I was speaking with the head of procurement for a large healthcare facility last month who lamented the $1M+ they spend annually on just pager service and fax machine lines. Never mind the 500 physical servers and all the SANs IT still supports. But bureaucracy and politics consistently undermine his efforts to eliminate anachronistic waste.
The regulations and complexity surrounding healthcare, especially in the U.S., provide a barrier to entry making it largely impervious to the demand for technological efficiency that is reshaping most industries. The AEI chart below shows that healthcare costs in the U.S. have far outpaced the inflation rate, as well as all of the other services, products and wages tracked. As reported by CNN, Warren Buffet says that the U.S. spends 18% of GDP on health care – 60% more than other developed countries.
The Times They are a Changin’
CNBC just reported that Apple is launching AC Wellness, a group of primary health clinics for its employees. While this initiative is quite limited in scope, it reinforces a similar move by Amazon whose venture with JP Morgan and Berkshire Hathaway will not only service their combined 840,000 employees, but according to Warren Buffet, eventually other employees as well.
In order to avoid disruption from hi-tech competitors, healthcare must disrupt itself. On the IT side of the business, this means cutting through legacy complacency and deploying far more efficient on-prem and public cloud-based infrastructure solutions. But where to start?
I recommend utilizing financial modeling as a way for a health care IT organization to get out of the day-to-day weeds and think about the big picture. A good TCO or ROI (depending upon the situation) analysis can help immensely in determining a strategic direction for infrastructure that not only optimizes value in relation to spend, but which also increases clinical worker productivity. A thorough analysis also evaluates the IT strategy in terms of how it can best support the overall mission of the organization including delivering exceptional patient care.
I will be at HIMSS next week in Las Vegas along with a group of healthcare experts from Nutanix. Please visit our booth (#4865). And I am happy to meet with attendees looking to discuss how financial modeling can benefit their organizations. You can reach me at email@example.com or on Twitter @ROIdude.