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The current state of healthcare digital transformation

Digital transformation in healthcare, though a reality, does not have any clear definitions. Damo Consulting’s research suggests there is a set of common themes that healthcare executives refer to when discussing digital transformation. In this paper, we discuss the results of research by Damo Consulting on the current state of digital health and digital transformation, and the findings from focus group discussions with nearly 40 CIOs and senior health IT leaders who are members of the College of Health Information Management Executives (CHIME).

Healthcare digital transformation is in early stages of maturity relative to other sectors

“In our service area, we’re serving four generations. For the older generations, digital transformation isn’t that big of a deal. They still want to make a phone call, talk to a person, take a paper for their after-visit summary. So, it depends on the customer how they want to use digital and we have a variety of challenges serving four generations.”

Health System CIO

Digital transformation efforts in healthcare correspond with one of the four models described in the visual below:

Digital Transformation Models

Today, most health 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 healthcare 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 future. Being able to manage care in this context is a huge driver to go beyond incremental initiatives and develop an enterprise digital healthcare roadmap.

Healthcare Digital Transformation: A primer for healthcare executives and technology solution providers

Digital transformation is about reimagining business processes and customer experiences

“I think any digital transformation has to have an affordability component because all the reimbursement rates are going down. We have to work smarter because we’re not getting as much money as we used to.”

Health System CIO

Digital transformation is about reimagining business processes and customer experiences

Most of the CIOs in our focus group indicated that digital transformation in healthcare is about using digital technologies to reimagine business processes and customer experiences. For many, this means improving access for patients so they can get in and receive care when they need it. Leaders also acknowledge the distinction between improving and reimagining processes which allows for more innovative thinking around existing processes.

The CIO is also the Chief Digital Officer – for now

“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 role.”

Health System CIO

What health systems must do to accelerate digital transformation

Most CIOs who participated in our focus group indicated that their healthcare organizations do not have a digital function. By default, the digital function sits with the CIO in most healthcare organizations even if it is not formally designated. Some also wonder if the term CDO is another “flavor of the month” title, like Chief Integration Officer. It also comes down to whether health systems can afford to have another senior executive in a CDO role, given the current state of maturity of digital transformation in healthcare and the lack of appetite to create additional C-level roles in health systems. Our focus group CIOs believe most health systems systems. Our focus group CIOs believe most health systems are not large enough for two separate roles –  CIO and CDO. This is in sharp contrast to other sectors such as banking who have had full-time CDO roles for a while.

Digital transformation budgets are part of IT budgets, but creative collaboration is driving digital innovation

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

Health System CIO

Digital budgets are part of IT budgets, but creative collaboration is driving digital innovation

To many CIOs, it does not matter what budgetary buckets digital comes out of. At the end of the day, the important question is whether the organization is moving towards digital innovation, and not so much whose budget it is in. However, there are interesting models that health systems are adopting to fund digital investments. One organization had identified marketing and IT as the two areas of service lines or departments that work together on digital. When it came to funding specific projects, in one case it came out of the capital budget of IT and in another case it came out of marketing and new business development.

Most health systems do not have an enterprise digital platform strategy today

“We just can’t seem to always get our act together or agree that we’re kind of marching in the same direction. There’s so many different initiatives. We have a hard time prioritizing or sticking with anything.”

Health System CIO

Most health systems do not have an enterprise digital platform strategy today

Based on the current state of digital transformation in health systems, it is logical that EHR systems would be seen as the dominant strategy from a digital platform standpoint. Health systems are also more inclined to build or buy digital health point solutions based on needs today. However, several health systems are also building out their enterprise digital platform stacks in a deliberate and thoughtful way.

Organizational readiness determines the pace of digital transformation

“In many cases we do have major parts of the organization that just aren’t ready or really clinging to the old ways or will fight us all the way. And that ends up being the majority of the work. The technology is easy. And either you have the budget, or you don’t. But it really is getting the mindsets and the culture moving in the direction you need to move.”

Health System CIO

CIOs do not see digital transformation as a distinct or discrete function or activity. Often, digital transformation is not necessarily a big strategic objective, a.k.a. digital transformation of the entire organization, but looking at specific needs at a given time and baking digital innovation into the initiatives. A related issue is that of organizational culture and the discipline required to gain agreement on different initiatives, prioritizing, and sticking with them.

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