Beruflich Dokumente
Kultur Dokumente
AUPHA
HAP
STRATEGIC MANAGEMENT
OF INFORMATION SYSTEMS
IN HEALTHCARE
AUPHA/HAP
Editorial Board
Frederick J. Wenzel
University of St. Thomas
G. Ross Baker, Ph.D.
University of Toronto
Sharon B. Buchbinder, R.N., Ph.D.
Towson University
Caryl Carpenter, Ph.D.
Widener University
Leonard Friedman, Ph.D.
Oregon State University
William C. McCaughrin, Ph.D.
Trinity University
Thomas McIlwain, Ph.D.
Medical University of South Carolina
Janet E. Porter, Ph.D.
University of North Carolina at Chapel Hill
Lydia Reed
AUPHA
Louis Rubino, Ph.D., FACHE
California State UniversityNorthridge
Dennis G. Shea, Ph.D.
Pennsylvania State University
Dean G. Smith, Ph.D.
University of Michigan
Mary E. Stefl, Ph.D.
Trinity University
Linda E. Swayne, Ph.D.
University of North CarolinaCharlotte
Douglas S. Wakefield, Ph.D.
University of Iowa
STRATEGIC MANAGEMENT
OF INFORMATION SYSTEMS
IN HEALTHCARE
Gordon D. Brown
Tamara T. Stone
Timothy B. Patrick
AUPHA
HAP
Your board, staff, or clients may also benefit from this books insight. For more information on quantity discounts, contact the Health Administration Press Marketing Manager
at (312) 424-9470.
This publication is intended to provide accurate and authoritative information in regard
to the subject matter covered. It is sold, or otherwise provided, with the understanding
that the publisher is not engaged in rendering professional services. If professional advice
or other expert assistance is required, the services of a competent professional should be
sought.
The statements and opinions contained in this book are strictly those of the author(s) and
do not represent the official positions of the American College of Healthcare Executives,
of the Foundation of the American College of Healthcare Executives, or of the Association of University Programs in Health Administration.
Copyright 2005 by the Foundation of the American College of Healthcare Executives.
Printed in the United States of America. All rights reserved. This book or parts thereof
may not be reproduced in any form without written permission of the publisher.
09
08
07
06
05
CONTENTS IN BRIEF
vi
Contents in Brief
DETAILED CONTENTS
vii
viii
Detailed Contents
Detailed Contents
Index 293
About the Editors 307
About the Contributors 309
ix
Figure 1.1
Figure 1.2
Figure 2.1
Figure 2.2
Figure 3.1
Figure 3.2
Figure 3.3
Figure 3.4
Table 5.1
Figure 5.1
Figure 5.2
Figure 5.3
Figure 5.4
Figure 6.1
Figure 6.2
Table 8.1
Table 9.1
Figure 9.1
Figure 9.2
xii
L i s t o f F i g u re s a n d Ta b l e s
Figure 9.3
Stakeholder Matrix
Figure 9.4
Table 9.2
Table 11.2
PREFACE
his book explores how healthcare organizations can utilize advanced information technology (IT) to achieve high levels of operational performance and strengthen their market position. It considers health information systems from an organizational perspective, integrating the science
of IT, medicine, and nursing practice within the context of complex adaptive
systems. The book provides a conceptual framework for considering how IT
can be used to fundamentally transform clinical work processes and integrate
the clinical and business functions to achieve a coherent organizational strategy. The framework draws on a body of organizational and systems theory and
incorporates evidence from information and clinical sciences. The book takes
an application approach, drawing on current operational and policy issues and
supported with a rapidly growing body of evidence on how IT can be used to
transform health systems function and improve clinical and business performance.
Because of its grounding in theory and research evidence, the book is
well designed for use in graduate courses in health management, medical informatics, medicine, and nursing and other health professions. Practicing
health professionals can use the book effectively as well, either as a general
reference or by focusing on the conceptual and applied material as a framework for problem solving and strategy development. Starting with Chapter
2, each chapter features a case study drawing on actual situations to introduce
and apply the concepts. Readers are encouraged to return to the case for additional insight as they read through the chapter. These chapters also include
a problem solving scenario that draws on the case and applies and integrates
material from the chapter.
The book is divided into four parts. Part I focuses on both business
and clinical strategies and then considers them as an integrated organizational
strategy. These chapters describe the structure of IT and how information
can be used to structure and manage the clinical and business functions. This
discussion includes how these functions can and must be integrated to
achieve high levels of performance. The book focuses initially on clinical and
business operations because the transformation must start with a redefinition
of the traditional role of organizations in managing clinical processes and
xiii
xiv
Pre f a c e
Pre f a c e
of the conflict with traditional professional roles. The technical focus of early
applications has included primarily information technologists and nursing
and medical professionals.
This book builds on the foundation work in medical informatics to explore how IT can be used to transform work processes and systems. The science and the complexity of the task are expanded to include how information
can be used to facilitate change in complex systems and individual behaviors.
Information enables organizations to restructure their work processes and
systems. It also enables them to develop new strategic initiatives, some of
which are based on information as an enterprise strategy. Such profound
change draws on the fields of medicine and nursing, informatics, systems theory, organizational psychology, organizational strategy and structure, economics and finance, law, and ethics. These are the disciplines from which this
book draws to understand the potential of this new technology.
xv
ACKNOWLEDGMENTS
xvii
CHAPTER
1
INTRODUCTION: THE ROLE OF
INFORMATION TECHNOLOGY IN
TRANSFORMING HEALTH SYSTEMS
Gordon D. Brown
Key Terms
Chapter Outline
1.
2.
3.
4.
Learning Objectives
1. Understand the role of IT as it affects work process design and organizational strategy.
2. Understand the issues facing healthcare organizations regarding the application and use of IT.
3. Apply knowledge about IT to make informed operational and strategic
decisions in healthcare organizations.
4. Synthesize how the clinical and business functions in healthcare organizations are structured and how IT can facilitate effective business and
clinical decision making.
5. Evaluate the potential and limitations of IT in a functioning healthcare
organization.
Business
process
redesign
Clinical process
redesign
Healthcare
value chain
Genomic
medicine
Information
vocabularies
and databases
Information
architecture
Clinical
decision
support
systems
Integrated
delivery
systems
Chapter Overview
The application of advanced information technology (IT) to improve health
system performance has probably generated more hope than any development
in the health system. Yet, somewhat perversely, IT has at the same time frequently failed to meet expectations. Those studying the problem define it in
different ways and propose varied solutions. Some chief information officers
1
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
CASE 1.1
Health Valley
Hospital
Upgrades IT
System
Health Valley Hospital had operated on a financial system from a minor software
vendor for many years. The hospital reviewed the cost and made judgments about
the system, deciding that it was not keeping up with the needs of the organization.
Management felt it was time for a new patient and financial accounting system.
This action was taken to reduce costs and, more importantly, to improve the financial performance of the organization and increase its sophistication in financial
analysis.
After a thorough process of determining and documenting requirements,
a multidisciplinary group of executives and managers evaluated all of the major
healthcare software vendor offerings. They selected a well-known full-suite product of patient and general accounting, accounts payable and receivables management, payroll, decision support, and electronic commerce. The application
suite was installed primarily by the staff of the hospital with support from the
vendor.
The implementation of the system was a technical success, but the approach of the business leaders was to automate the current business processes
with the new system. They did not fully evaluate the new systems impact on operations. The electronic commerce capability had advanced edit and screening capability well beyond the capabilities of the prior system. This system checked the
components of a bill against the billing system entries, against the medical records
abstracting system, and finally against edits used by the Medicare intermediary
that adjudicated and paid Medicare claims. The older system only checked for data
integrity within the billing system and had no capability to replicate the editing
done by the intermediary.
The implementation had an immediate and significant impact. Claims that
used to go out the door to the insurers were now failing to pass the edit checks.
No process was in place to reconcile the issues between the billing and medical
records offices. The edits became more robust and caught claims at a more detailed level. Finally, claims that used to leave the organization and go to Medicare
There are two basic approaches to the application of IT to healthcare organizations: to automate existing processes or to enable the transformation of
processes. Neither is right or wrong, but they are very different in approach
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
after a significant time delay if they were returned because of edit failures were
being rejecting on site immediately.
The result of this process was a rapid growth in rejected claims, overwhelmed business office staff, and dramatically increased dollars in accounts receivable (AR). Prior to conversion to the new system, the days in AR averaged in
the mid-70s. This increased significantly as management tried to cope with the
problem, until days in AR reached more than 110.
The approach taken to deal with the problem was to use a multidisciplinary,
multilevel team assisted by outside consultants who reviewed and redesigned the
entire business work flow. The software vendor was also brought in to help coordinate the work flow changes with the capabilities of the software system. New roles
were created, new middle management was hired, and training in new processes
was implemented. The linkages among the business, medical records, and registration offices were dramatically strengthened with audits implemented to support
the evaluation of data quality. Additionally, a change management committee was
established to discuss, evaluate, and approve changes that needed to be made to
business processes as well as computing systems. Effectively, the new integrated
computer system forced the organization to behave more like an integrated system
itself and less like a collection of departments.
The end result of the new system implementation along with the new business process improvements is impressive. Days in AR have dropped dramatically
and now average in the mid-30s, close to best in class within the geographic region. The charges billed and dollars collected have improved dramatically. Days of
cash on hand have grown by 50 percent in less than two years. Finally, the organizations bottom-line profitability has improved.
Problem Solving 1.1 discusses the lessons to be learned from Health Valleys experience.
Lawrence Sharrott, CIO, AtlantiCare Health System,
and president, InfoShare, Inc., Atlantic City, NJ
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
The application of IT overlaid how hospitals and clinics were structured and
functioned.
Early applications in hospitals and clinics were designed to automate
existing internal processes. Organizational leaders were reluctant to invade
and alter the clinical decision process. In part this reluctance was because
most leaders had been trained in and were oriented only to the business function and it challenged hundreds of years of separation of the clinical function
from organizational interference. The availability of information to assess
clinical outcomes and improve clinical processes frequently exceeded the capacity or commitment of the organization to use it in such a manner. Hospitals and clinics maintained their existing hierarchical functions or invested in
clinical information systems seemingly under the assumption that new data
systems would change clinical work processes. This assumption has not
proven to be true.
Transformation
of processes
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
In Case 1.1 it was only through the installation of a new software system and implementation of new business process that outstanding results were achieved.
The lesson to be learned from this experience is how to use new technology to
transform business processes without being forced to do so by poor outcomes.
The improvements noted in Case 1.1 could not have been achieved by the implementation of new technology alone. As a matter of fact, the new system
highlighted and amplified the problems with the old processes.
Implementing new processes without a new software system could not have
produced the same results. Many of the processes now in place could not be
provided or supported with the older system.
The successful transformation of this complex business process involved frontline workers who understood the technical aspects and managers who understood how each work element contributed to an overall work process.
technology prior to process redesign can contribute to the failure of the redesign by further freezing current processes into place. Furthermore, change
that occurs later will be much more complex and costly. On the other hand,
acquiring IT as a means of producing the redesign is likely to fail.
Organizations committed to innovative work process redesign have
found the investment in IT essential (Caron, Jarvenpaa, and Stoddard 1994).
Those that have tried to pursue such a strategy without a strong IT infrastructure designed to support it have failed or had limited success. Information
technology has been found to be an essential enabling technology when
closely integrated with the redesign of the business or clinical functions. When
IT is incorporated as an enabling technology in process redesign, issues of acceptance and use are diminished. These institutions do not use IT development to overlay existing work processes but rather as the enabling technology
to fundamentally transform them. This is the strategy of Wal-Mart (Furey and
Diorio 1994), VISA (Hock 1999), and other companies using IT to support
a transformation of previous business processes.
Considerable evidence describes how IT can be used to enable the fundamental redesign of work processes that produce exceptional levels of industrial operating efficiency and strategic advantage. Scholars and executives, particularly those grounded in management IS, have established a rich literature
on innovative business process redesign as a means of achieving superior business performance. Process redesign is differentiated from process improvement, depicting fundamentally new ways of considering business functions.
Process redesign has also been referred to as process reengineering, requiring
vision and conceptual skills to develop innovative solutions for existing problems. True innovation requires the conceptual reorganization of problem situations (Shull, Delbecq, and Cummings 1970, 7194). This assumption underpins the work of Deming, Juran, and others in using process redesign and
process improvement as a means of reaching Six Sigma levels of quality.1
PROBLEM
SOLVING 1.1
Health Valley
Hospital
Upgrades IT
System
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
IT in Healthcare Organizations
Evidence of how advanced IT can facilitate work process redesign is compelling. The level of evidence over time and across a large section of the service and product industries provides considerable support for application of
advanced IT to healthcare organizations. The evidence supporting the enabling power of IT to improve work processes raises questions of why such a
lag exists in the health industry. Are healthcare organizations more complex,
resource rich, or poorly managed, or are there other factors to consider?
Healthcare organizations present a particularly difficult challenge because of their traditional structure and assumptions about work processes, especially clinical work processes. Patients enter the hospital or clinic based on
a specific need, typically seeking treatment of some disease symptom. The patient encounters the system, receives a service, and exits the organization.
Health services are viewed by the institutions more as a commodity than as a
continuing commitment. Services are evaluated on the basis of the quality of
the given service and level of satisfaction reported by the patient. Patients, on
the other hand, increasingly view health services as a continuous process because of the increasing rate of chronic diseases and changing attitudes about
healthcare. Under these conditions, information on health status, disease history, treatment history, and health risks is shared among all health providers
and with the patient. Healthcare organizations are institution-centric, which
also characterizes their information systems. Physicians frequently become
focused on episodic illness, probably in part because the information systems
that support their decision making are designed in this manner.
Within hospitals and clinics exist an overall business function and a clinical function designed to support patient diagnosis and treatment. Hospitals,
clinics, and other health services delivery organizations traditionally have been
structured around a functional organizational model for providing services.
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
Operational
efficiency
10
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
Business
process
redesign
FIGURE 1.1
Hospital
Functional
Design
Interest by healthcare executives in redesigning business processes with vendors and other collaborative organizations has lagged far behind other industries. The redesign of business processes broadens the perspective of internal
business operations and places them within the context of strategic partnerships for managing the business function. Process redesign in health institutions will be dependent on advanced IT as it has been in other industries. Like
other industries, however, IT will not initiate process redesign.
Burns (2002) and colleagues have provided a useful conceptualization
and discussion of supply-chain management in the health field. Burns describes
classifications of institutions participating in the healthcare supply chain, or
value chain, including payers, fiscal intermediaries, providers, purchasers, and
Board of trustees
Medical staff
Medical
director
Medicine
Surgery
Obstetrics
Radiology
Pediatrics
Pathology
Anesthesia
Finance
Administrator,
hospital services
Administrator,
clinical services
Personnel
Admissions
Physical
therapy
Maintenance
Nursing
Purchasing
Radiology
Housekeeping
Labs
Food services
Medical
records
Pharmacy
Occupational
therapy
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
11
producers (Burns 2002, 2326). From analysis of the various interrelationships among organizations along the value chain, Burns (2002) concludes:
What is lacking, however, is coordinated effort among these parties, widespread strategic alliance formation, knowledge sharing, inter-firm trust, and
compelling value chains oriented to delivering the greatest customer value at
lowest total cost. Indeed some industry executives boldly state that the word
partner does not really exist.
The
institutional
perspective
12
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
The pattern of automating the clinical function was departmental or functional and based on decisions made by department directors. Departments
such as pathology saw early applications of electronic IS because they dealt
with standardized measures and repetitive processes perfect for IT. Applications were oriented primarily to support internal work processes. Other departments developing early IS included pharmacy, radiology, and nursing. Automating various clinical functions was straightforward and widely pursued,
albeit at different rates within a given institution and built on different data
platforms. The pattern of automating existing processes defined by functional
departments continues to be followed by hospitals and clinics, producing improved efficiency and accuracy. Many departments used the application of IT
to evaluate and improve existing processes. Although the reporting of results
from these developments was characterized as process redesign, it might be
better characterized as improving existing processes. More accurately, the reporting of results was oriented to improve work processes, or microprocesses,
within functional departments.
