Healthcare executives need to consider several factors when seeking a merger.
When merging two healthcare organizations together, leaders typically focus on integrating operations, building a cohesive culture, and addressing key strategic issues. Often, healthcare IT budgets can be overtaken by more pressing issues. Unfortunately, ignoring this critical component can lead to adverse downstream impacts, such as paying more to address long-standing healthcare IT barriers.
For example, when a deal is finalized, the combined healthcare organization can inherit legacy applications, which often consist of a portfolio of obsolete or underutilized products. By engaging an IT consultant to decommission these applications, organizations can realize real cost savings and avoid potential security breaches. This strategic process is called application rationalization. The cost savings achieved in terms of hard savings and cost avoidance free up hospitals and health systems to make additional investments, which is timely for an industry that is often underfunded for its IT infrastructure.
According to a recent industry study, U.S. healthcare organizations spend 2.5% to 2.8% of their total revenue on IT and related systems, which is lower than the global healthcare average of 3.5%. also, Report Global spending on healthcare IT is only expected to increase over the next few years, surpassing $200 billion by 2025.
The future will see more investment in IT, and the Chief Information Officer (CIO) is at the heart of these essential processes. After a massive healthcare M&A, they have a significant say in which technologies are integrated and which are left behind. However, their work does not exist in a vacuum and requires adequate funding, support from other leaders in the organization, and a proactive mindset to be successful.
Here are three ways healthcare IT leaders can ensure technology doesn’t get lost in the larger conversation about healthcare consolidation.
1. Think long-term, not short-term
Yes, M&A opportunities may bring significant new revenue, geographic areas or service lines to the health system, but all of these ultimately depend on stable and scalable IT applications.
From a strategic planning perspective, organizations need to build their IT investments and prioritize tasks accordingly, rather than cutting IT budgets to save money.
Without a robust, efficient IT infrastructure, even the most appropriate merger commitments can be revoked due to unresolved vulnerabilities that snowball into more serious cost issues. As Benjamin Franklin once said, “Don’t put off until tomorrow what you can do today.”
In addition, IT leaders can appeal to the short-term perspective of healthcare executives and highlight the impact of technology on the newly integrated organization. Executing post-merger IT integration is not as simple as snapping your fingers; success takes time, patience, and communication.
Leaders need to consider the long-term impact of their investments and not be blinded by the short-term, instant gratification of deals. Instead of focusing on immediate ROI, leaders should examine their existing technology for potential risks and redundancies, assess system performance and establish forward-looking goals and benchmarks.
2. Get high-level support
Healthcare IT leaders are the biggest advocates for an organization’s IT infrastructure. However, they cannot make a case alone and need team support to support the budget.
The support of the entire C-suite, including leaders overseeing finances, clinical staff and operations, goes a long way in the interests of the business.
Conversations among organizational stakeholders must shift from a siloed perspective. The state of the industry — with all major digital transformations — does not allow hospital leaders to consider their IT infrastructure unimportant to the overall clinical, operational, and financial success of the business.
In addition to healthcare IT leaders, it is important that other executives understand and support adequate IT budget resources. Every leader should be able to illustrate how each business area will benefit from the appropriate technology.
Furthermore, similar to how executives lay the foundation for a sustainable and efficient culture, the same approach can be taken to the technologies that drive new services and products. If the CEO has considerable influence over the need for best-in-class IT operations, others will listen and the organization will benefit.
3. Addressing IT staffing challenges with healthcare M&A expert
Every year, there is a fierce competition among the various parts of the health system to get enough money from the budget. Like many things, the Covid-19 pandemic will only further complicate this dynamic.
It’s no secret that hospitals and health systems are still suffering financial pain and deteriorating bottom lines as elective surgeries are widely canceled during the pandemic.
according to January 2022 Kaufman Hall National Hospital Quick ReportIn December 2021, hospital margins increased compared to previous months as Omicron variants surged nationwide and patient numbers increased. That followed two straight months of lower margins, a sign of challenges as the pandemic persists.
To do this, vendor executives need to put their money where they fund healthcare IT operations. Even hospitals and health systems that have set aside a significant portion of their budgets for IT will need to do more in the future.
These budgets require healthy and capable teams, which require appropriate benefits. An experienced healthcare IT consulting provider conducts comprehensive IT due diligence, integrated planning and risk management across IT systems to unlock cost savings and IT value optimization options. More money will go to the IT operating model in the future, so it’s better to act quickly now than to be trapped by competitors later.
The most rewarding takeaway for hospital leaders is embracing a proactive mindset. The more a supplier organization can use technology to assess its processes and optimize its performance, the better it is positioned for the future.
Photo: ipopba, Getty Images
