The Importance of Revisiting roi

Abstract

HAVING JUST READ the lead articles by Skinner and by Solovoy and Chaiken for this issue of Frontiers, I am preparing to update the return on investment (ROi) analysis presented periodically to the Memorial Health governing board. This report discusses a number of information technology (IT) projects implemented during the past 18 months. You could say that commenting on these articles is appropriate for the world that I am currently living in. THE MYTH OF TECHNOLOGY'S VALUE I could not agree more with Skinner that IT today is often thought of as a magic pill or automatic solution to many of the business process problems that healthcare faces. Everything from expediting payment of accounts on a quick, real-time basis to making sure that medications are administered properly to noting medication interactions as the physician is writing the order may be improved by IT. However, the decision to implement technology to solve problems in healthcare is complex; when determining ROIs, an organization must consider how technology is tied to the strategic objectives of the organization. At Memorial Health, the technology vision ties closely with the overall business objectives of the organization. As chief information officer, I do not propose individual technology solutions. The department heads and administrators create their individual business plans, and they, with the assistance of the information services department, are responsible for determining whether a technology tool will help them achieve their goals and objectives. The information services department acts essentially as a liaison and research arm to let the business leaders know what technologies are available and the capabilities of those technologies. Any ROI assessment for technology implementation is tied to the overall RO I calculation done on the specific business project. So, similar to Skinner's comments that IT is basically a business tool once you get past all the hype and mysticism, one school of thought says that it should be thought of as just a part of a project, much as building materials would be when building a new emergency department. However, bigger issues come into play when determining what metrics to use for measuring return on investment. NEW METRICS FOR ROI Ten years ago, measuring the ROI for IT projects was pretty easy, as most of the projects were finance based in nature. You could determine whether the number of days in accounts receivable was reduced, whether submitting claims electronically resulted in a lower denial rate, or whether cash flow increased. The metrics today for most IT projects remain the same in the financial arena, but as we move to a more clinically oriented world, many of the metrics must change. As both lead articles stated, ROI measurements on clinical projects are quality based in nature. These include: * reduction of medical errors, * overall reduction in the number of sentinel events, * number of alerts generated at the point of order entry. These quality measures, for the most part on the clinical side of IT, are not tracked today as closely and accurately as are the financial measurements such as accounts receivable days and cash flow. The Institute of Medicine (2ooo) report outlining preventable medical errors and the Leapfrog Group's push for quality have been widely discussed. While these efforts have been catalysts for quality improvement in healthcare, ultimately, the consumer will drive healthcare to a more quality-focused practice in everyday business. I concur with Skinner's comments on this issue comparing other industries to healthcare. In the 1970s the auto industry did not pay much attention to quality until foreign automakers entered the market with a higher-quality product. The American auto industry was ultimately driven by the buying patterns of the consumers as they moved to a higher-quality, same-cost product. …