Integration
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
The
clinical
perspective
13
14
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
The clinical function in the health system has consisted historically of individual clinicians functioning independently. Since the 1970s physicians have
joined corporations, such as medical groups, and developed closer links with
hospitals through more highly structured medical staffs and collaborations
such as physician-hospital organizations. These corporate designs enable
physicians to negotiate insurance contracts, manage the revenue cycle, and increase operational efficiency, but they have not redesigned the clinical process.
These structures primarily serve the business function. Physicians have retained a high degree of individual autonomy over the clinical function in organizations, even those owned by physicians. Few organizational models have
invaded the clinical process per se. Many of the managed care models did so
in a crude manner, such as by applying rules for preadmission authorization,
but were opposed by clinicians and patients and ultimately discredited. The
appropriateness of organizational involvement in clinical process redesign is
still the subject of debate and not universally accepted. Certainly, few healthcare organizations have strongly committed to clinical process redesign as an
organizational goal. Health leaders are ambivalent in general, doubting that
process redesign is an appropriate role for organizations. Others see the potential and are carefully initiating change from within. The difficulties leaders
face include external forces such as reimbursement, governmental regulations,
state practice acts, and accrediting agencies that create obstacles and disincentives to change. It is clearly not a problem of information or even of the organization, but rather of the health system. The challenge is in changing the
system.
The lack of clear commitment to clinical process redesign inherently
limits the utility of investment in IT to support the process. Information
technology has consistently been found to be an enabling technology for
process redesign, but it will not produce process redesign. Investment in IT
without the capacity to redesign clinical processes will be a limited investment. There will be an overinvestment in IT that provides technical capacity
beyond that needed to manage traditional clinical processes. One resolution
is to accept established processes and reduce the investment in IT. This solution would bring business operations into balance by reducing the overinvestment in underutilized information capacity. This would solve the investment problem but suboptimize health system performance. Leading
organizations will pursue real innovation by fundamentally redesigning the
clinical process. Information thus changes from an overhead cost of operations to a strategic asset for the organization. Evidence suggests that such
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
15
Transformation
16
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
currently being installed. For organizations that do not pursue clinical and
business process redesign, it will not make much difference what information
architecture they choose.
Clinical IT
systems
A parallel IT development is occurring on the business side of the organization by automating existing purchasing, materials management, engineering,
and other functions. There is greater probability of success undertaking business process redesign because it occurs on the business side of the enterprise
and is under the control of management. The lagging development in this
area is difficult to explain but probably results from a number of factors.
First, healthcare organizations have not been forced to undertake business
Business IT
systems
17
18
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
Transformational
leadership
The concept of transformational leadership is now popular in training programs but is at best difficult to apply and generally misunderstood. It is a powerful concept, which assumes both vision and skills to implement solutions.
Transformational leadership must start from the top and enlist others throughout the organization. It is difficult to envision a transformational leader as a department director functioning within a structured and controlled environment.
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
19
Organizational
alignment
20
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
measurement, quality assessment, organizational leadership, and change. Figure 1.2 provides a brief description of specific technical skills important to leading change in healthcare organizations. The integration of the four technologies shown in the figure provides the potential for generating real value.
Without an appreciation of basic technical aspects of IT, executives cannot envision what is possible. Without organizational skills, the technology
cannot be applied.
In addition to general skills identified in Figure 1.2, a need exists for involvement of individuals with a mastery of specialty skills including informatics, medicine, nursing, finance, human resources, and management. These
skills will not be contained within a single person, but rather will come from a
team of organizational leaders. Each member of the top executive team will
bring his or her own technical expertise but must also bring a basic knowledge
of IT and its use in transforming organizations. The CIO is in a key position
to lead this transformation. The CIOs organizational and management skills
might be as important as any technical skills in this case.
In addition to specific and shared technical skills, the top executive team
must have accomplished leadership skills (see Figure 1.2). They must be able
to transcend their own professional and technical areas to understand the complexities of the organization and communicate effectively using expert interpersonal skills. Their work will be characterized by vision, developing conceptual models, spanning boundaries, communicating, negotiating,
compromising, and risk taking (Kanter 1989). Individuals selected for top executive positions should, first and foremost, demonstrate a high level of organizational skills. High levels of technical informatics skills are not enough and,
if combined with the desire to control and exert power, will be destructive.
Summary
This chapter explores the role of IT in transforming work processes in health
organizations. Historically, IT has been oriented more toward automating traditional business and clinical processes than transforming them. These applications view IT primarily as a technical activity, and the staffing of IT departments has reflected this orientation. Although complex in itself, applications to
automate traditional business and clinical processes are relatively simple compared to transforming these processes.
Increasingly, advanced IT systems have focused on integration within
clinical functions, within business functions, and between business and clinical functions. Integration of disparate IT systems has been difficult to achieve
because of issues of database vocabularies and standards and that existing information systems have been customized to specific uses. While these technical problems have been addressed and are being resolved, organization are
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
Information
Technology
Clinical
vocabularies and
lexical technology
Databases and
information
architecture
Clinical decision
support systems
Knowledge
systems and
management
Organizations
Medicine and
Nursing
Work process
design
Clinical outcomes
measurement
Organization
structure and
strategy
Clinical process
improvement
Organizational
change
Risk and
valuation
Role of the
professions
Leadership
Teams
Communications
and interpersonal
skills
Organizational
vision and
conceptual skills
Risk taking
Complex adaptive
systems
E-health and
telemedicine
21
FIGURE 1.2
Skills Needed
by Health
Systems
Leaders for IT
Decisions
22
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
Note
1. Six Sigma quality is a data-driven approach to the analysis of the level of
quality achieved in manufacturing or service process. It is a statistical
representation of defects per volume of activities performed. Six Sigma
level of performance would be achieved if 3.4 defects occurred per million activities completed.
References
Andersen, T. J., and A. H. Segars. 2001. The Impact of IT on Decision Structure
and Firm Performance: Evidence from the Textile and Apparel Industry.
Information & Management 39 (2): 85100.
Broadbent, M., P. Weill, and D. St. Clair. 1999. The Implications of Information
Technology Infrastructure for Business Process Redesign. MIS Quarterly
23 (2): 15982.
Burns, L. R. 2002. The Health Care Value Chain. San Francisco: Jossey-Bass.
Byrd, T. A., and N. W. Davidson. 2003. Examining Possible Antecedents of IT
Impact on the Supply Chain and its Effect on Firm Performance. Information & Management 41 (2): 24355.
Caron, J. R., S. L. Jarvenpaa, and D. Stoddard. 1994. Business Reengineering at
CIGNA Corporation, Experiences and Lessons from the First Five Years.
MIS Quarterly 18 (3): 23350.
Chapman, T. L., A. Gupta, and P. D. Mango. 1998. Group Purchasing Is Not a
Panacea for U.S. Hospitals. McKinsey Quarterly (1): 16065.
Chen, Y., and J. Zhu. 2004. Measuring Information Technologys Indirect Impact
on Firm Performance. Information Technology and Management 5 (1/2):
922.
Collins, J. C. 2001. Good to Great: Why Some Companies Make the Leapand Others Dont. New York: HarperBusiness.
Davis, C. 1991. Partnering in the 1990s. Hospital Material Management Quarterly 12 (4): 813.
I n t ro d u c t i o n : T h e Ro l e o f I n f o r m a t i o n Te c h n o l o g y i n Tra n s f o r m i n g H e a l t h Sy s t e m s
Erstad, T. L. 2003. Analyzing Computer Based Patient Records: A Review of Literature. Journal of Healthcare Information Management 17 (4): 5157.
Friedman, C. P., R. B. Altman, I. S. Kohane, K. A. McCormick, P. L. Miller, J. G.
Ozbolt, E. H. Shortliffe, G. D. Stormo, M. C. Szczepaniak, D. Tuck, and J.
Williamson. 2004. Training the Next Generation of Informaticians: The
Impact of BISTI and BioinformaticsA Report from the American College of Medical Informatics. Journal of the American Medical Informatics
Association 11 (3): 16772.
Furey, T. R., and S. G. Diorio. 1994. Making Reengineering Strategic. Planning
Review 2 (4): 613.
Hock, D. 1999. The Birth of the Chaordic Age. San Francisco: Berrett-Koehler.
Institute of Medicine (IOM). 2001. Crossing the Quality Chasm: A New System for the
21st Century. Washington, DC: National Academies Press.
Kanter, R. M. 1989. The New Managerial Work. Harvard Business Review 67
(6): 8592.
Keen, P. G. 1994. Every Managers Guide to Information Technology, 2nd ed.
Boston: Harvard Business School Press.
Kohn, L. T., J. M. Corrigan, and M. S. Donaldson, eds. 2000. To Err Is Human:
Building a Safer Health System. Washington, DC: National Academies Press.
Oliner, S. D., and D. E. Sichel. 2000. The Resurgence of Growth in the Late
1990s: Is Information Technology the Story? Journal of Economic Perspectives 14 (4): 323.
Pointer, D. D., and J. E. Orlikoff. 1999. Transforming Governance. In Board
Work: Governing Health Care Organizations, 23954. San Francisco: JosseyBass.
Porter, M. E., and O. Teisberg. 2004. Redefining Competition in Health Care.
Harvard Business Review 82 (6): 6579.
Richardson, J. C. 1989. Group Purchasing. Hospital Material Management
Quarterly 10 (4): 5156.
Shull, F. A., A. L. Delbecq, and L. L. Cummings. 1970. Organizational Decision
Making. New York: McGraw-Hill.
Spare, N. C. 2000. The Four Pillars of Wisdom: A System for 21st Century Management. Zumikon, Switzerland: The Swiss Deming Institute.
Toffler, A. 1980. The Third Wave. New York: Morrow.
Weed, L. L. 1968. Medical Records that Guide and Teach. The New England
Journal of Medicine 278 (11): 593600.
. 1970. Technology Is a Link, Not a Barrier, for Doctor and Patient. Modern Hospital 114 (2): 8083.
Further Reading
Christensen C. M., R. Bohmer, and J. Kenagy. 2000. Will Disruptive Innovations
Cure Health Care? Harvard Business Review 78 (5): 10217.
23
24
St ra t e g i c M a n a g e m e n t o f I n f o r m a t i o n Sy s t e m s i n H e a l t h c a re
PART
I
THE CONTRIBUTION OF
INFORMATION TECHNOLOGY
TO ORGANIZATIONAL STRATEGY:
INTEGRATING THE CLINICAL
AND BUSINESS FUNCTIONS
Enterprise strategy
Clinical strategy
Business strategy
Organizational strategy
Information strategy
INTRODUCTION TO PART 1
art I focuses on organization strategy, which is defined as the internal structure and function of an organization. It deals with how an
organization selects and designs work processes to achieve its goals.
Internal operations of an organization provide the focus for Part I. These
chapters will address the ways healthcare organizations can apply information technology (IT) to achieve high levels of performance. Such performance requires the integration of business and clinical work processes, while
advanced IT enables system integration. Integration has proven to be difficult for two reasons:
1. The challenge of fundamentally redesigning clinical and business work
processes
2. The technical complexity of achieving interoperability of information
systems (IS)
Chapter 2 provides a conceptualization of healthcare organizations,
describing the relationships among organizational strategy, enterprise strategy, and information strategy.
Enterprise strategy focuses on how organizations position themselves in
the market and adapt to external environmental changes.
Organizational strategy includes how organizations are structured and
function to carry out enterprise strategy.
Information strategy consists of how IT contributes to both organizational and enterprise strategies.
In high-performance organizations these three strategies are closely
aligned. Information strategy is considered as both a means of transforming
the organization internally and a means of positioning it externally to achieve
exceptional levels of performance. Part I examines the considerable potential
of advanced IT as a means of transforming healthcare organizations to
achieve exceptional levels of performance.
Organizational strategy in healthcare organizations consists of both
clinical and business functions. The clinical function makes up the technical
core of healthcare organizations and theoretically is their reason for being, at
27
28
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
I n t ro d u c t i o n t o Pa r t 1
29
CHAPTER
2
INFORMATION STRATEGY RELATED TO
ENTERPRISE AND ORGANIZATIONAL
STRATEGIES
Tamara T. Stone and Gordon D. Brown
Key Terms
Chapter Outline
Enterprise
strategy
Organizational
strategy
Learning Objectives
1. Be able to conceptualize enterprise, organizational, and information
strategies and discuss how they are interrelated.
2. Explain how enterprise strategy guides both organizational and information strategy.
3. Understand the systems-based approach to strategy development.
4. Formulate an information strategy for an organization as a means of implementing organizational and enterprise strategies.
5. Examine the discrete roles of IS, IT, and IM in information strategy.
6. Be able to discriminate between the value of IT to a given healthcare
organization and society in general.
Chapter Overview
This chapter describes the pressing need for strategic alignment in healthcare organizations to enhance the delivery of care and ensure long-term
competitive viability. Through the Strategic Integration of Healthcare Organizations framework, the reader is introduced to the guiding role of strategy in healthcare organizations and the need for organizational and information strategies to consistently align with systemwide enterprise strategy
Business
strategy
Clinical
strategy
Information
strategy
Information
systems (IS)
Information
technology (IT)
Information
management
(IM)
Systems-based
approach
Information
chain of
command
Technological
imperative
Dual structure
31
32
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
CASE 2.1
New IS at
Cedars-Sinai
Medical Center
The publicized benefits of computerized medical records have captured the attention of many healthcare organizations. With expectations that new IT could make
physician documentation and patient information maintenance easier, CedarsSinai Medical Center in Los Angeles felt that it was ready to implement a new computerized physician order entry system (Chin 2003). Managers devoted three
years to developing and implementing Patient Care Expert, an information system
designed to assist with patient registrations, billing procedures, and electronic
physician orders. Management felt that it was what the organization needed to
help it meet national objectives to reduce medical errors, improve quality of care,
and join the ranks of other organizations moving toward paperless practices.
Despite eliciting input from approximately 40 physicians during the design
process, implementation was received with an immediate, overwhelmingly negative response. Hundreds of physicians came forward, expressing rejection and disappointment that they had not been included in all phases of the integration plan,
from strategy creation through system design and implementation. Physician dissatisfaction over lack of input, as well as a number of system shortcomings identified after its implementation, forced the medical center to discontinue use of the
new system.
Physicians claimed that the new system did not mesh with their daily workflow and was extremely time consuming, sometimes adding two to three hours to
each day for manipulating a laborious sequence of screens to enter patient information. Furthermore, after this amount of time was spent entering the orders,
many were being lost in the system. These shortcomings resulted in a costly, unintended negative consequence for the center.
Problem Solving 2.1 discusses the lessons to be learned from the CedarsSinai experience.
Source: Adapted from Chin, T. 2003. Doctors Pulling Plug on Paperless System. American Medical News, February 17.
(see Figure 2.1). Case 2.1 illustrates the consequences of failure of sufficient
alignment in these matters. Highlighted throughout the chapter is the integral role of information technology. Because healthcare organizations rely
heavily on IT to perform daily operations, the quality of information strategy can significantly affect overall organizational performance. The discrete
roles of information systems (IS), information technology (IT), and information management (IM) are described in the context of setting a comprehensive information strategy.
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
Enterprise strategy
Clinical strategy
Business strategy
Organizational strategy
Information strategy
33
FIGURE 2.1
Strategic
Integration of
Healthcare
Organizations
34
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
The lesson to be learned from this case is that thorough analysis and detailed
processes that incorporate all levels and departments in the organization are
needed prior to and during each phase of an IS integration plan. Although a number of physicians representing a wide range of clinical specialties were involved in
the design and selection of Patient Care Expert, acceptance by other physicians
could not be anticipated. This is true of staff of organizations in general but even
more true of highly professionalized staff who bring a much more independent
perspective to the organization.
Two perspectives are represented in this case. First, IS are a technology
that enables work processes to be improved, and this requires change. Changing
work processes is difficult in any organization, particularly in highly professionalized areas such as health.
Second, not only are physicians the most professionalized group within the
organization but also their time is the most valuable to them and to the institution.
