not the core component of a broader IT solution needed to support a sustainable business strategy. As with most investments, it is what you do with it which matters, not that you simply own it.

This is not to say that EHRs are not necessary, but executives must recognize that they remain a small component of the IT infrastructure that hospitals require in order to prosper and drive revenue back to the health system. EHRs are inherently limited in their promise to grow a business as they are only designed to digitize manual processes within the four walls of the hospital system. They do nothing to capture potential outpatient revenue or support a referral destination strategy.

This widespread approach to EHR adoption is reminiscent of the tale “The Emperor’s New Clothes,” a short story written by Danish author Hans Christian Andersen, which provides an account of a vain emperor and the collective denial of an obvious truth. In the tale, the Emperor is so obsessed with wearing the finest garments that he is seduced into allowing two swindlers to weave him a wardrobe of nonexistent clothing, which they claim can only be viewed by those who are fit for their posts. When the Emperor parades through the town wearing nothing, no one, including the Emperor himself, can actually see the clothing, yet the pretense continues. This metaphor rings true today as we revisit the value of EHRs; the government and the healthcare community believe or pretend to believe in the worth and value of the technology – or are simply afraid to point out the obvious truth.

That EHRs have failed to deliver on their promises, and worse, are bleeding health systems of much-needed working capital, is a truth that the industry must begin to recognize and acknowledge.

Executives who have invested in EHRs hoping to derive investment returns above their cost of capital must first come to grips with this truth. EHRs are designed to solve specific problems within a singular health system. However, nearly all incremental revenue originates from the broader hospital network and care communities.

Recognizing that the industry’s expectations of EHRs exceed what they were actually designed to do is simply the first step. Today, the survival of health systems depends on the extent to which hospital leaders can deploy IT solutions that go beyond the four walls of the hospital to better connect with community trading partners. Developing a business strategy, supported by agile, cloud-based and cost-effective IT solutions that prioritize outpatient revenue growth will determine which health systems remain profitable in the long run.


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