How can you ensure the dollars you’re investing drive positive outcomes for your private health practice, clinic, or hospital?
That’s IT’s million-dollar question. Whether you’re a private health CFO or investor looking to understand the impact of your investments–or an IT Manager aiming to proactively prove ROI to stand up a project–your ability to move projects forward often comes down to that all-important bottom-line number.
Yet, as most of us understand in practice, ROI doesn’t tell the whole story. IT investments can drive important benefits for health practices that can’t be measured in dollars and cents. To see the difference–and to understand how to communicate the full value of your IT projects–we’ll look at two ways to prove ROI:
Measuring Tangible ROI in IT
Generally speaking, ROI refers to the ratio of net profit over the total cost of an investment. In private health, however, IT isn’t always considered a profit centre in its own right. As a result, tangible ROI in this IT context can be better understood as either a reduction in cost or a measurable improvement in capabilities, relative to the investment.
When practices, clinics, and hospitals are in a rapid growth phase, well-designed, scalable IT solutions should allow their per-user costs to decrease while their overall functionality increases.
That’s exactly what happened at one private hospital group that partnered with Daraco. The group was growing quickly via acquisitions fuelled by private equity. Yet even as their overall costs increased due to higher head-count, their per-user costs went down by 33% while the number of features implemented went up.
The concept of ‘shelfware’ is also important to consider here. According to Gartner, “At any point in time, IT operations may be running with 25% plus of software going unused”. If your practice has existing technology it isn’t fully utilising, measurable ROI can often be achieved quickly by fully implementing its features, compared to investing in new solutions.
The Impact of Intangible ROI on IT Investments
Being able to prove a tangible ROI on IT is important, to ensure responsible spending, to increase leadership buy-in for needed investments, and as a key market differentiator that establishes a competitive edge. But even a quick look at the examples above makes it clear that traditional definitions of ROI can’t capture the full benefits of technology improvements.
For example, consider how the following benefits may contribute to achieving greater market share. These intangible factors are clearly as impactful as more measurable figures–even though it’s difficult to assign a dollar amount to them.
- Improvement in patient health outcomes: Investing in technology improves everything from the way your assets are utilised to the risk of human error from manual data entry and other tasks–all of which have the potential to improve patient health outcomes.
- Improvement in patient satisfaction: In a similar way, technology can help to provide a more modern, digitally driven patient experience. Happier patients are less likely to seek care elsewhere or give the kinds of negative reviews and referrals that could cost your practice business.
- Improvement in staff morale: Replacing legacy technology saves time for care team members and can help minimise their frustration. As a result, practices may be able to attract better talent, reduce staff turnover, and free up more time for team members to focus on patient care.
- Consolidation of IT service providers: Understandably, managing one provider takes less time than managing 4-5 individual vendors. Narrowing your provider pool may also result in a tangible ROI if doing so removes the costs associated with vendors who are providing overlapping services or capabilities.
- Increased stability and security of systems: Investing in technology that stabilises your systems may minimise outages that both disrupt patient care and cost money to resolve. At the same time, improving your security may reduce your risk of costly, reputation-damaging data breaches–something no private health practice wants to deal with!
Why is ROI So Hard to Achieve in Private Health IT?
Despite these recommendations, ROI–whether tangible or intangible–remains deceptively difficult to measure in practice. This is due, in part, to technology’s complexity and to the interrelated nature of the systems and organisations in which it’s used.
That said, our experience working closely with private health facilities suggests that there’s more going on when it comes to both the understanding and measurement of ROI. Consider the following challenges:
- A mindset that’s focused on tasks–not outcomes. It’s not uncommon for our team to observe situations where opportunities for automation or process optimisation are missed, simply because no one is looking for them.
- A focusing on achieving the lowest possible cost. If you’re focused on cutting costs-at all costs- that likely means you aren’t comparing apples to apples (or masks to masks, in the case of private health). Take comparing cloud costs to those associated with on-premise infrastructure. On-prem is almost always going to look cheaper on paper, but if you aren’t accounting for its flexibility and versatility, the analysis will be incomplete.
- A lack of connection between an organisation’s business direction and its strategic vision for the role of technology. Without an experienced stakeholder (internal or external) who can drive conversations on IT investment and ROI, private health practices, clinics, and hospitals can miss important opportunities to measure or increase ROI.
For assistance navigating these and other challenges, reach out to the expert team at Daraco. Our Health Solutions practice regularly supports private health groups to not just uplift their technology and security, but to maximise the ROI of their investments as well.