There must be assurance that the new IS is designed to support the clinical function by actually improving efficiency and quality. Information systems cannot be
designed only around a technical information architecture logic; it must also be
designed around a clinical logic. Is the issue one of just change (i.e., going from an
old process to a new one), or does the information architecture impede the efficient and effective work process? The issue of customization must also be considered. Does IT take the approach of one size fits all, or are the applications customized to physicians based on their individual preferences? Information sytems
can be standardized without having exactly the same formats.
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
Systemsbased
evaluation
35
36
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Clinical
orientation
Healthcare organizations have always had as their dominant enterprise strategy a strong clinical orientation. Hospitals were primarily not-for-profit or
public, and the clinical function was their reason for being. Clinical services
were added if a public need was perceived. Hospitals had a strong business
function, but one subordinate to the clinical function. The business function was designed to support the clinical function by providing the greatest
range of services and the best equipment and staff possible. On the margin
almost any new clinical service, piece of equipment, staff, or IT added value,
and cost-based reimbursement provided the source of funds to support it.
Hospitals became growth oriented and the dominant institution in the
health system. Much public policy since the latter half of the twentieth century has been oriented to reducing the duplication of clinical services and
increasing operational efficiencies. Operational efficiencies have been fostered primarily through externally initiated financial incentives or regulatory
mandates. Public policy has approached improving clinical efficiencies primarily through financial incentives or regulating the business function, not
by managing the clinical function per se. While the clinical function has
been the dominant enterprise strategy of health organizations, the structure
and management of the clinical process (i.e. the clinical strategy) has remained primarily outside the operational responsiblity of the organization
itself (i.e. the organizational strategy).
Business
component
The business component of the organizational strategy encompasses all administrative, human resources, and support functions, including customer
service, billing and insurance claim processing, and marketing functions.
How a healthcare organization structures its basic functions will either support or impede enterprise strategy. For example, if a healthcare organizations
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
37
patient billing procedures are inefficient and prone to errors, the result may
be patient dissatisfaction and possibly a discontinuation of care. These outcomes can be detrimental to the enterprise strategy that aims to increase the
organizations competitive edge and patient satisfaction. The poor billing
function, of course, can also weaken the financial position of the organization. When a healthcare organization creates enterprise strategy and implements a supporting information strategy, its organizational strategy must
align to create overall operations that are seamless and effective.
The dominant functions in hospital operations are the business and
support functions. Early organizational strategy applications focused on
repetitive processes such as payroll and billing. The management of the revenue cycle became and remains an important business focus of healthcare organizations and was supported by automated systems designed specifically
for that purpose. Financing became the most highly developed business
function because of the ever-increasing pressure on the organization to provide sufficient financial resources to support the clinical function. Services
were financed through cost-based reimbursement, allowing a flow of revenue to support the almost insatiable demand for services. The structure and
culture of hospitals and hospital systems reflect the strong financial orientation within the business function.
Hospitals are structured and function around a business logic similar to other
organizations in society. What differentiates them is how the enterprise strategy has been carried out through organizational strategy. The hospital is
characterized by a dual structure: one element for the clinical function, and
one for the business and support functions. The clinical function has been
structured to provide maximum autonomy for clinical decision making with
minimum corporate influence. This is a typical structure for highly professionalized organizations (Mintzberg 1979).
The clinical component of organizational strategy encompasses all aspects of patient care and has traditionally not been formally structured in
hospitals and integrated health systems. The clinical strategy has thus remained outside the influence of the organizational strategy. Structuring and
managing the clinical function have been considered outside the domain of
responsibility of the corporation. Hospitals developed strong functional
structures characterized by nearly autonomous medical staffs reporting to
the board of trustees through a weakly structured joint conference committee. Within the medical staff, physicians were given near autonomy in decision making (e.g., within the limits of the admitting privileges granted by the
board). The primary concern of the board was the qualifications of the individual physician. Qualifications were assessed based on education and certification by the profession. The organization was careful not to impose rules
or policies that interfered with clinical decision making. The structure and
Structural
differences in
healthcare
38
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
A
professionalized
culture
The maintenance of professional autonomy in organizations has been dramatically played out in numerous ways, including legal decisions and the design of corporations themselves. Although varying from state to state, legal
decisions over the years have upheld the doctrine prohibiting the corporate
practice of medicine, that is, doctors delivering clinical services as members
of corporations, including medical groups. The threat of the corporate practice of medicine has been a basic organizing principle for healthcare organizations.
The dominant business structure has resulted from the highly professional nature of healthcare organizations and fidelity to the independence of
professional practice. The clinical function has not been formally structured
within healthcare organizations, resulting in the need for considerable communication and coordination among all health professionals to support patient care. This lack of structure and hands-off approach within the clinical
process has probably contributed to clinical errors and high stress in the work
environment. Organizations viewed clinical strategy as consisting of clinical
support functions, including various business functions such as scheduling
and admitting, as well as clinical services such as laboratory, pharmacy, radiology, and therapy. These clinical support services were structured based on
a functional design. The enterprise strategy of the organization was frequently driven by clinical need or interest, not by the crucible of the market
or financial viability.
The
importance of
integration
Organizational strategy in healthcare today must include both clinical strategy and business strategy, and these strategies must be closely integrated. The
clinical and business components cannot function independently, as their
processes must support each other. For example, the quality of employee
training and the nature of the environment in which employees work can
greatly affect how clinical care is administered. These components must engage in cross-functional interaction and networking to meet the enterprisewide goals and objectives. These components also determine how work
processes and procedures must be arranged, coordinated, and evaluated for
the organization to achieve the objectives identified in the enterprise strategy.
For a healthcare organization to develop a meaningful organizational strategy the clinical and business strategy components that can affect the enterprise strategy must be aligned. This alignment can only be achieved when
each of the following is systematically identified: (1) structure supporting
communication and workflow; (2) work environment supporting workers
who bring to the job appropriate personal qualities, knowledge, experience,
and skill levels; and (3) business processes and the accompanying systems of
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
39
40
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
models for development and implementation will be identified. Unfortunately, since the late 1980s many healthcare organizations have faced costly
consequences from pursuing a narrowly defined IT strategy without consideration of all organizational components. The technological imperative
mind-setpursuing technology for the sake of technology without aligning
with the organizational and enterprise strategieshas resulted in the implementation of technology without consideration of the need to change the
clinical or business process and the need for integrated support and change
in all organizational components (Ash, Berg, and Coiera 2003; Blum 2003).
Information strategy should be created after enterprise analysis determines where IS can support or enhance current clinical, business, and support practices or where IT advancements may be needed. Information strategy should be designed and structured to address a healthcare organizations
immediate needs as well as its long-term vision. Effective information strategies are initiated by leadership, who present an ultimate goal to be achieved.
Through collaborative discussion among enterprise, organizational, and information leaders, feasible options can be identified. Feasibility is determined
by identifying the factors that will be essential for success and whether each
organizational component can follow through on its role in the process. This
integrated approach to implementing objectives and processes is only successful after a thorough bottom-up evaluation of the organizations current
practices (Latham 1998). Clinical, business, and information staff can assess
the quality of procedures and activities occurring in daily operations, and this
information is brought before the chief information officer (CIO), as a member of the top management team, for thorough consideration before a proposed enterprise strategy is accepted or rejected.
Enterprise and organizational strategies guide IS development, followed by IT, which must then identify the organizations specific hardware
and software needs to achieve the principal goals and objectives. Information
strategy should consider current trends and the future direction of IT innovations and possibilities to identify potential risks or shortcomings that may
result from a proposed strategy (Latham 1998). A healthcare organizations
information strategy will define how communication and interaction will
occur for goals and objectives to be accomplished. It will assign responsibilities to IS, IT, and IM participants and inform enterprise employees of this
structure and how its use can maintain order and convenience in organizational processes.
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
41
42
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
superior quality of clinical services by developing disease management programs. This broad goal can be achieved by breaking it down into specific procedures, policy changes, and program developments that must occur in the
organizational and information strategy components. Strategists may first
choose one disease area on which to focus, for example, asthma. Information
strategists may then provide a description and information on associated costs
of a web-based program that asthma patients can use to access accurate educational information on asthma, a web-based message board for posting
questions and receiving feedback from other asthma patients, and an online
group discussion for patients to share concerns, experiences, and solutions on
how to cope with their asthma. Finally, clinicians and office staff may create
specific procedures for how to provide asthma patients with information
about the web-based opportunities and track patient utilization of office visits to determine any reduction in operational costs. While policies and procedures are the responsiblity of each organizational component, they must
complement each other. In this example the creation of procedures to track
patient office visits may require the assistance of information specialists to
modify a current system or create a new one to make tracking convenient. In
this way component strategy responsibilities and objectives may overlap.
Recent enterprise strategy in healthcare organizations seems frequently
to focus on IS and IT capabilities as if the technology were a strategy in itself.
Although IT has become a priority on enterprise strategy agendas, in itself it
cannot be considered a strategy. Any new software program that is developed
and implemented must align and be fully integrated with enterprise objectives
and be user friendly for organizational employees. A web-based program that
links patient EMRs to diagnostic and laboratory test results should be implemented only if this aligns with current enterprise and organizational strategies, which may have already established objectives relating to patient privacy
issues or physician satisfaction. While IT itself is not a strategy, the information that can be elicited, disseminated, and managed through technology can
become an integral strategic asset. Organizational knowledge made available
between and among departments and health professionals can be a valuable
resource used to create nationally recognized best practices and specialization
that foster an organizations competitive edge (Davenport and Glaser 2002).
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
43
Enabling
organizational
operations
The same evolution occurred to support the clinical function. There was a
significant lag in development of clinical IS because of the increased complexity of the task and the tradition and culture of the health professions to resist
The field of
medical
informatics
44
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Clinical
support
systems
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
existing processes to anticipate how IT would change both the clinical and
business strategies. Information technology was designed primarily to solve
yesterdays problems.
Changes in enterprise or organizational strategy can therefore have a direct
effect on a healthcare organizations information strategy. For example, consider the concern that originates in the organizational strategy component regarding patients extreme dissatisfaction with delays associated with the transfer of laboratory and diagnostic results to their medical charts. Consideration
of this concern might prompt the creation of an enterprise objective to improve communication between and among departments and prompt the creation of an information strategy to link laboratory systems to EMR systems.
Only through such interrelationships can a healthcare organization effectively
function. A change in one component must result in subsequent changes in
the other two.
All changes in information strategy processes and procedures carry
consequences. Unintended negative consequences are almost certain to result
if the effects that such changes have on other components of a healthcare organization are not evaluated. Thorough analysis requires input from representatives of all organizational components. For example, plans created to upgrade a patient information database without input from the IT and IS
specialists regarding costs could result in project termination because of insufficient funds to support the purchase of software licenses, staff training,
and other required items. This illustrates the importance for all components
to become actively involved in strategy development.
Effects of
strategy
change
45
46
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
the design of IS is driven by the business, clinical, and enterprise strategies of organizations;
investment and management of information assets should be based on
information strategy, not IT; and
healthcare organizations will assume responsibility for the clinical strategy and will restructure and manage the clinical process to achieve the
enterprise strategy of clinical quality and operational efficiency.
IT as a Social Good
The importance of IT health systems is increasing at a rapid pace. New technology allows healthcare organizations to make great strides in the delivery
and quality of care. IT examples include computerized medical records, inhome telemedicine care, the National Library of Medicine MEDLINE database, web-based programs educating patients and promoting disease management, and so forth. Clinical IT refers not only to large systems for recording
and accessing patient data but also to new tools such as wireless handheld devices, speech recognition systems, home monitoring devices, and other
equipment that improves care delivery (Crane and Raymond 2003, 62). Clinical technology today serves several functions, including the following (Crane
and Raymond 2003):
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
FIGURE 2.2
Maxims for
Information
Technology
47
48
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Summary
Healthcare organizations can achieve sustained competitive advantages by utilizing enterprise, organizational, and information strategies that stress their capabilities and satisfy unmet needs within the industry. Capabilities can be developed and nurtured when those fulfilling enterprise, business, clinical, IT,
IS, and IM functions within organizations are networked and encouraged to
engage in continuous learning and knowledge sharing. Because organization
functions are interrelated, new enterprise, organization, or information strategies that require changes to be made in any individual functions processes also
require appropriate corresponding adjustments to be made in the others.
Maintaining the balance of this interrelationship is essential for providing optimal quality healthcare and services. As new ways of delivering, managing,
and improving care continue to evolve, they will only contribute to the systemwide value of organizations and the social good if they consistently align
with and support the missions and values of each organizations strategic components and functions.
I n f o r m a t i o n St ra t e g y Re l a t e d t o E n t e r p r i s e a n d O rg a n i z a t i o n a l St ra t e g i e s
References
Ash, J. S., M. Berg, and M. Coiera. 2003. Some Unintended Consequences of Information Technology in Health Care: The Nature of Patient Care Information SystemRelated Errors. Journal of the American Medical Informatics
Association 11 (2): 10412.
Blum, E. 2003. Paperless Medical Record Not All Its Cracked up to Be. [Online
article; retrieved 8/19/04.] American Medical News, February 17. www
.ama-assn.org/amednews/2003/02/17/bica0217.htm.
Chin, T. 2003. Doctors Pull Plug on Paperless System. [Online article; retrieved
7/30/04.] American Medical News, February 17. www.ama-assn.org
/amednews/2003/02/17/bil20217.htm.
Collen, M. F. 1995. A History of Medical Informatics in the United States: 1950 to
1990. Bethesda, MD: American Medical Informatics Association.
Crane, R. M., and B. Raymond. 2003. Fulfilling the Potential of Clinical Information Systems. [Online article; retrieved 7/30/04.] The Permanente Journal 7 (1). http://xnet.kp.org/permanentejournal/winter03/cis.html.
Davenport, T. H., and J. Glaser. 2002. Just-in-Time Delivery Comes to Knowledge Management. Harvard Business Review 80 (7): 10711.
Earl, M. J. 1989. Management Strategies for Information Technology. New York:
Prentice-Hall.
Iansiti, M., and R. Levien. 2004. Strategy as Ecology. Harvard Business Review
83 (3): 6878.
Latham, A. 1998. Strategic Information Systems Planning: A Necessary Evil for
Schools? Journal of Applied Management Studies 7 (2): 26774.
Mechanic, D. 2002. Improving the Quality of Health Care in the United States of
America: The Need for a Multi-Level Approach. Journal of Health Services
& Research Policy 7 (Suppl. 1): S35S39.
Mintzberg, H. 1979. The Structuring of Organizations. Englewood Cliffs, NJ:
Prentice-Hall.
Pearlson, K. E., and C. S. Saunders. 2001. Managing and Using Information Systems: A Strategic Approach. New York: John Wiley & Sons.
U.S. National Institute of Standards and Technology. 2004. Baldrige National
Quality Program. Health Care Criteria for Performance Excellence. [Online information; retrieved 7/15/04.] www.quality.nist.gov/index.html.
Further Reading
Kangas, K. 2003. Business Strategies for Information Technology Management. Hershey, PA: IRM Press.
49
CHAPTER
3
ORGANIZATIONAL ACCOUNTABILITY
FOR CLINICAL OUTCOMES:
THE COMING OF THE CORPORATION
Gordon D. Brown and Suzanne A. Boren
Key Terms
Chapter Outline
Organizational
domains
Accountability
Work process
Clinical
encounter
Clinical process
Learning Objectives
1. Understand why healthcare organizations have become increasingly accountable for clinical outcomes.
2. Understand how accountability for clinical outcomes changes responsibility for clinical processes in healthcare organizations.
3. Analyze the assumptions clinical decision support systems make about
clinical decision making.
4. Redesign the structure of clinical processes consistent with the assumptions of clinical guidelines and pathways.
5. Formulate how healthcare organizations can apply clinical decision support systems and retain fidelity to the role of health professions in society.
6. Create a strategy for the application and use of clinical decision support
systems.
7. Compare alternative approaches to bringing about change in clinical
processes using advanced IT.
