EHR implementations in many healthcare organizations have taken a toll on the community, leadership ranks, staff, and not to mention on the financials. Any investment made, particularly of this magnitude, should be expected to deliver benefits to the organization, be it be in the form of financial ROI, as well as improvement in mission related KPIs, like quality indicators. The reality for many healthcare organizations, however, looks much different.
- The Athens Regional Health Cerner implementation has led to physicians dropping their staff privileges, and the CEO subsequently resigning in the aftermath
- MD Anderson saw a 56.6% drop in income, a $160.5M decrease, related to their EPIC implementation
- Brigham and Women’s hospital had its first budget shortfall in 15 years in part due to an EHR implementation, and the implementation had a $27M cost overrun
- Increased operating expenses due to the EPIC implementation contributed to a $5.6M operating loss for Lahey Hospital and Medical Center
- According to Southcoast Health CEO Keith Hovan, financial challenges of the system are due to higher-than-expected operating expenses largely related to the system’s EPIC implementation
- South Shore Health System had to file for Chapter 11 bankruptcy protection in large part due to a failed EMR and billing system conversion
Interestingly, there is a key parallel to historic events in other industries having gone through significant technological change. The good news is that the risk can be mitigated and large gains in the way of cost reduction and quality improvement can be enabled through the EHR implementation.
Michael Hammer launched the re-engineering wave of the 1990s. It was a time of heavy investments in new technologies, client server technology and new ERP systems, with lackluster results for the implementing organizations. Very much like EHR implementations in healthcare today, the new technology was not delivering to the promised results and often caused financial distress and more. The issue was that systems were overlaid onto old workflows, antiquated organizational structures, and governance models of command and control. The term “paving the cow paths” was minted to describe the fundamental problem arising from implementing new technologies without fundamentally redesigning the business processes, and impacting the cultural dimensions required to perform at a new level.
The new technology, with its capability, presented the opportunity to redesign how business needed to be done and to ultimately harness the human capital to its full ability. However, a mind set of automation and implementation of best practices, the best practices of yesterday, are simply a guarantee for high failure risk and disappointment. Re-engineering challenges the rules and reinvents the fabric of how business is done to deliver a step function improvement in performance.
A key component to success is that this is done with the resources residing in the organization, not in isolation based purely on consulting recommendations. The re-engineered way of doing business must be culturally owned by the organization, and this is only achievable via high levels of engagement. Since the re-engineering wave of the 1990s, we have also learned much more about these cultural and engagement dimensions, using existing resources in a way to not only reduce implementation costs, but achieve ownership and business literacy at all levels of the organization. This learning can now be overlaid, and the re-engineering framework of the 1990s is enhanced to be even more powerful, and delivering even higher levels of improvement than ever before.
Some leading healthcare organizations are utilizing the enhanced re-engineering framework as an enabler for the EHR implementation, while others, being in the unfortunate situation of having implemented along traditional pathways are choosing to unlock their organizational capabilities post implementation. In summary, IT solutions are always a means to an end, and keeping the eye on the ultimate prize of delivering high quality care at low cost requires creating a high performance organization across all dimensions. IT implementations conducted in isolation will continue to disappoint.