INNOVATION IN HEALTHCARE Are IT Budget Restraints Holding

INNOVATION IN HEALTHCARE Are IT Budget Restraints Holding IT Innovation hostage? Strategies to Reduce OPEX to help fund IT Initiatives Presented by: TJ Bauer

WHAT IS INNOVATION? New Idea. New Device. New Method.

Innovation is often viewed as the application of better solutions that meet new requirements, or existing market needs accomplished through more effective products, processes, services & technologies.

Innovation changes the way we do business The largest taxi company has no cars The largest hotel has no beds The largest news provider has no writers The largest financial companies have no banks

Innovation changes the way we communicate 4, 000 Search Queries 48, 000 Applications Downloaded Every Minute of Everyday 72 Hours of Video Uploads 260, 000 User Shared Content 277, 000 Tweets 26, 380 Reviews Posted

INNOVATION & HEALTH IT

The Cost Of Implementation $1. 2 Billion (2015 $1 Billion plus ? ? (2015) $750 Million (2014) $4 Billion (last 9 years) Source: Modern Healthcare

The Impact Of Implementation Income down 56% Income down 60% Income down 31% Source: Becker’s CFO Report May 2016

IT BUDGET.

IT BUDGET: Components PEOPLE • SOFTWARE • HARDWARE • EXTERNAL IT

“The current state of my budget is 75% on run operations and 25% innovation; we have to make a shift toward innovation to meet the demands of health care reform. I’m looking at anything (without risk) to reduce Op Ex and maximize my IT investments. ” Michael Ryan, VP of IT, Mayo Clinic Health IT Symposium

STRATEGIES TO REDUCING OPEX

Ask The Experts Dee Cantrell HIT Consultant, former CIO Emory Health Michael Sheehan Health IT Advisor, former Regional CIO Peace. Health Wes Wright CTO Sutter Health

Labor

“If hospitals must implement cost-cutting measures, labor costs are the first target” Randy Carpenter, SVP for Stoltenberg Consulting Becker's IT & CIO Review May 2016 “St. Mary officials said Providence decided to eliminate the executive role as it restructures operations to reduce expenses” Union Bulletin in Walla, WA Oct. 2016

Outsourcing Labor In a report by Black. Book Research… 73% of surveyed health IT leaders have plans to Outsource IT labor next year. Two Primary Motivators: ► ► Immediate access to well-trained staff Return-on-Investment Deliotte launched consulting branch – Evergreen - To focus on reducing labor spend UCSF Medical Center outsources to HCL

What can you do? ► ► “Adopt Best Practices (ITIL) & work to improve culture through process improvements (LEAN)” Dee Cantrell Provide Additional Training ONC – Health IT Workforce Development Program

Strategy 2: Software

Software “Someone should constantly manage your software contracts review licenses, renewal and SLA’s” Michael Sheehan “A key strategy is Application Rationalization. If I have 7 software applications that do similar things, reduce that to 1” Wes Wright 3 Pillars of managing software maintenance spend; 1. Initial Spend 2. Renewals/Right Sizing 3. 3 rd Party/Saa. S Accenture

Strategy 3: Hardware

Gartner Identifies key actions to Reduce Infrastructure & Operations Cost • • Enhance IT Asset Management (ITAM) Virtualize & Consolidate Infrastructure Re-Examine Networking Cost Defer Non-Critical Initiatives

Strategy 4: External IT Cloud & Outsourcing

MOVING TO THE CLOUD? BENEFITS: ► ► ► Service on demand Undefined access Infrastructure abstraction Virtually infinite performance and capacity Consistent service-level characteristics Pay-as-you-go usage model FACTORS TO CONSIDER ► ► ► Intellectual property/data protection Access to data Security compliance Disaster recovery Service-level agreements Scalability and cost

OUTSOURCING The U. S. healthcare IT outsourcing market is expected to reach $50 B by 2018 and grow by 42. 8% over the next five years *Report by Marketsand. Markets

Innovation… changing the way we deliver care QUESTIONS?