Six Sigma
quality
Knowledge
systems
Integrated
delivery
systems
Chapter Overview
This chapter explores changes in clinical strategy in healthcare organizations
resulting from increased organizational accountability for clinical outcomes
51
52
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
and financial pressure for greater efficiency. Financial pressure for greater efficiency extends beyond operational efficiency to strategic positioning of organizations with regard to the market for clinical services and demand for
clinical and service quality. Accountability for clinical outcomes links business
and clinical strategies of healthcare organizations (see Chapter 2) and defines
information strategy. The ability of healthcare organizations to transform
themselves to become high-performance, accountable delivery systems depends on their investment in and application of advanced information technology (IT). Such an investment, however, will not in itself ensure this transformation.
Organizational accountability for clinical outcomes creates an inherent
accountability for clinical processes. Organizational leaders will draw on the
science of process-outcome relationships to provide evidence-based solutions
for achieving superior outcomes through process improvement. Organizational accountability for clinical outcomes and processes will change the relationship between health professionals and organizations. Figure 2.1 (see
Chapter 2) indicates the relationship between business and clinical strategy
and how they will both affect information strategy. Without change to the essential elements of organizational design and behavior, the investment in IT
will have limited effect.
Information technology can be considered an essential enabling factor
for organizational transformation but in itself will not produce the transformation. The investment in IT alone will have a limited effect on organizational strategy or outcomes and therefore limited return on investment. Managers must avoid the trap of thinking that major investments in IT will enable
them to achieve high levels of performance. An effective information strategy
should be considered necessary but not sufficient to achieve high levels of
clinical and business performance.
The empowerment of organizations through effective information
strategy has been demonstrated by industries such as banking and airlines.
These industries have had to change how work is structured and coordinated,
how jobs are defined, and how workers are evaluated and rewarded. This chapter explores changes in organizational design that will enable IT to be effectively deployed and how information strategy can become aligned with the
transformation of clinical strategies. The implications of information strategy
in healthcare organizations are explored as they affect existing assumptions
about tasks, work processes, and the role of health professionals. Case 3.1 illustrates these issues at a micro level with regard to chronic disease.
The chapter concludes by exploring how new clinical strategies will
change the internal design of healthcare organizations, affect business strategies, create new interorganizational linkages, and transform the role of organizations within the health system. New structures will take the form of
networks of structured information exchange, not hierarchical command
and control systems. Information strategy linked to new business and clini-
53
54
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
CASE 3.1
Chronic Care Is
a Continuous
Clinical Process
Dr. Johnson cares for many patients with diabetes in a thriving community-based
internal medicine practice. Today hes seeing Mary Parker, a 50-year-old patient diagnosed with type 2 diabetes two years ago. Dr. Johnson has a good rapport with
Ms. Parker and has been her primary care provider for the past three years. She is
always interested in new developments in diabetes care and has done some reading about diabetes on the Internet but, as she says, struggles to find the right information. Because of Ms. Parkers busy scheduleshe works full time and has
two children in high school and an elderly mother who needs additional assistanceshe never followed through with Dr. Johnsons recommendation to attend
ten hours of education with a certified diabetes educator.
Despite her lack of formal diabetes education, Ms. Parker understands the
importance of self-management. She checks her blood glucose level several times
each day and keeps a diary of her dietary intake and activity level. Ms. Parker has
brought to her visit the handwritten notes of her daily blood glucose measurements and diary for the past six months. Dr. Johnson reviews the numbers; some
are normal, but many are high. He asks his nurse to make a photocopy of the blood
glucose measurements and diary for the chart. Dr. Johnson knows from his notes
in the chart that Ms. Parker has been having her hemoglobin A1c (HbA1c) measured
quarterly, but the last measurement in the chart is from nine months ago. Ms.
Parker confirms that she did have blood drawn for the HbA1c test three and six
months ago. Dr. Johnson checks the electronic lab results reported on the computer and finds the HbA1c results from six months ago; the value from three
months ago is missing. All of the available readings for the past year are greater
than 8.0. Dr. Johnson sorts through his old handwritten notes on the criteria for referring patients with diabetes to a specialist and recognizes that it may be time to
refer Ms. Parker to an endocrinologist for additional professional input.
Dr. Johnson continues the visit by confirming that a dilated pupil retinal examination and a lipid profile have been measured in the past year but tells Ms.
Parker to go ahead and schedule those tests again in the next three months. Next,
Dr. Johnson examines Ms. Parkers feet and concludes the visit by mentioning that
her blood pressure is normal and there is no protein in her urine today. Dr. Johnson
Direct accountability for clinical outcomes within healthcare organizations was primarily through health professionals themselves. Accountability by
professionals has been the traditional role of the professions in society (Freidson 1994). Highly institutionalized clinical services such as surgery are monitored and managed through reporting incidents such as nosocomial infections
and postsurgical wounds. In general, clinical outcomes were not measured or
monitored as part of the domain of organizational responsibility.
The shift of organizational accountability to clinical outcomes was stimulated by the managed care movement of the 1970s with capitation-based financing. Capitation-based financing allowed insurance companies and corporations paying insurance premiums to shift the focus from clinical services to
clinical outcomes. Clinical outcome measurement and reporting have been
developed by agencies such as the National Committee on Quality Assurance.
then writes on a piece of paper that Ms. Parker is to schedule an appointment with
Dr. Smith at the Diabetes Center in the next month and schedule a dilated pupil retinal examination with Dr. Wright in the next three months. Dr. Johnson asks his nurse
to copy and forward relevant clinical values from Ms. Parkers chart to Dr. Smith. Dr.
Johnson hopes that the information will arrive at the appointment.
Before Ms. Parker leaves she asks if it would be useful for Dr. Johnson to
receive the blood glucose and diary information in an electronic form. She says
she has read about new glucose monitors that have the ability to store blood glucose levels, which can then be downloaded into an office-based information system to assess the patients blood glucose over time. She has also read about
handheld diabetes diaries. Dr. Johnson confesses that while her suggestion is
great, he would have no way to incorporate this electronic information into his
paper charts.
Dr. Johnson sees four more patients with diabetes that same day. Unfortunately, most of them do not have the same high level of self-management skills as
Ms. Parker. Reviewing and remembering all of the important elements of quality
diabetes care is tedious and time consuming for both the patient and the physician. One of these patients was referred to an endocrinologist at a nearby academic health sciences center two weeks ago, and Dr. Johnson was pleased to receive a letter on the referral. It suggested providing individualized medical
nutrition therapy under the guidance of a registered dietician to assist in achieving treatment goals. The endocrinologist also recommended performing the HbA1c
test at least quarterly because the patient was not meeting glycemic goals. Dr.
Johnson noted that nutrition therapy was already being aggressively pursued and
felt that the referral did not really add much to the treatment plan.
Problem Solving 3.1 discusses an example of clinical process improvement
related to diabetes management.
Stephen A. Brietzke, M. D., associate clinical professor,
Cosmopolitan International Diabetes and Endocrinology Center,
University of MissouriColumbia
The federal government, through the Centers for Medicare & Medicaid Services (CMS), is the largest payer for health services and is starting to demand
improved clinical outcomes and experiment with incentive programs to reward high quality (U.S. CMS 2004). Increased organizational accountability
for clinical outcomes has caused healthcare organizations to examine more
closely the nature of clinical outcomes measurement, variation in clinical decision making, and clinical processes improvement. Clinical leaders in healthcare organizations must understand these principles to develop an effective
clinical strategy for the organization.
55
56
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Variation
in clinical
decision
making
57
Reduction of
medical errors
and improved
patient safety
The changing role of consumers in society and in the health system is a third
force changing accountability of healthcare organizations. The values and
Consumerism
58
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
PROBLEM
SOLVING 3.1
Chronic Care Is
a Continuous
Clinical Process
Mr. Phelps, the practice manager, has met from time to time with Dr. Johnson to exchange some ideas about the use of an electronic medical record (EMR) system in
the clinic with the function of creating disease registries and report cards.
For some time Dr. Johnson has been thinking about upgrading his paperbased chart system to an EMR. Following his discussion with Mr. Phelps, he concludes that an EMR would be very helpful in creating forms, which can document at
a glance when the patients last HbA1c, microalbumin, and lipid profiles were performed. He recalls seeing demonstrations of EMRs at a recent medical conference,
and it seemed attractive to be able to create registries and report cards specific to
common diseases such as diabetes. If he could create shortcuts for the documentation process, that would give him more time to review results with patients, answer questions, and provide feedback and education. The report cards could be effective both in informing patients about important aspects of their diabetes disease
status and improving his own performance in caring for such patients. Dr. Johnson
would be able to use the report cards as his own just in time reminder to order
recommended tests and examinations when needed. It would also be great if the
EMR system provided links to the latest clinical practice guidelines and recommendations.
The following factors should be considered when assessing a potential innovation like the EMR and its effect on, for example, diabetes management:
Structure of the clinical processes, taking into consideration the elements of
time, location, and people involved
Where handoffs take place and where errors will most likely occur
Types of clinical evidence available through clinical guidelines for diabetes
care, using such sources as the National Guideline Clearinghouse
Whether the patient is interfering with the treatment process for this complex
and chronic disease
Whether all parties involved in the patients care can agree on the best course
of treatment given the evidence available
How a treatment protocol can be coordinated across individuals, time, and
location
59
60
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
FIGURE 3.1
Five
Coordinating
Mechanisms
M
Analyst
Manager
Operator
Operator
M
A
Input
skills
Work
processes
Outputs
(c) Standardization
Source: Mintzberg, H. 1979. The Structuring of Organizations, 1st ed. Reprinted by permission of Pearson
Education, Inc. Upper Saddle River, NJ.
quality or performance parameters. Performance improvement through standardizing outcomes allows better quality measurement and comparison. Improved quality measurement and comparison allow for quality control and organizational learning about improving processes. By standardizing processes,
the relationship between process and outcome can be scientifically measured.
Knowing the relationship between process and outcome provides the basis for
improving processes based on evidence. This assumption underlies the work
of Deming and others on process improvement to achieve Six Sigma quality
(Walton 1986, 1990). Coordination of work can also be achieved by standardizing inputs. The standardization of inputs enables everyone involved in
the work process to understand the base of knowledge, skills, and responsibility of each health professional. This characteristic of work design is deeply
embedded in the structure of healthcare organizations and systems. It constitutes the DNA of healthcare organization design.
Mintzberg (1979) applies his model to a range of industries and concludes that the nature of work varies by industry; therefore, optimal structures
for carrying out work differ by industry. Highly professionalized industries traditionally have had difficulty standardizing outcomes and processes and tend
to standardize inputs (Mintzberg 1979, 34879). This has been characteristic
of the health industry, and one need only visit a hospital or clinic to readily
observe the phenomenon. The level of knowledge and competency of health
professionals is represented by academic degree, professional certification,
title, dress, and privileges. The standardization inherent in the training and licensing of health professionals serves as the basis for coordinating work
processes. Work processes consist of handoffs between specialized professionals, departments, and institutions. The qualifications and responsibilities of individuals can be easily identified by their professional positions. Competency
is ensured primarily by the profession itself based on licensure and certification. The structure of the work process in the health industry is based on
handoffs from professional to professional. The clinical process consists of
linking disparate jobs.
Sociologists and organizational theorists over the years have concluded
that outcomes and work processes of professional work cannot be standardized. This is an assumption on which healthcare organizations and systems
have historically been structured. If it is true, the full potential envisioned by
those wanting to reduce medical errors and variation can never be achieved.
The concepts of Six Sigma quality and autonomous professional decision making are incompatible. The great challenge to implementing process improvement strategies is to change the underlying assumptions on which healthcare
organizations are structured. A growing body of evidence refutes the assumptions long held about the work of professionals. An example of attempts to introduce standardization into medicine occurred as early as 1893 with the
French Bertillon classification system (Collen 1995, 105). In 1948 the World
Health Organization first published the system as the International Classification of Diseases. While this effort focused on a classification system used to code
and classify mortality data from death certificates, it developed a standard vocabulary and became the first major contribution of medical informatics to the
advancement of medical science and health services delivery. A new revolution
is currently underway to develop measures for classifying health outcomes to
provide the basis for measuring and comparing clinical quality (Epstein 1996).
If clinical outcomes can be measured, there will be incentive to provide a degree of standardization of clinical processes used as the basis for quality improvement. Growing evidence supports the claim that clinical processes can be
standardized as a basis for improving clinical outcomes (Berwick 1991). This
science is enabled by the field of health informatics through the development
of large databases and rapid computing speed necessary to study causal relationships in a range of diseases. Informatics provides the basis for bringing to
61
62
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
practitioners clinical guidelines and protocols that provide evidence-based solutions to complex clinical problems.
Mapping the human genome will increase exponentially the amount
of information and level of evidence available to health professionals. The integration of the genomic information with disease databases used in clinical
decision support systems will be a core technology in health. There is clearly
much to be done technically in health informatics, bioinformatics, evidencebased medicine, and genomic medicine to bring to full measure the potential
of these merging sciences. At the same time, much existing technology and
knowledge are available but not being used by health professionals and organizations. The gap in using what we know is not one of technology but of
its application in complex healthcare organizations that were structured
under a different set of assumptions. The following section introduces some
of the issues needing attention in health systems.
practices. Decision support can be divided into clinical guidelines and clinical pathways. Decision support can vary from compiling and reporting patient information to bringing various levels of evidence to support a diagnosis and course of treatment. Knowledge systems retrieve, process,
analyze, and report information gathered from clinical trials to bring the
best clinical evidence to the point of the clinical encounter. They might
also include clinical judgments that incorporate experience and values. The
ways in which clinical decision support systems are applied depend on the
clinical strategy of each organization. They might be optional for physicians, or their use might in fact constitute the clinical strategy.
The clinical
encounter
63
64
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
of insurance products thus influenced to a varying degree the clinical decision. Insurance reflects the business strategy of the organization starting to
influence, albeit indirectly, the clinical strategy. The term third party identified an important institutional influence on the patient-practitioner relationship; it did not have a positive connotation with physicians and was viewed
as interfering with clinical decision making.
Private insurance and later social and public insurance mechanisms
were designed around the existing structure of the health system and clinical
decision making. Insurance principles were based on fee-for-service, where
the patient has freedom of choice of physician, hospital, and services. While
clinical decision making was influenced by benefit packages and financial incentives, considerable decision-making autonomy continued to be afforded
to health professionals. Insurance payment for services did alter the clinical
decision behavior, but not the structure of the clinical decision-making
process. Cost-based reimbursement allowed for the maximum level of professional decision-making autonomy. External incentives and rules, however,
became part of the business strategy of healthcare organizations.
Capitation as an alternative to fee-for-service financing increased in
importance in the 1970s. The managed care movement was the initiative of
the industrial community, stimulated by the rapidly rising costs of healthcare
and the unexplained variation in service utilization. Insurance companies
took the initiative to create new financial incentives as well as externally imposed rules on clinical decision making as a means of decreasing the excessive
use of clinical services.
Changing
clinical
behavior at
the point of
encounter
Capitation financing imposed external rules to change clinical decision making. Early approaches to managed care were rudimentary in nature and did
not allow a great deal of individual flexibility. Rules-based decisions were
broadly applied and included preadmission authorization or preauthorized
procedures. Financial incentives included withholding a portion of the capitation fee to create an incentive pool, which would be shared with the physician if performance standards were met. These approaches were not popular
with health professionals or consumers, and managed care as a concept lost
considerable favor with these groups. Health professionals criticizing the
manner in which they delivered services to patients became self-destructive as
a clinical strategy. Capitation as a financing concept has the potential of aligning financial rewards with clinical outcomes if providers assume the risks and
reap the rewards. Instead, capitation became an insurance overlay on a health
system designed around a different set of assumptions and was not effective
or popular. Changing clinical decision-making processes by external controls
is unpopular with both health professionals and consumers.
