ehealth’s elusive return on investment

by Hans on 2008/09/02

Government Health IT published an interesting article titled, "The quest for value". The author, Nancy Ferris, reports on some of the challenges, difficulties, and frustrations with trying to demonstrate a return on investment (ROI) or tangible cost savings when using information technologies within health care settings.

My own research and experience in this area has me believe that the main assertion of the article is more or less true – that the link to tangible, measurable results (i.e., ROI) is difficult. I would add that the main reason for this difficulty is because there is no direct causal link between use of IT in health care and outcomes, or at the very least, the link is so weak, that other factors drown out the benefits. A report released by the EU (www.financing-ehealth.eu) titled "Conceptual framework, healthcare and eHealth investment context and challenges" presents some similar findings that the benefits are only realized in the future (see the latter parts of the report).

Personally, I think this concept of trying to identify a cost-savings or return on investment in health care is a bit absurd. Even in industry, trying to calculate return on investment regarding the use of IT is a challenge. I can’t remember the exact quotation, but a CEO of Fedex (or UPS) once indicated that even though they can’t completely identify the ROI of using IT, they said that they can’t NOT use IT and said that it’s just the cost of doing business.

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{ 3 comments }

Patrick Pichette March 7, 2011 at 3:12 pm

Great post Hans. The CEO of FedEx is right, and he has no choice to leverage IT to keep up with the competition. Without IT, he would be crushed. There isn’t this sense of urgency in healthcare to leverage technology, even though there are countless examples of how IT has helped other industries find cost savings and deliver a better level of service.

We need to shift our thinking around ROI in health IT. It may be difficult to demonstrate ROI during the planning phase, but if we become proactive and begin to implement more IT health initiatives (and I am not talking about mammoth projects like a national EHR), we will quickly learn more about the ROI issue.

Southlake Regional Health Centre (in Newmarket) recently confirmed several cost and time efficiencies (http://bit.ly/egwb9b) that were gained by leveraging patient self-service technologies (disclaimer: I work with the company that implemented the technology). They used progressive planning, took the plunge, and made significant progress – not to mention getting some clarity on the ROI issue.

Hans March 7, 2011 at 3:21 pm

Hi Patrick,

Thanks for the information about Southlake Regional Health Centre. It’s always great to have examples of successes. In this case, I think you point out that IT was not the solution (by itself). There was planning and probably did some important process improvement activities to maximize any investments they made.

If the findings of the AMA’s “Most Wired” survey is any indication, technology is only an extension of an organization’s leadership capabilities. The Most Wired survey shows that the best managed organizations tend to get the most out of their IT investments. I’ve always believed that IT (be it health care or otherwise) is an accelerator: if you are a well run organization, IT can help take you to the next level of productivity and related success. If you are a poorly run organization, no amount of IT will solve your issues, and in fact my accelerate you into a “downward spiral”.

Hans.

Patrick Pichette March 7, 2011 at 3:33 pm

You are correct, and this is a very important point. Technology is not a magic bullet, there needs to be process improvement (or redesign) activities, and change management cannot be an after-thought. The staff needs to buy-in, and it starts at the top with the leadership. This is why so many IT projects (including EMR implementations) fail. You can’t just plug-in the technology and watch it print money. So, I guess what we are saying is that the ROI needs to be measured against process changes, as oppose to simply isolating the IT expense.

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