D'Arcy Gue

Observing and Measuring Value in Health Care IT

July 15, 2014

Healthcare IT 6 Minute Read

Last week, we talked in depth about value, and how the pressures on hospitals and IT today require a relentless focus on delivered value. Specifically, we discussed the importance of a focus on information technology activities that have measurable business impact. These are the projects that improve the quality of care and/or reduce the hospital’s costs to deliver patient care and other services.

In future installments in this series, we will discuss specific areas such as — costs, systems, services, and alignment of IT to the business needs, and present specific strategies to plan for and deliver value to the organization. Before we do that, however, it’s important to first understand how to measure value and the levels at which value can be provided.

Measuring Value

Patient outcomes are key to the understanding of value. Health status achieved, time to recovery, long term complications of disease, and complications of treatment all play important roles in measuring value from the patient perspective. However, assessing the total picture of patient outcomes isn’t feasible in most cases. Particularly when valuing an IT project. It’s generally enough to target one or two specific metrics that are most relevant to the facility and calculate the total impact on costs or quality of care from there.

Here’s an example of a way to illustrate value related to patient outcomes: 

Hospital A has determined a goal — to increase the number of admissions from community based providers. One strategy to achieve this is to undertake a project to create a clinical portal that will allow community physicians to directly access patient labs and health records from their offices. This connectivity would serve as a benefit to the community providers, allowing them to refer their patients to the facility. If the project generates two new patient stays per month (24/year) at an average of $12,000 per stay, the hospital will see an additional $288,000 in annual revenue. Another measure that could be considered when assessing derived value is the savings from decreased volumes of medical records requests from the physicians.

Project Planning

Best practices for IT project portfolio management require that the value of a potential project can be estimated prior to making the decision to begin work on the project. Whenever there are more project requests than resources – which is pretty much always – the value of a project to the key business objectives is one of the most critical components of the decision making process. Only mandatory projects like regulatory upgrades and end-of-life system replacements should come ahead of the highest value projects in the queue.

It is critically important that your IT department evaluate a more informed estimate of each and every project’s value after the project is complete. There are at least three reasons for doing this:

  1. The information gathered can be used to refine project and value measurement methodologies.
  2. The project may have produced unexpected values and consequences.  In the example we provided above, the clinical portal might be shown to decrease medical errors.
  3. Evidence that the past projects have produced value can serve as a key driver for getting funding for new projects

The Value Model

The graphic below represents a value added approach to providing IT services. We use this model internally, to capture and demonstrate value for our clients.

value pyramid

We believe that there are three increasing levels of value that can be provided as the result of any IT project or service (such as service desk):

1. Expected Value

Expected value is the most basic level of value, and represents a project or service that does exactly what it should. This work is the basic “blocking and tackling” of projects, IT operations, and IT services. It represents 95% of the work but provides perhaps 5% of the value.

One example of this might be found in the implementation of an electronic medical record to attain Meaningful Use / MIPS. The expected value of the project is a functioning medical record that allows you to meet the requirements to attest to Meaningful Use / MIPS.

Another example could be found in the service desk. The expected value of a service desk is that the phones get answered and users get their problems resolved. You could further define this with service level agreements that specify metrics like First Call Resolution percentage, Time to Answer, and Call Abandonment. See our service desk report for details.

2. Leveraged Value

This is the value obtained through relationships with outside organizations like Phoenix or your IT software vendors. This focuses on the value provided by the relationship. This might include the provision of best practices by your software vendor, and insight into how other clients have addressed a challenge you now face.  A membership in an outside organization such as the Project Management Institute or the Help Desk Institute would also qualify here.

Another example is the related to medical record systems. The guidance provided by your vendor regarding solutions for recording and addressing specific documentation challenges is leveraged value.

In a service desk scenario, leveraged value could be provided by a third-party service desk vendor like Phoenix. Because a vendor with clients in many time zones has the ability to accommodate a varying load of calls, they can provide reduced costs to staff the busiest times of day and slowest hours of the day.

3. Business Value

The highest level of value that IT activities can produce is business value. This is operational value – situations where the system or service provides specific benefits targeted at business-critical goals.

In our ongoing example of an electronic medical record, the opportunities to produce business value abound. Clinical quality oriented decision support rules, such as one that identifies patients at risk for a blood clot, and triggers the clinician to take prophylactic measures to avoid the risk, improves both the quality and cost of care.

Service desk also provides business value. There are multiple interactions with hospital operations and costs. A well designed service desk, for example, doesn’t just answer individual calls (the expected value) but also proactively analyzes trends to identify potential problems before they become crises. This improves system quality for the end users, saving frustrations, time, and money.

Where do you find business value? Typically, it is in the intersection of processes, knowledgeable users, knowledgeable IT staff, solid reliable IT systems, and strategic business needs. The most effective process for identifying and creating lasting business value is optimization of your current systems and processes.

Screen Shot 2014-07-16 at 9.29.11 AM

Future articles in this series will focus on various aspects of optimization. If you are interested in knowing more about how Phoenix can help you optimize your IT functions, request a consultation. 

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