Clinical researchers in the 1990s examined how clinical behavior could
be changed using clinical evidence but preserving the decision-making auton-
65
Adults and adolescents with type 1 diabetes should have an initial dilated and
comprehensive eye examination by an ophthalmologist or optometrist within
three to five years after the onset of diabetes. (B)*
Patients with type 2 diabetes should have an initial dilated and comprehensive
eye examination by an ophthalmologist or optometrist shortly after the diagnosis of diabetes. (B)
Subsequent examinations for type 1 and type 2 diabetic patients should be repeated annually by an ophthalmologist or optometrist who is knowledgeable
and experienced in diagnosing the presence of diabetic retinopathy and is
aware of its management. Less frequent exams (every two to three years) may
be considered with the advice of an eye care professional in the setting of a
normal eye exam. Examinations will be required more frequently if retinopathy
is progressing. (B)
*B indicates that there is supportive evidence from well-conducted cohort studies and case-control studies.
Source: American Diabetes Association. 2004. Standards of Medical Care in Diabetes. Diabetes Care 28 (Suppl. 1):
S4-S36.
FIGURE 3.2
Clinical
Guideline for
Diabetic
Retinopathy
Screening and
Treatment
66
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
is based on evidence derived using rigorous scientific methods. Scientific evidence is a compelling argument for clinical decision support systems. Second,
clinical guidelines are developed by professionals and adapted by colleagues
who practice together and have mutual respect. The scientific rigor supporting clinical guidelines and ownership by professionals create great potential for
implementation and institutionalization of these decision-making tools.
Changing behavior depends on an understanding of and respect for the logic
supporting the change. Decision rules externally or internally imposed and
lacking the support of scientific evidence are less likely to be accepted and
used.
The acceptance and use of clinical guidelines reveals important insights
into clinical decision behaviors. The acceptance of clinical guidelines depends
on a number of factors such as the level of scientific support provided and
how they are presented to clinicians (Balas et al. 1998). Guidelines supported
by clinical trials have been found to be most effective in changing physician
behavior in that they represent the highest form of evidence (Balas et al.
1998). This suggests that the presentation of clinical trials should include the
level of evidence supporting the guidelines. Guidelines based on expert judgments have been found to be less acceptable than guidelines based on clinical trials. Considerable individual physician variation as to the level of evidence desired also exists. This places additional requirements on IS that
enable health professionals to access additional detail if desired. For example,
a medical resident might desire more detail than a seasoned board-certified
physician. Other factors affecting the acceptance and use of clinical guidelines
include their availability at the point of decision making (Balas et al. 2000).
Factors such as the length of time health professionals are willing to wait for
a computer response to a query before abandoning its use as a decision tool
become important research questions. Acceptable waiting times have been
found to be measured in terms of seconds.
Research has revealed that summary and retrospective reports on clinical performance are less effective in changing behavior even though they are
widely used in organizations (Balas et al. 1996). A range of topics on humancomputer interface and data presentation has produced rich areas for informatics research. Findings from this research inform design and operational
decisions for computer applications in clinical decision making. At a more
basic level organizational leaders must understand the assumptions inherent
in the use of clinical guidelines regarding the traditional role of health professionals in organizations.
The introduction of clinical guidelines in healthcare organizations
gives rise to questions of organizational policy and design. Will the use of
clinical guidelines be optional for health professionals? Will guidelines be imported from external sources or developed by each professional staff for their
own use? If external sources are used, which ones will be selected, and on
what basis? Does external derivation of guidelines affect acceptance and use?
Will health professionals be allowed freedom to consistently deviate from the
guidelines, or will colleagues enforce strict review and compliance? What is
the balance between having clinical guidelines accepted and used and the freedom to interpret the appropriateness of the guidelines? These important
process and behavioral questions need to be addressed by health professionals, organizational leaders, and health services researchers in the development
of clinical strategy in healthcare organizations.
Organizational issues raised by the application of clinical guidelines include those of measuring clinical outcomes, requiring the standardization of
vocabularies, and creating databases to serve multiple users and purposes. The
organizational logic for clinical decision making is requiring changes in the
structure of the clinical process and the IS that support it. Evidence indicates
that clinical decision support systems produce improved outcomes, but evidence alone will not bring about health systems change. Information strategy
must be aligned with the new organizational strategy, specifically a new clinical strategy. Clinical process redesign is new territory for managers because organizations have historically avoided dealing with the clinical function as an organizational strategy. Clinical guidelines and other clinical information
interventions assume the organization will take responsibility for clinical outcomes and strategy and will integrate clinical and business strategies. This is the
coming of the corporation in healthcare.
The clinical
process
67
68
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
out of necessity, not by design. The clinical process has become more complex
because of the increased complexity and specialization of medical care and the
changing role of consumers. These factors, along with the rapidly increasing
numbers of chronic care patients within the system, are compounding the opportunity for errors.
The expansion of managed care in the 1970s introduced several new approaches to managing the clinical process. Early managed care plans required
that patients enter the health system through a gatekeeper, typically a primary
care physician. The logic was to discourage patients from entering the health
system through what were considered to be costly medical specialists. The
economies of this strategy have never been clearly documented, but these externally imposed rules did alter the clinical process. Other attempts to alter the
process include carve-out models in which specialized services such as mental
health were referred outside the health plan to specialty mental health services.
Patients could not access selected services, that is, would not be covered by the
plan, except through referral by physicians serving as gatekeepers for the plan.
Case management is another structure for managing the clinical process.
Case management coordinates services across a number of health professionals
by an individual or team of individuals. Case managers are usually nurses or social workers, depending on the nature of the case. This model typically has one
or two health professionals managing the case, consistent with the historical
structure of how clinical work in the health system is carried out. Work is coordinated in a case management model by a health professional with skills most
central to the case. The case manager controls the flow of the clinical process,
or the handoffs, from one professional to another. Case management does not
reengineer or standardize the clinical process, but rather assigns one individual
or team the task of coordinating the work process.
Structuring
the clinical
process
One early attempt to standardize the clinical process was initiated in nursing
services (Zander 1992). It is instructive that a health professional, against all
conventional wisdom, decided it was possible to standardize processes for
nursing care in hospitals. Zanders early applications were for relatively simple
processes, within a single institutional setting, and for a single service. Surgery
was selected initially because processes were relatively well defined in terms of
technology, time, and territory. Standardizing the process meant that care
pathways were defined for a given diagnosis and applied to patients admitted
for that diagnosis. Care plans included preferred standard practices developed
from a population of patients and adapted to fit individual patients. Zander
and others accomplished what many said could not be done, that is, standardize a work process for highly professional staff.
The early work of Zander gave rise to the development of clinical pathways to a range of other clinical applications. Clinical pathways are an adaptation of the concept of critical pathways, analytical techniques that are wellestablished and broadly applied in product industries and increasingly in the
services sector. They have not been widely applied to healthcare organizations because of disagreements on standardizing clinical processes. The use
of the term critical creates certain sensitivities for health professionals, and
alternative phrases such as clinical pathways or integrated pathways have
been adopted. The term integrated pathways acknowledges that chronic
care frequently includes comorbidities that put patients on more than a single pathway (Hicks and Bopp 1996). Integrated pathways are defined as
clinical management tools that
organize, sequence, time, and coordinate the major interventions of
healthcare providers across the continuum of care for particular case
types or conditions and
bridge clinical specialties, functional departments, care settings, and organizational boundaries.
Clinical pathways can be developed by healthcare teams drawing on
the specialized skills of physicians, nurses, and other health professionals as
well as the involvement of the patient. They can standardize the process by
defining a medical condition and the type and sequence of services to be
provided, by whom, and when. They integrate information into a single
grid linking elements of the clinical process to organize, sequence, time, and
coordinate care. The standardized process serves as a basis for integrating
services and managing them over time, territory, and technology. Clinical
pathways are appropriately developed by teams of health professionals based
on the best clinical evidence. They do not reduce the importance of professionals in the caregiving process, but they do require that health professionals work in teams and assume a degree of standardization of the clinical
process. They are minimally invasive of the existing decision process but are
nevertheless invasive in that they reduce individual decision-making autonomy. Clinical pathways constitute a profound restructuring of the clinical
process and strategy in healthcare organizations.
Restructuring the clinical process necessarily involves the patient and
family. Clinical decision processes allow patient involvement and input and
can result in changing patient behaviors as well. Clinical pathways can cause
patients to assume greater responsibility for their health and for managing
their diseases. Figure 3.3 presents an example from a growing literature on
using information to change patient behavior; as in this asthma-related illustration, managing the clinical process can and should involve the patient and
potentially the family. Patient involvement in decision making facilitates true
patient-centered care. As patients become coproducers in the clinical process,
care must be integrated across the entire clinical process. Clinical pathways
are based on information structures, not functional structures, and allow the
patient and family to become participants in the process. IT allows the
process to overcome the increased complexity caused by adding participants
69
70
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
FIGURE 3.3
Clinical
Pathway for
Asthma
Management
Involving
Patient and
Parents
Site/Sample
This randomized controlled trial involved 95 children (ages 6 through 16) with
asthma and their parents. Children and parents resided in Halifax County, Nova
Scotia, Canada.
Intervention
Asthma education for children and their parents occurred during three months of
clinic visits and home visits. Topics covered included the mechanisms of asthma,
maintaining healthy behavior and environment, avoidance of asthma triggers, inhaler instruction and technique, functions and taking of medications, and managing an asthma attack.
Effects
Improved inhalation technique (94.7 percent vs. 55.6 percent, p = .0005)
Improved small airway function (pulmonary function data p = .001)
Improved asthma management, child took responsibility (72.1 percent vs. 33.1
percent, p = .006)
Decreased school absences (10.7 days vs. 16.0 days, p = .04)
Decreased pediatrician visits (26 visits vs. 66 visits, p = .017)
Decreased hospital days (3.67 days vs. 11.20 days, p = .02)
Source: Hughes, D. M., M. McLeod, B. Garner, and R. B. Goldbloom. 1991. Controlled Trial of a Home and
Ambulatory Program for Asthmatic Children. Pediatrics 87 (1): 5461.
and increasing the dimensions of time and territory. The clinical pathways can
be used to structure clinical processes within a facility and manage the process
beyond the facility. Clinical pathways are structured information and are easily
extended to other locations, organizations, and systems. They can be extended
to the patients home, school, or work environment. They would enable, for
example, managing childrens asthma in the school environment, where children spend a considerable percentage of their time. Clinical pathways are very
nimble structures that can be easily changed and adapted to changing environments.
Consideration of patients as coproducers of health is important when
addressing clinical process redesign. To overlook patient involvement maintains traditional roles of health professionals, resulting in improving clinical
processes that are themselves obsolete. The effective development and application of clinical pathways requires organizational leaders who understand clinical decision making, informatics, organizational structure, and behavioral
change. Clinical pathways provide a mechanism for organizations to improve
clinical processes as a means of achieving Six Sigma quality. They address the
challenge presented by IOM (2001) regarding the occurrence and potential
reduction of medical errors. Clinical pathways can also become an enterprise
strategy, giving organizations a competitive edge in the market for achieving
exceptional levels of quality and efficiency. Leadership for changing the clinical
strategy in organizations will come from physicians, nurses, other health professionals, and corporate executives and will take on hundreds of years of tradition and values surrounding clinical decision making. Restructuring the clinical process will require organizational restructuring and the development of
an information strategy to support it.
71
72
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
what can be recovered through the use of new process improvement strategies. This argument supports preserving the domain of health professionals
in clinical decision making. The challenge is to develop structures for doing
so within healthcare organizations. Organizational leaders must lead the
transformation of clinical strategy but maintain a balance of professional autonomy, using the best evidence-based solutions for clinical decisions and
processes; health professionals will have to change how the clinical process is
carried out within organizations without diminishing their role as professionals. Health professionals must learn to function within corporate settings and
abandon traditional beliefs based on individual professional autonomy. Educational programs preparing new health professionals must include important content in advanced IT, teamwork, evidence-based decision making,
and clinical process improvement. These competencies cannot be understood or applied outside corporate environments. Medical and nursing educational programs that do not acknowledge the reality of the changing
healthcare environment are preparing graduates for systems that will no
longer exist.
73
and Bopp 1996). Managers envision care being coordinated within such a system because all units are contained within the same organizational structure
and report through the same management hierarchy to the board.
Most integrated heath systems retain a hierarchical structure, reflecting
a continuous dominance of the business strategy of the organization. Integrated delivery systems have been effective in gaining access to capital, expanding markets, and increasing operating efficiencies. Hierarchical structures
are familiar to managers because they do not alter traditional assumptions
about how healthcare organizations are structured and managed. The individual units are typically motivated to suboptimize their performance and thus
maintain a degree of independence and competitive goals. This occurs because they are regarded as separate business/clinical units that are evaluated
separately, rewarded for their own performance, and have independent strategies and, frequently, independent missions and cultures. They function just
the way they are structured, and that is the problem. Hospitals also continue
to hold their position as the center of the health system, their traditional role.
Integrated health systems have been less effective in providing restructuring
of the clinical process, although all of the units of production are under the
same governance structure. This is true because, while integrated systems
might have a stated goal to integrate clinical services, they have not developed
a true clinical strategy. The traditional strategy of autonomous clinical decision making is the same as it was for the stand-alone organizations.
The horizontal arrows in Figure 3.4 depict how clinical work is carried out within integrated health systems, requiring patients and health professionals to coordinate services across professionals and work units. Managing clinical processes within such a structure poses the same challenges as
among freestanding organizations. Integration of production units within a
given system may or may not facilitate the process of developing a strong
FIGURE 3.4
Contemporary
Integrated
Health System
Healthcare
System
Mental
Home
ICF
SNF
Rehab
Community-based services
Clinic
Acute
Hospital
74
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
clinical strategy. Freestanding systems will carry out integration within the
market through loosely coupled structures, whereas formally integrated systems involve greater bureaucracy with its resultant delays, resistance to
change, suboptimization, and organizational politics. Neither has proven to
be a superior model because both lack the commitment or ability to develop
an effective clinical strategy.
Conclusion
Evidence supports the use of clinical guidelines and pathways as a means of
structuring and managing more effectively the clinical process. Broad application to healthcare organizations has not occurred because these processes are
inconsistent with how contemporary healthcare organizations are structured
and managed. The development of an information strategy within healthcare
organizations is based on the assumption of a new clinical strategy. However,
the organization has not taken on the development of a new strategy, and IS
have not been effective in initiating it. Decision support tools conflict with
how health professionals have been trained and are accustomed to practicing
in organizations. If the existing design of healthcare organizations and systems
were not in place, we would probably not design them the way they are. But
they are in place, and managers have not had the ability to change them.
Changing clinical strategy is the challenge to organizational leaders. How can
organizational leaders bring about this transformation and survive in the
process? The system needs skilled leaders who will look to the future and challenge traditional values and assumptions but honor and respect health professionals and their appropriate role in healthcare organizations. Organizational
leaders must go forward and transform the system. They cannot spend energy
and resources trying to preserve the past. The technology exists to redesign
clinical processes, organizations, and systems.
5. What are the difficulties and potential value of extending the International Classification of Diseases to include a classification of evidencebased treatment protocols?
6. What are the relative influences of science and health system culture and
tradition in developing a standard classification of treatment protocols?
7. If clinical guidelines are supported by evidence, why has their acceptance and use been slow in healthcare organizations?
8. Discuss how clinical pathways differ from clinical guidelines and why
the former are much more difficult to implement.
9. How do clinical pathways constitute a form of organizational structure,
and what are some of the qualities of such structures?
References
American Diabetes Association. 2004. Standard of Medical Care in Diabetes.
Diabetes Care 28 (Suppl. 1): S4S36.
Balas, E. A., S. M. Austin, J. A. Mitchell, B. G. Ewigman, G. D. Brown, and G. T.
Perkoff. 1996. The Effect of Physician Profiling on Utilization of Clinical
Procedures: A Multi-Level Meta-Analysis of Randomized Clinical Trials.
Journal of General Internal Medicine 11 (10): 58490.
Balas, E. A., S. A. Boren, and A. G. Griffing. 1998. Computerized Management
of Diabetes: A Synthesis of Controlled Trials. In A Paradigm Shift in
Health Care Information Systems: Clinical Infrastructure for the 21st Century; Proceedings of the 1998 AMIA Annual Symposium, edited by C. G.
Chute, 29599. Philadelphia: Hanley & Belfus.
