CIOs Perspective of Technology adoption - Should Hospitals Buy, Build or Partner?

Niranjan K Ramakrishnan, Group CIO, Kauvery Hospital Headquartered in Trichy, Tamil Nadu, Kauvery Hospital is a global multispeciality hospital offering a broad spectrum of diagnostics and remedial care services in the areas of heart diseases, transplantation, vascular, and neurosciences medicine.

Role of a proficient Healthcare CIO is to build a stable governance and executive team within the healthcare organizations, reduce the dependency of individuals and implement an integrated IT solution considering the total cost of ownership meeting the corporate objectives. In defining the automation Strategy, Investor’s underlying question to a HIT Consultant or CIO is whether to buy, build, buy or partner?

Popular 'partnership' Model:
The most popular option is to partner with technology solution providers and make them responsible to deliver the automation deliverables. Those who are responsible and accountable for the IT strategy in an organization may find the partnership /outsourcing as the easiest and fastest option to achieve their goals.

• Known costs: Less surprises in terms of budget overshoot.
• Defined timelines: Time bound contracts and deliverables
• Change management: Measured & controlled changes
• Grow together: Especially midsize & start up partners.
• Right talents: Qualified domain experts with innovation are fairly smaller in size for the organizations to acquire and retain.
• Flexibility: Flexibility to change the scope based on the business needs.

Partnering is win- win when the business is steadily growing; OPEX over CAPEX is preferred and overall less risk proposal.

Industry is Heading Towards Build & Buy; But Why?
Healthcare organizations start looking at Buy and Build options, when

• Health IT is close to their core business
• At the cost of partnership, if ownership is possible.
• Confidence on the in house expertise to build what is required for the organization’s automation
• Probably consider a long term and permanent solution.

Buying a readymade solution enables quick go to market and better utilization of the subject matter expert’s valuable time in growing the organization

At this stage, organization is equally well placed between build and buy. When time to go to market is not a major issue, building is preferred over buy. Between buy and build there are few critical questions that cause the decision making process bit tougher which are,

• Is it really the core business?
• Is the organization really good enough to attempt?
• Is it just for internal use or bigger commercial interest?
• How long is it going to take it to build?
• Are there enough skills on board to deliver quality solutions?

Careful review of the history does not favor in house building of HIT solutions especially with the HIT business intent.

Homework to Decide Between Build, Buy or Partner:
Proposed steps that prepare an organization to decide the right course are as follows:

• Work on a detailed business case and get it validated with industry experts
• Perform on systematic due diligence on the industry, the people and business potential.
• Document clearly the assumptions, identified risks and anticipated challenges.
• Make it a time bound evaluation process and limit the exercise to specific number of iterations.
• Success of Healthcare IT is to be measured by the valued of investment not by the return on the investment.
• Understand the difference between upfront investment over the Total Cost of ownership and it has to be at least for the period of five calendar years.
• Build a culture of Information Technology within the environment which is totally different from the Healthcare institutions function.

Conclusion: Building in-house empowers the organization to align the IT initiatives with the organization growth strategy. Unique, cost effective, better controlled, easy access to meet the organization’s user needs is generally few obvious advantages.

Buying a readymade solution enables quick go to market, better utilization of the subject matter expert’s valuable time in growing the organization instead of sharing the skills of vendor dominated HIT market in India. Once bought, with effective knowledge transfer maintaining the right skills with efficient change management control board is extremely important.

Partnering with HIT vendors is the most prevalent approach in the most fragmented, isolated and decentralized healthcare industry. Risk mitigated, fairly less capital investment and value based on spending on IT are achievable. Exit option or disband the IT investment is nearly effective in partnership which is a probably not an option in build and buy decision.

Exercising the continuous innovation, retaining the qualified skills, high quality change management board and most importantly the visionary culture qualifies an organization’s decision to build over buy or partner.