Balas, E. A., K. C. Su, J. F. Solem, R. Z. Li, and G. D. Brown. 1998. Upgrading
Clinical Decision-Support with Published Evidence: What Can Make the
Biggest Difference? In MEDINFO, edited by B. Cesnik, A. T. McCray, and
J. R. Scherrer, part 2: 84588. Amsterdam: IOS Press.
Balas, E. A., S. Weingarten, C. T. Garb, D. Blumenthal, S. A. Boren, and G. D.
Brown. 2000. Improving Preventative Care by Prompting Physicians.
Archives of Internal Medicine 160 (3): 301308.
Berwick, D. M. 1991. Controlling Variation in Health Care: A Consultation with
Walter Shewart. Medical Care 29 (12): 121225.
Brown, G. D., K. D. Bopp, and S. A. Boren. 2006. Assessing Communications
Effectiveness in Meeting Corporate Goals of Public Health Organizations.
Journal of Health and Human Services Administration 28 (3), in press.
Burns, L. R. 2002. The Health Care Value Chain, 41. San Francisco: Jossey-Bass.
Center for the Evaluative Clinical Sciences, Dartmouth Medical School. 1999. The
Dartmouth Atlas of Health Care 1999: The Quality of Medical Care in the
United States, A Report on the Medicare Program. [Online report; retrieved
8/23/04.] www.dartmouthatlas.org/atlaslinks/99atlas.php.
75
76
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Charns, M. 2000. Work Design. In Health Care Management: Organization Design and Behavior, 4th ed., edited by S. M. Shortell and A. D. Kaluzny,
191209. Albany, NY: Delmar Thomson Learning.
Chassin, M. R., R. H. Brook, R. E. Park, J. Leeseu, A. Fink, J. Kosecoff, K. Kahn,
N. Merrick, and D. Solomon. 1986. Variations in the Use of Medical and
Surgical Services by the Medicare Populations. New England Journal of
Medicine 314 (5): 28590.
Collen, M. F. 1995. A History of Medical Informatics in the United States: 1950 to
1990. Bethesda, MD: American Medical Informatics Association.
Epstein, M. 1996. The Role of Quality Measurement in a Competitive Market.
In Strategic Choices for a Changing Health Care System, edited by S. H. Altman and U. E. Reinhardt, 20734. Chicago: Health Administration Press.
Freidson, E. 1994. Professionalism Reborn. Chicago: University of Chicago Press.
Harry, M. J., and R. Schroeder. 2000. Six Sigma: The Breakthrough Management
Strategy Revolutionizing the Worlds Top Corporations. New York: Currency.
Hicks, L., and K. D. Bopp. 1996. Integrated Pathways for Rural Health Services.
Health Care Management Review 21 (1): 6572.
Hughes, D. M., M. McLeod, B. Garner, and R. B. Goldbloom. 1991. Controlled
Trial of a Home and Ambulatory Program for Asthmatic Children. Pediatrics 87 (1): 5461.
Institute of Medicine (IOM). 2001. Crossing the Quality Chasm: A New System for
the 21st Century. Washington, DC: National Academies Press.
Leape, L. 1990. Practice Guidelines and Standards: An Overview. Quality Review Bulletin 16 (2): 4249.
Leapfrog Group. 2004. Fact Sheet. [Online information; retrieved 8/28/04.]
www.leapfroggroup.org/FactSheets/LF_FactSheet.pdf.
Mintzberg, H. 1979. The Structuring of Organizations. Englewood Cliffs, NJ:
Prentice-Hall.
Normann, R. 2001. Reframing Business. Chichester, UK: John Wiley & Sons.
Pointer, D. D., and J. P. Sanchez. 2000. Leadership: A Framework for Thinking
and Acting. In Health Care Management: Organization Design and Behavior, 4th ed., edited by S. M. Shortell and A. D. Kaluzny, 11821. Albany,
NY: Delmar Thomson Learning.
Spare, N. C. 2000. The Four Pillars of Wisdom: A System for 21st Century Management. Zumikon, Switzerland: The Swiss Deming Institute.
Starr, P. 1982. The Social Transformation of American Medicine, 42049. New
York: Basic Books.
U.S. Centers for Medicare & Medicaid Services (CMS). 2004. Quality Initiatives. [Online information; retrieved 8/23/04.] www.cms.hhs.gov/quality.
Walton, M. 1986. The Deming Management Method. New York: Dodd, Mead.
. 1990. Deming Management at Work. New York: G. P. Putnams Sons.
Wennberg, J. G., and A. Helsohn. 1973. Small Area Variations in Health Care
Delivery. Science 182 (117): 11021108.
Further Reading
Bauchner, H., and L. Simpson. 1998. Specific Issues Related to Developing, Disseminating, and Implementing Pediatric Practice Guidelines for Physicians,
Patients and Families and Other Stakeholders. Health Services Research 33
(4, Suppl. III): 116177.
Mittman, R., for the California HealthCare Foundation. 2004. Using Clinical Information Technology in Chronic Disease Care: Expert Workshop Summary. [Online article; retrieved 08/30/04.] www.chcf.org/documents
/ihealth/UsingClinicalITinChronicDiseaseCare.pdf.
Redman, B. K. 1996. Ethical Issues in the Development and Use of Guidelines
for Clinical Practice. Journal of Clinical Ethics 7 (3): 25156.
Solberg, L. I., T. E. Kottke, M. L. Brekke, C. A. Calomeni, S. A. Conn, and D. G.
Davidson. 1996. Using Continuous Quality Improvement to Increase Preventative Services in Clinical Practice: Going Beyond Guidelines. Preventive Medicine 25 (3): 25967.
Sonnad, S. S. 1998. Organizational Tactics for the Successful Assimilation of Medical Practice Guidelines. Health Care Management Review 23 (3): 3037.
Weinstein, M. E., B. McCormack, M. E. Brown, and D. S. Rosenthal. 1998.
Build Consensus and Develop Collaborative Practice Guidelines. Nursing
Management 29 (9): 4852.
77
CHAPTER
4
INFORMATION STRATEGY EMPOWERS
ORGANIZATIONAL STRATEGY
Tamara T. Stone
Key Terms
Competitive
advantage
Chapter Outline
1.
2.
3.
4.
5.
Learning Objectives
1. Examine how information strategy can be used in healthcare organizations to achieve competitive advantage.
2. Understand how effective IT management can be used to ensure
that organizational resources are deployed to meet enterprise objectives.
3. Apply the resource-based view of enterprise, and frame its influence
on how tangible, personnel, and intangible information resources are
used to achieve competitive advantage.
4. Demonstrate that organizational culture and human issues play a key
role in successful information strategies.
5. Recognize how synergy between information and organizational
strategy can be achieved through a customer-focused enterprise strategy.
6. Explain how tangible assets in healthcare organizations can be transformed into value-added intangible resources through IT.
7. Demonstrate why commitment-based management is crucial to the
development of human capital in IT knowledge workers.
Resource-based
enterprise
Organizationand information
technology (IT)
based capabilities
Tangible resources
Intangible
resources
Human resources
(HR)
Learning
organization
Intellectual capital
Organizational
knowledge
Knowledge
management
Human capital
Knowledge
workers
Commitmentbased
management
IT transformation:
automation
IT transformation:
integration
IT transformation:
strategic
79
80
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Chapter Overview
This chapter uses the resource-based view of enterprise as a framework for understanding how information and organizational (business and clinical) resources can be transformed into unique capabilities, which in turn can be used
to achieve competitive advantage. Through this process the need to create
learning organizations in healthcare becomes apparent. The power of effective
information strategy to transform intangible resources into tangible assets, facilitate organizational learning, and create a customer-focused culture is discussed. The chapter concludes with a discussion of commitment-based management and articulates why this management approach is critical to successful
development of information technology (IT) human capital in healthcare organizations.
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
and between business and clinical work processes; this promotes increased
operational efficiency and effectiveness and thus improves competitive advantage. To be effective, IS must be fully integrated with these processes, both
facilitating and transforming them.
Integration of HR and IT
To some degree the IT and human resources (HR) functions become integrated in a knowledge-based organization. Health systems are built heavily
around human interaction and judgments, and IS must be fully integrated in
81
82
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
CASE 4.1
Integrating a
Clinical and
Business
Information
System
Deanna Doolittle heads the operations and special projects unit reporting to the
chief executive officer of a medium-sized academic medical group in central California. The organization consists of 59 specialty and primary care clinics, a threehospital system, and a medical group made up of 352 physicians representing all
major branches and specialties of medicine and medical research. Deanna has
been given the responsibility to develop an integrated practice performance reporting system that would allow practice managers and individual physicians
throughout the organization access to information on productivity, profit and loss,
clinical quality outcomes, and patient satisfaction in a persuasive and pervasive
format. Deannas project description developed as follows:
Create/adapt a highly utilized open information system for business intelligence, resulting in a holographic report incorporating all necessary practice
management parameters required to enable rapid and conclusive decision
making. Necessary system design includes open architecture capable of accepting data from proprietary and nonproprietary sources and agile enough to
promote rapid incorporation of additional data streams as dictated by changing financial, regulatory, and environmental pressures. System capabilities
must include data recombination and data-stream merge capabilities incorporating highly graphic user interfacing for the end user. Reports are initially to
consist of three data streams (revenue, service, and quality) in a drill-though
format incorporating tolerances.
Deanna has access to multiple discrete data sources including an expensive hospital-oriented electronic medical record (EMR) (35 percent implemented)
that provides near-real-time documentation, clinical decision support, and computerized physician order entry; well-established, visit-based admission, discharge, and transfer (ADT) system (updated every evening); home-grown patient
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
83
84
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
PROBLEM
SOLVING 4.1
Integrating a
Clinical and
Business
Information
System
Deanna Doolittles mandate to develop an integrated practice performance reporting system represents a classic stage of evolution of the application of IT in an integrated health system. Seldom does one have the opportunity to start with a
clean slate to build an information system. In practice IS consist of remnants of existing systems, all installed at different times and designed for different purposes.
In addition, the business and clinical work processes they are now expected to
support were not envisioned when the old systems were designed.
In this case the CEO has demonstrated considerable vision for the future,
with a focus on outcome assessment, process improvement, and managing quality at the operating level of the organization. The organization is anticipating payfor-quality programs and identifying quality as an enterprise strategy. No one in
the organization anticipated these programs when the current information strategy was designed.
The information system in this case has been asked to support a new management concept, and a number of issues have surfaced.
There are issues with the database. The EMR is patient based and encountered its own problems with multiple patient records within the hospital. The
ADT system, on the other hand, is visit based; a single patient might have a
different visit number for each clinic utilized. Visit numbers are assigned sequentially based on arrival. The ADT system is structured on a business logic,
and the EMR is structured on a clinical logic.
1991; Bharadwaj 2000; Connor 1991; Mata, Fuerst, and Barney 1995;
Rumelt 1984; Schulze 1992; Wemerfelt 1984). Organizations with comparatively greater numbers of unique resources increase their opportunities to
be competitive. In healthcare an organizations resources include those that
are tangible (diagnostic equipment, surgical instruments, laboratory devices
for conducting analyses, financial capital, and information hardware and
software), intangible (national or international name recognition and perceived quality as reflected in patient satisfaction analyses), and personnel
based (healthcare specialist expertise, HR coordination, and elements of a
commitment-based culture) (Bharadwaj 2000; Grant 1991). In isolation
these resources are not sufficient to create competitive advantage in healthcare organizations. Rather, an organizations development of efficient and
effective capabilities and processes for acquiring, disseminating, and utilizing
each of these resources is essential for competing within the industry.
A key venue for healthcare organizations to achieve competitive advantage is the systematic use of information resources to promote organizational
learning. To engage in continuous organizational learning, administrative
functions must incorporate IT. Information systems promote enterprisewide
growth and development by creating processes that combine human knowledge with mechanisms to access knowledge and drive administrative and resource efforts toward organizational learning. Healthcare organizations may
identify and focus on a small number of knowledge specialties that afford
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
Each information system is updated on a different basis, and using these data
to manage real-time practices and clinics results in reaching faulty conclusions.
End-user needs vary among professionals and between management and clinical users. Physicians in general want information in graphic medical format,
and managers want spreadsheets and financial terminology. They are looking
at the same picture but see different things.
There is always the issue of user acceptance; in this case 10 percent of the
physicians are reluctant users of IT if they are users at all. This will disappear
with time as younger health professionals enter practice.
Even with electronic medical IS, there is always the problem of duplicate
records. This might occur in the obstetrics department, for example, where a
newborn baby might have a record corresponding to the insured individual
(maybe the father), a record linked to the mother, a record under the name
Baby Smith, and a record under the full name of the baby.
Numerous other issues emerge from integrating clinical and business databases and IS in hospitals and clinics. As with all new IT developments, modifications must be made based on new demands and assumptions at the same time old
systems must be maintained and supported. These challenges require the highest
levels of collaboration among clinical, managerial, and informatics leaders. They
also require the full understanding and involvement of those who will make the
changes and make the systems work.
them recognition within the industry (Kangas 2003). The Mayo Clinic, for
instance, constantly reveals breakthroughs in care for patients with brain tumors and provides internationally renowned services for patients undergoing transplants (Mayo Clinic 2004). Investment in IT alone will not differentiate the organization either operationally or strategically. This
differentiation is achieved through the seamless transfer of research evidence
to practice. Aligning all processes to deliver patient-centered care and instituting effective information-based changes as new knowledge in each specialty area is acquired foster this seamless transfer. Problem Solving 4.1 explores some of the specific issues related to the application of IT in an
integrated health system.
In todays highly competitive healthcare industry, organizations
achieve greater distinction through their intangible assets of knowledge and
intellectual capital than through tangible assets of state-of-the-art equipment
and infrastructure (Roepke, Agarwal, and Ferratt 2000). Without knowledge and expertise, the capabilities of equipment and infrastructure cannot
be fully realized. However, attempts to develop and implement systems that
allow employees to share knowledge among the organizations clinical and
business functions often fall short of expectations (Pare 2002). Organizations often lack processes that allow them to disseminate and utilize their
current knowledge effectively or acquire and apply new knowledge to their
practices. In fact, a survey of 431 executives conducted by Ernst & Young
85
86
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
Information systems are the vehicles through which knowledge can be routinely disseminated and utilized, thus engraining learning processes in an organizations culture to sustain a competitive advantage.
Unfortunately, the fast-paced introduction of IT throughout the
healthcare system has led to less-than-optimal results. The presence of numerous technology system shortcomings and unintended negative outcomes reflects a lack of adequate attention to knowledge management structures that
would ensure adequate user input throughout all phases of the technology
design and implementation process as well as effective processes for troubleshooting and system adaptations. There are many reasons why web-based
and advanced technologies are not more successfully incorporated into
healthcare systems; however, the greatest obstacles appear to be shortcomings
in the healthcare culture and lack of attention to human issues (Lazarus
2001). An enterprisewide emphasis on knowledge management must be engrained in the organization for clinical and business personnel to acquire, disseminate, and utilize knowledge effectively with the support of IT. But if
technology implementation is to be successful, executives must first develop
a thorough understanding of organizational trust and communication concerns (Malato 2001).
With the success of technology implementation based on an organizations ability to engage in continuous learning and knowledge management,
it is important to consider practices that will engrain these in the organizational culture. As noted by KPMG (1998),
Moving to a culture that values and encourages innovation, openness, teamwork
and knowledge sharing requires leadership and, possibly, changes in relationships,
organisational structures and office environment. Management should consider
what they need to do to start and sustain this change and, in particular, on their
roles as examples to staff. Thorough and sustainable cultural change takes time,
but some useful initiatives can be taken quite quickly. For example, the creation
of a time and place where staff can meet to discuss their ideas and experiences,
that is clearly viewed by senior management as an investment rather than a cost,
can produce a tangible outcome and also have deeper symbolic effect.
For healthcare organizations to embody this type of commitmentbased culture, in which healthcare professionals are encouraged to share
knowledge and empowered to take initiative to engage in problem solving to
deliver patient-centered care, they will need to overcome their tendency toward a functional orientation. Such a level of organizational learning requires
a more cohesive structure and commitment-based culture that allow and encourage informational networking focused on a common goal. The ultimate
cultural unifier must be defined by the enterprise. Thus the customer, or more
precisely the patient, is the only reasonable source of unity for the disparate
healthcare entities.
87
88
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
89
IT-enabled
customer focus
90
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
services that reflect them (Bharadwaj 2000; Jaworski and Kohli 1993; Narver
and Slater 1990). Information technology can be used to facilitate effective
customer relationship management that involves such activities. Many organizations have designed and implemented IT systems that allow them to capture customer-focused information easily and efficiently. Through technology, organizations can rapidly track and predict their customers needs,
preferences, and desires and use this information to adjust their products and
services accordingly. Such information can be gathered, for example,
through the organizations web site, which may contain a section for consumer feedback or an online survey. Similarly, technology can be used to generate a mass mailing of surveys to current and potential customers to gather
customer profiles and interests. However, organizations will benefit most
from customer-focused information if their business and clinical functions are
networked so each component can determine how it must adjust to reflect
the changing needs, preferences, and desires of its customers. Conducting
the research without applying the information to an organizations products
and services represents a lost opportunity to increase customer satisfaction
and improve the organizations standing in the industry.
IT-enabled
knowledge
assets
IT-enabled
synergy
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
Automation
stage
91
92
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Integration
stage
In the integration stage, IT is used to link individual functions and departments within the organization. The cross-functional integration must be supported by an enterprise strategy that promotes the use of technology to create efficiency and improve quality. As interdepartmental linkages occur,
value-added IT is revealed through ease of communication, coordination, and
transfer of knowledge. Integration-stage transformation can occur when IT is
designed and implemented to link an electronic patient laboratory test results
system to family practice department systems so that physicians can access patient test information easily and quickly during an office visit. Alternatively,
technology can be implemented to allow physicians to create electronic patient prescriptions that can be sent directly to the pharmacy. This basic process
can be used to promote patient compliance with treatment and eliminate extra
work created by lost prescriptions.
Strategic
stage
In the strategic stage all entities within the organization learn to expect and
rely on technology to facilitate multiple cross-functional links. The value of
IT links is fully realized, and business and clinical departments understand
the benefits of functioning as a network. The use of IT is engrained in the organizations culture and is the foundation for strategy aimed at increasing organizational capabilities and learning to sustain a competitive advantage. In
this stage the learning organization fully relies on technology to manage
knowledge in order to adapt to change and address pressures and threats. Information technology utilization
provides collaborative links with external and internal systems that can
assist in reducing pressures in overextended service areas or improve
processes that are slow to adapt or produce substandard functioning;
allows managers to improve management practices and clinical decision
making;
gives leaders a more thorough understanding of the scope of problems
and helps identify the organizational components that contribute to
these problems; and
allows for knowledge acquired by others within the organization to be
more readily applied to learned principles, decision-making processes,
outcomes, and experiences.
Strategic-stage transformation can lead a healthcare organization to
implement a patient electronic medical record (EMR) system that is linked to
laboratories for retrieving test results, to the billing department for accessing
account balances from office visits or diagnostic testing, and to sources of evidence-based information and prescription information that can be accessed
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
readily. Such a network would provide enterprise personnel with the information needed to address patient questions and concerns more easily and to
provide complete and accurate customer-centered care. Strategies that empower the organizations human capital investment, that is, its knowledge
workers, do so by creating knowledge systems or IS that allow worker knowledge to be easily applied to daily processes and practices. These knowledge
systems evolve HR functioning into the strategic stage, which is marked by
open communication across functions, teamwork, and other qualities characteristic of a commitment-based culture.
93
94
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
to continuously gather patient feedback will find success only if the business,
clinical, and enterprise functions that plan to utilize it develop and follow their
own specific guidelines and practices to support the strategic goal. They may
create processes that allow them to provide input on the programs development to meet their information needs and uses, identify specific staff who may
access and manipulate the data, create training opportunities for users to fully
understand and take advantage of the systems features, create specific procedures for troubleshooting problems that arise in software functioning, and address other such important issues. An IT strategy for a web-based initiative to
support a patient satisfaction program, for example, will not be successful unless patient satisfaction is a well-developed clinical and enterprise strategy.
With a highly developed IT component that engages in continuous
learning and the development of capabilities to organize and manage practices and processes, IT can also add to the development of the healthcare organizations knowledge workers carrying out business and clinical functions.
Implementation of IT systems develops the organizations human capital by
requiring staff from each component to develop new technical skills and frequently to redesign work processes and adjust their job responsibilities. A
second-order HR action might be to modify job descriptions and evaluation
and incentive programs. For example, a healthcare organization may acquire
a physician e-mail program that allows patients to send direct e-mail inquiries
to their physicians. Physicians may require training to be able to use this form
of communication, and clinical managers may be required to consider additional compensation to reflect the added effort, time, and responsibility
physicians have to invest to make adequate responses to these inquiries. Utilization of such a system may markedly improve patient satisfaction. In addition, as healthcare organizations increase their use of IT, administrators may
aim to recruit or hire new business and clinical staff with comparatively more
experience in the utilization of healthcare technology.
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
Conclusion
Resource-based enterprises compete within their industry by developing
unique, efficient, and effective capabilities and processes for acquiring, disseminating, and utilizing their resources. Healthcare organizations with effective information strategies will promote IT, IS, and IM processes that enhance
the development, use, and continual growth of their intangible resources.
These strategies and processes make healthcare organizations able to respond
efficiently and effectively to environmental needs, changes, and pressures.
Through IT resources, new knowledge can be continuously acquired and
shared among organization functions, allowing workers to show more initiative and expertise in anticipating and responding to change as well as meeting customer needs, preferences, and desires. This type of learning culture
supports workers and enhances their skills and abilities, which increase the organizations capabilities and competitiveness.
95
96
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
3.
4.
5.
6.
7.
8.
9.
References
Barney, J. B. 1991. Firm Resources and Sustained Competitive Advantage. Journal of Management 17 (1): 99120.
Bharadwaj, A. S. 2000. A Resource-Based Perspective on Information Technology
Capability and Firm Performance: An Empirical Investigation. MIS Quarterly 24 (1): 16996.
Connor, K. R. 1991. A Historical Comparison of the Resource-Based Theory and
Five Schools of Thought Within Industrial Organization Economics: Do I
Have a New Theory of the Firm? Journal of Management 17 (1): 12154.
Grant, R. M. 1991. The Resource-Based Theory of Competitive Advantage. California Management Review 33 (3): 11435.
Hatten, K. J., and S. R. Rosenthal. 2001. Reaching for the Knowledge Edge: How the
Knowing Corporation Seeks, Shares and Uses Knowledge for Strategic Advantage. New York: AMACOM.
Hitt, M. A., P. G. Clifford, R. D. Nixon, and K. P. Coyne. 1999. Dynamic Strategic
Resources: Development, Diffusion and Integration. West Sussex, England:
John Wiley & Sons Ltd.
I n f o r m a t i o n St ra t e g y E m p owe r s O rg a n i z a t i o n a l St ra t e g y
Jaworski, B. J., and A. K. Kohli. 1993. Market Orientation: Antecedents and Consequences. Journal of Maketing 57 (3): 5370.
Kangas, K. 2003. The Resource-Based Theory of the Firm. In Business Strategies
for Information Technology Management, edited by K. Kangas. Hershey, PA:
IRM Press.
KPMG. 1998. The Power of Knowledge. [Online article; retrieved 3/14/05.]
http://www.kpmg.co.uk.
Kathuria, R., M. Anandarajan, and M. Igbaria. 1999. Linking IT Applications with
Manufacturing Strategy: An Intelligent Decision Support System Approach.
Decision Sciences 30 (4): 95991.
Khatri, N., T. Patrick, S. Boren, and G. Brown. 2004. Medical Errors and Quality
of Patient Care: The Commitment-Based Approach. Presented at the Annual Academy of Management Conference, New Orleans, August, 611.
Lazarus, I. R. 2001. Developing Internet Strategies Is a Top Priority for Hospital
Systems. Health Care Strategic Management 19 (4): 1213.
Malato, L. A. 2001. Nurses, Pharmacists and Information Technology in Public
Health Care. MPA thesis, Graduate College, University of Nevada, Las
Vegas.
Mata, F. J., W. L. Fuerst, and J. B. Barney. 1995. Information Technology and
Sustained Competitive Advantage: A Resource Based Analysis. MIS Quarterly 19 (4): 487505.
Mayo Clinic. 2004. Medical Services. [Online information; retrieved 8/16/04.]
www.mayoclinic.org.
Milner, E. M. 2000. Managing Information and Knowledge in the Public Sector.
London: Routledge.
Narver, J. C., and S. F. Slater. 1990. The Effect of a Market Orientation on Business Profitability. Journal of Maketing 54 (4): 2035.
Pare, G. 2002. Implementing Clinical Information Systems: A Multiple-Case Study
Within a U.S. Hospital. Health Services Management Research 15 (2):
7192.
Penrose, E. 1959. The Theory of Growth of the Firm. Oxford, UK: Blackwell.
Roepke, R., R. Agarwal, and T. W. Ferratt. 2000. Aligning the IT Human Resource with Business Vision: The Leadership Initiative at 3M. MIS Quarterly 24 (2): 32753.
Ruggles, R. 1998. The State of the Notion: Knowledge Management in Practice.
California Management Review 40 (3): 8089.
Rumelt, R. P. 1984. Towards a Strategic Theory of the Firm. In Competitive
Strategic Management, edited by R. B. Lamb, 56670. Englewood Cliffs,
NJ: Prentice-Hall.
Schulze, W. S. 1992. The Two Resource-Based Models of the Firm: Definitions
and Implications for Research. Academy of Management Best Paper Proceedings, 3741. Presented at the 52nd Annual Meeting of the Academy of Management, Las Vegas, NV, August 912.
97
98
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O rg a n i z a t i o n a l St ra t e g y
Further Reading
Ackerman, M., V. Pipek, and V. Wulf. 2003. Sharing Expertise: Beyond Knowledge
Management, edited by M. Ackerman, V. Pipek, and V. Wulf. Cambridge, MA:
MIT Press.
CHAPTER
5
MANAGING DATA, INFORMATION, AND
KNOWLEDGE
Timothy B. Patrick
Key Terms
Chapter Outline
Data
Information
Learning Objectives
Knowledge
Controlled
terminology
Ontology
Knowledge
representation
Interoperability
Knowledge
management
Semantic web
Chapter Overview
This chapter broadly examines some fundamentals of the management of
data, information, and knowledge in healthcare systems, emphasizing their
interrelatedness. First, Case 5.1 demonstrates central themes of the chapter. Next, the relationships among data, information, and knowledge are
99
100
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
considered from a philosophical point of view. The contribution of the management of data, information, and knowledge to the success of organizational strategy is then considered from a technical perspective. This section
stresses issues of representation and interoperability and focuses on the importance and use of controlled terminology and ontology. Social aspects of
interoperability are then considered and related to aspects of knowledge
management per se. The chapter closes with a brief account of the semantic
web. The role of the Internet as a vehicle for the exchange of data, information, and knowledge both within and between healthcare organizations and
their customers is expanding. The semantic web is a set of techniques and
standards intended to increase the capacity of the Internet as a vehicle for
data, information, and knowledge sharing.
101
As part of a hospital and clinic systems project to build a patient electronic medical record system, a core database group met weekly to discuss issues relating to
basic data elements and their display counterparts. In the course of one meeting,
during a discussion of what code sets would be used to record patient visits, one
member of the group, Mr. Johnson, urged that whatever decision was made on
that and related matters should be well documented. To emphasize the need for
such documentation, Mr. Johnson related a cautionary tale. Several years earlier,
Mr. Johnson said, in the course of preparing for a security audit, staff had discovered a series of medical record numbers that was not in use and whose purpose
was not documented so far as they could tell. Preparations for the audit required
that the series of medical record numbers be documented. After much consternation and digging through old files, staff were able to determine that those medical
record numbers were vestiges of a time when a mental health services unit, now
organizationally separate from the hospital and clinics, was part of the hospital.
The medical record numbers in that series were used at that time for patients of
the mental health unit. The point of the story, said Mr. Johnson, was that much
time and effort had been expended because some rather trivial documentation of
that series of medical record numbers did not exist. When Mr. Johnson had finished speaking, another member of the group, sounding exasperated, responded,
Well, all you had to do was ask me!
Problem Solving 5.1 details the issues surrounding interoperability of organizational knowledge.
CASE 5.1
Issues in
Organizational
Memory
102
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
Controlled
terminology
Two examples of a controlled terminology are the International Classification of Diseases: 9th Revision, Clinical Modification (ICD-9-CM) (U.S. Centers for Medicare & Medicaid Services 2003) and Medical Subject Headings
(MeSH) (U.S. National Library of Medicine 2004a). ICD-9-CM is used for
the purpose of assigning controlled terms and codes to diagnoses and procedures associated with hospital utilization in the United States, whereas MeSH
is used to index the publications included in the National Library of Medicines MEDLINE/Pubmed system.
Basic features of a controlled terminology include
1. a thematically restricted set of terms that are multiword noun phrases
selected purposively from natural language;
2. a set of alphanumeric codes for the terms;
3. a set of semantic relationships defined on the set of terms; and
4. optionally, a set of entry terms.
Terms
Alphanumeric
codes
Semantic
relationships
103
nonhierarchical relationship is is synonymous with. Consider the hypothetical example of a controlled terminology for health services. In such a terminology the term healthcare provider would stand in the relationship
broader than to the term physician, whereas the term physician would
be related by is-a to the term healthcare provider, and quite possibly the
term family practice physician would be related by is a subtype of to the
term physician. In addition, if the hypothetical controlled terminology includes non-English terms, it might contain the term mdecin (the French
word for physician), which would be synonymous with the term physician.
The entry terms are multiword terms that are not part of the controlled terminology proper (i.e., they are not used for representational purposes), but
rather are used to provide entry points to the terminology. For example, a
controlled terminology of diseases might include an entry term of sugar diabetes to support use of the terminology by laypersons. The term sugar diabetes would not be a term in the controlled terminology proper, but it
would provide an entry point to it. Users familiar only with the term sugar
diabetes could search, based on this term, to locate records actually encoded
with the related controlled terminology term diabetes mellitus.
Entry terms
Ontology
Representational uses of
controlled
terminology
and ontology
104
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
terms from MeSH are used in the National Library of Medicine MEDLINE/Pubmed (U.S. National Library of Medicine 2004b) system to construct representations of the informational content of medical literature.
In general, knowledge representations are themselves based on firstorder predicate calculus or some variant of it. Typically, controlled terminology and ontology participate in the representation of knowledge by providing
at least part of the lexicon for statements in the logic. Use of such logic-based
knowledge representations can enable an organization to better leverage its
data and information toward organizational goals. For example, use of controlled terminology and ontology can support the construction of knowledge
bases for use in medical reasoning. Such a knowledge base might consist of
unambiguous conditional rules that form the basis for a clinical reminder or
alert system intended to improve care and support quality improvement. The
use of a standard logic such as predicate calculus to represent the logical structure of the rules ensures that inferences from the knowledge base are logically
valid.
The use of controlled terminology and ontology as predicates helps to
ensure that the meaning of the rules is unambiguous. For example, consider
this conditional rule: If a person is overweight, then he is at risk for heart
disease. In this rule, the logical operator is the ifthen conditional, and
two of the predicates are overweight and heart disease. The rule might
be expressed as, If a person has android obesity (disorder), then that person
is at risk for heart disease (disorder), where android obesity (disorder)
and heart disease (disorder) are terms from SNOMED CT. The meanings
of those terms are explicitly specified in SNOMED CT and, taken with the
explicit logical structure of the rule, render the meaning of the rule unambiguous.
In this case important organizational knowledge regarding the purpose of a particular series of medical record numbers was not generally available. Persons who
did have that knowledge did not realize that it was not more generally understood
and available. The lack of explicit documentation of that knowledge was not trivial
in its effects, but rather could have direct bearing on the achievement of the organizational mission with regard to Health Insurance Portability and Accountability
Act (HIPAA) compliance.
Explicit documentation of data, information, and knowledge representation
standards is always critical.
Organizational knowledge that is explicitly represented may become implicit
over time and become less generally available throughout the organization.
The problem of the interoperability of data, information, and knowledge
throughout an organization is only partially a technical informatics problem. It
is also a problem of social relationships, attitudes, and communication among
persons in the organization.
The use of generally accepted and well-documented standard representational schemes by different actors may not be required to ensure interoperability. However, the use of such standard schemes may facilitate interoperability. Controlled terminology and ontology as standards for representing data,
information, and knowledge have long been recognized as important to this
end. For example, in 1963 the Group dEtude sur lInformation Scientifique,
Marseilles, proposed a system of scientific information sharing based on the
idea of an intermediate lexicon (Coates, Lloyd, and Simandl 1979). A group
of scientific study centers could share information (e.g., scientific reports) by
use of a standard switching language, or intermediate lexicon. Each study center would use a controlled terminology or ontology, chosen according to local
preference, to represent its information. The information contained in a given
document or report would be represented by terms in the controlled terminology or ontology. For example, if the document were about possible links
between obesity and heart disease and the representational language were
SNOMED CT, the terms used might be android obesity (disorder) and
heart disease (disorder).
Interoperability would be achieved by the use of an intermediate language standard that would relate terms from different local controlled terminologies that express the same concept.1 By means of such an intermediate
switching language, it would be possible for a given study center to use its
customary local terminology to search for and acquire information in the collection of another study center even though that information was represented
there by a different controlled terminology. The key to this scheme, aside
from the intermediate lexicon or switching language itself, is that each individual study center uses a controlled and well-documented terminology to
represent the information in its collection.
105
PROBLEM
SOLVING 5.1
Issues in
Organizational
Memory
106
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
A contemporary example of this solution to the interoperability problem is the Unified Medical Language System Metathesaurus (U.S. National
Library of Medicine 2004c). The Metathesaurus is a large database that relates
terms from more than 100 controlled vocabularies, terminologies, indexing
languages, and coding systems, including the three examples (ICD-9-CM,
MeSH, and SNOMED CT) discussed earlier. Collectively, these are referred
to as source vocabularies in the Metathesaurus documentation. The Metathesaurus is organized by meaning; terms from different source vocabularies are
linked by metaconcepts. Two terms are assigned to the same metaconcept
when those terms express or are names for the same concept. Thus, the
Metathesaurus provides a means of translating the representation of data, information, and knowledge based on one source vocabulary to a representation
based on another source vocabulary. For example, the Metathesaurus assigns
both the SNOMED CT term heart disease (disorder) and the ICD-9-CM
term heart disease, unspecified to the metaconcept C0018799. Using these
term-metaconcept assignments we can translate the ICD-9-CM term heart
disease, unspecified to SNOMED CT as heart disease (disorder).
The Metathesaurus (or similar technology) allows the organization to
make better use of its data, information, and knowledge by applying existing
knowledge to new data and information and by applying new knowledge to
other entities existing data and information, regardless of the parochial representational schemes that may characterize those separate repositories. Consider the rule discussed aboveIf a person has android obesity (disorder),
then that person is at risk for heart disease (disorder)where android obesity (disorder) and heart disease (disorder) are terms from SNOMED CT.
The Metathesaurus can enable reuse of the knowledge represented by that
SNOMED-centric rule by making it possible to apply that rule to data repositories based on other controlled terminology systems.
For example, with the aid of the Metathesaurus we might reuse that
rule for a data repository based on ICD-9-CM. Such reuse would depend on
the term-metaconcept assignments provided by the Metathesaurus. The
Metathesaurus assigns the SNOMED term android obesity (disorder) to
the metaconcept C0342940 and the SNOMED term heart disease (disorder) to the metaconcept C0018799. The Metathesaurus also assigns the
ICD-9-CM term obesity, unspecified to the metaconcept C0028754 and
the term heart disease, unspecified to the metaconcept C0018799. The
metaconcept C0028754 stands in the relation broader than to the metaconcept C0342940. In effect, the ICD-9-CM term obesity, unspecified
has a meaning that is broader than the meaning of the SNOMED term android obesity (disorder). Armed with these term-metaconcept assignments
one can translate the original knowledge rule to a nearly equivalent rule that
is applicable to the ICD-9-CM data: If a person has obesity, unspecified,
then that person is at risk for heart disease, unspecified.
107
108
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
TABLE 5.1
Alternative
Definitions of
Knowledge
Management
Retrieved from
Google.com
Typically, the systematic management and use of the knowledge in an organization; or, more abstrusely, the leveraging of collective wisdom to increase responsiveness and innovation. (Delphi Consulting Group; www.ktweb.org/rgloss.cfm)
The use of computer technology to organize, manage, and distribute electronically
all types of information, customized to meet the needs of a wide variety of users.
(www.sirsi.com/glossary.html)
A term with many meanings. It includes deliberate efforts to maximize an organizations performance through creating, sharing and leveraging knowledge and experience from internal and external sources. (www.upstreamcio.com/glossary.asp)
The way a company stores, organizes and accesses internal and external information. Narrower terms are: organizational memory and knowledge transfer.
(Process; ccs.mit.edu/21c/iokey.html)
The process of capturing value, knowledge and understanding of corporate information, using IT systems, in order to maintain, re-use and re-deploy that knowledge.
(See also the Frequently Asked Questions page.) (www.documentmanagement.org
.uk/pages/glossary.htm)
A system or framework for managing the organizational processes that create,
store and distribute knowledge, as defined by its collective data, information and
body of experience. (www.bridgefieldgroup.com/glos5.htm)
Capturing, storing, transforming, and disseminating information within an organization, with the goal of promoting efficiency at the least and innovation and competitive advantage at the most. (www.vnulearning.com/kmwp/glossary.html)
Knowledge management is a concept in which an enterprise gathers, organizes,
shares, and analyzes its knowledge in terms of resources, documents, and people
skills. Knowledge management involves data mining and some method of operation to push information to users. (www.discoverit.co.uk/glossary/full_f-k.htm)
by McInerney (2002): Knowledge managementis an effort to increase useful knowledge within the organization. Ways to do this include encouraging
communication, offering opportunities to learn, and promoting the sharing of
appropriate knowledge artifacts.
Knowledge management initiatives may take many different forms. Examining 31 knowledge management projects and the factors contributing to
their success or failure, Davenport, De Long, and Beers (1998) identify four
broad types of objectives: (1) create knowledge repositories, (2) improve
knowledge access, (3) enhance knowledge environment, and (4) manage
knowledge as an asset.
Although many discussions of knowledge management focus principally on the technologies enabling the creation and sharing of knowledge artifacts, technology is in reality a relatively small part of the picture. Issues related to the organization as a whole, to the human actors involved in the
109
110
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
FIGURE 5.1
Simple Web
Document
example, the simple web document shown in Figure 5.1 is based on the
HTML shown in Figure 5.2. The sequences of characters beginning and
ending with angle brackets are called tags. The key point to note is that
these HTML tags do not indicate the meaning of the data they enclose or
to which they attach. Rather, these tags indicate to some degree how the
data values should be displayed. So, for example, the tag <p> indicates that
a paragraph break should be used in displaying the attached value John
Smith, and the tag <br> indicates that a line break should be used in displaying the attached value 123 Narrow Street. That the tags do not indicate the meaning of the data or the semantic structure of the document
means that an attempt to automatically extract data and information from
the document will be an inexact and difficult task. Although a human can
extract the information by reading the document, automatic extraction is
not possible because the meaning of the data is not unambiguously specified
by the language itself. Automatic extraction is desirable to enable sharing of
data, information, and knowledge among computer systems.
FIGURE 5.2
Sample HTML
Document
<HTML>
<Head>
<Title>Simple Web Document Example</Title>
</Head>
<Body>
<H1>Address List</H1>
<p>John Smith
<br>123 Narrow Street
<br>St. Louis, MO
</Body>
</HTML>
RDF
There are many semantic web tools in addition to XML that may be used to
support interoperability, many more than may be discussed here. One such
tool of particular importance, however, is the Resource Description Framework (RDF). This chapter concludes with a brief introduction to RDF.
Typically, users may think of data as facts about things and processes in
the world. But data themselves may be the subject of data. For example, researchers may collect facts about when the data were recorded, how they were
recorded, the intended use of the data, and so forth. Such data about data are
111
FIGURE 5.3
Sample XML
Document
112
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
<?xml version=1.0?>
<rdf:RDF xmlns:rdf=http://www.w3.org/1999/02/22-rdf-syntax-ns#
xmlns:mu=http://muhealth.org/properties
xmlns:exterms=http://www.example.org/terms/>
<rdf:Description df:about=http://muhealth.missouri.edu/repository.html>
<mu:owner rdf:resource=http://www.missouri.edu>
</rdf:Description>
</rdf:RDF>
Conclusion
The technical details (such as those shown Figures 5.2 to 5.4) aside, a most
important point to keep in mindparticularly for the student of health administration, but also for the student of health informaticsis that the management of data, information, and knowledge is only valuable to the extent
that it contributes to the success of the information, organizational, and enterprise strategies of the organization. In particular, controlled terminology
and ontology, knowledge management, and the tools and resources of the
semantic web are truly useful only to the extent that they increase the value
of the organizations data, information, and knowledge to those ends.
FIGURE 5.4
RDF Triple
in XML
113
114
T h e C o n t r i b u t i o n o f I n f o r m a t i o n Te c h n o l o g y t o O r g a n i z a t i o n a l S t r a t e g y
Note
1. The point of view according to which the terms from different controlled terminologies are judged to express the same concept is an important consideration. For a helpful discussion of these matters see
Campbell et al. (1998).
References
Bellinger, G., D. Castro, and A. Mills. 2004. Data, Information, Knowledge, and
Wisdom. [Online article; retrieved 8/15/04.] www.systems-thinking.org
/dikw/dikw.htm.
Berners-Lee, T., J. Hendler, and O. Lassila. 2001. The Semantic Web. [Online
article; retrieved 3/9/05.] Scientific American 284 (5). www.sciam.com.
Blair, D. C. 2002. Knowledge Management: Hype, Hope, or Help? Journal of
the American Society for Information Science and Technology 53 (12):
101928.
Campbell, K. E., D. E. Oliver, K. A. Spackman, and E. H. Shortliffe. 1998. Representing Thoughts, Words, and Things in the UMLS. Journal of the
American Medical Informatics Association 5 (5): 42131.
Coates, E., G. Lloyd, and D. Simandl. 1979. The BSO Manual: The Development,
Rationale and Use of the Broad System of Ordering. The Hague, The Netherlands: Federation Internationale de Documentation.
College of American Pathologists. 2004. SNOMED Clinical Terms. Northfield, IL:
SNOMED International.
Davenport, T. H., D. W. De Long, and M. C. Beers. 1998. Successful Knowledge
Management Projects. Sloan Management Review 39 (2): 4357.
Davenport, T. H., and L. Prusak. 1998. Working Knowledge: How Organizations
Manage What They Know. Boston: Harvard Business School Press.
Health Level Seven, Inc. 2005. Health Level Seven. [Online article; retrieved
3/10/05.] http://www.h17.org/.
Gruber, T. R. 1993. A Translation Approach to Portable Ontologies. Knowledge Acquisition 5 (2): 199220.
McInerney, C. 2002. Knowledge Management and the Dynamic Nature of
Knowledge. Journal of the American Society for Information Science and
Technology 53 (12): 100918.
U.S. Centers for Medicare & Medicaid Services. 2003. International Classification
of Diseases: 9th Revision. Baltimore: U.S. CMS.
U.S. National Library of Medicine. 2004a. Medical Subject Headings (MeSH).
Washington, DC: U.S. Government Printing Office.
. 2004b. MEDLINE/Pubmed. [Online information; retrieved 8/15/04.]
www.ncbi.nlm.nih.gov/entrez/query.fcgi.
Further Reading
Aitchison, J., A. Gilchrist, and D. Bawden. 2000. Thesaurus Construction and Use:
A Practical Manual. London: Aslib, IMI.
Alavi, M., and D. E. Leidner. 2001. Knowledge Management and Knowledge
Management Systems: Conceptual Foundations and Research Issues. MIS
Quarterly 25 (1): 10736.
Cimino, J. J. 1998. Desiderata for Controlled Medical Vocabularies in the
Twenty-first Century. Methods of Information in Medicine 37 (4/5):
394403.
Nardi, D., and R. J. Brachman. 2003. An Introduction to Description Logics. In
Description Logic Handbook, edited by F. Baader, D. Calvanese, D. McGuinness, D. Nardi, and P. Patel-Schneider, 140. Cambridge, UK: Cambridge
University Press.
U.S. National Library of Medicine. 2004. Unified Medical Language System.
[Online information; retrieved 8/15/04.] www.nlm.nih.gov/research/umls
/about_umls.html.
115
PART
II
INFORMATION AS
ENTERPRISE STRATEGY:
THE STRATEGIC USE OF
INFORMATION RESOURCES
Enterprise Strategy
Clinical Strategy
Business Strategy
Organizational Strategy
Information Strategy
INTRODUCTION TO PART II
rapidly growing number and applications of telecommunication technologies in health maintenance and health services delivery;
effect of telecommunication technologies on enhancing and supplementing communication between healthcare professionals and patients;
119
120
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
CHAPTER
6
ALIGNING INFORMATION STRATEGY AND
BUSINESS AND CLINICAL STRATEGIES:
INFORMATION AS A STRATEGIC ASSET
Kenneth D. Bopp and Gordon D. Brown
Key Terms
Chapter Outline
1.
2.
3.
4.
Learning Objectives
1. Understand the historical evolution of healthcare under the traditional
industrial-age strategic management mind-sets and approaches.
2. Understand the dramatic shifts associated with emerging knowledge
economy and implication of these shifts for strategic management thinking and implementation.
3. Compare and contrast traditional twentieth-century strategic mind-sets
and approaches to emerging twenty-first-century knowledge-age strategic management mind-sets and approaches.
4. Assess how IT has been and can be used to fundamentally transform
healthcare organizations and systems.
Value migration
Strategic
positioning
Intergrated
delivery
systems
Biopsychosocial
services
Cocreation of
health
experience
Knowledge
systems
Keystone
organizations
Leading
complex
adaptive
organizations
Chapter Overview
Since the early 1980s, the economic landscape has been transitioning from an
industrial economy to a knowledge economy. The emerging knowledge economy has produced at least four major forces causing a shift in strategic management thinking and implementation.
1. Value migration from visible assetsfinancial and physical capitalto intangible knowledge resources (Stewart 2001). In the emerging knowledge
121
122
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
economy, intangible intellectual capital is becoming the preeminent resource for improving performance and organizational fitness and resilience in a turbulent environment (Leibold, Probst, and Gibbert
2002).
2. Transformation of passive consumers (patients) to active cocreators of
their health experiences. This change in consumer behaviors is being
driven by shifting consumer values and enabling information technology
(IT) (Prahalad and Ramaswamy 2004).
3. Digital technology that has dematerialized information and enabled the
separation of the information aspects from the physical world. Once IT
infrastructures and information are digitized, the information no longer
requires a physical object to carry it. Traditional activity clusters can be
unbundled in terms of place (where they are performed), time (when
they are performed), actor (who performs them), and actor constellation (with whom they are performed) (Normann 2001).
4. Shift from traditional inflexible hierarchical structures to more unconstrained, fluid, networked organizational forms that can adapt to rapidly
changing environmental and market conditions (Leibold, Probst, and
Gibbert 2002).
These knowledge economy discontinuities develop because of the complex interplay of consumerism, disruptive technologies, and new enterprise
logics capable of reconfiguring the roles and relationships among economic
actors to create value in new forms across traditional geographic, industry, and
organizational boundaries. In this economic transition, conventional enterprise strategies cannot deal with the changing consumer demands, rate of
technology and product innovation, or dynamics of the business sociocultural
systems. Because of the shift to the knowledge economy, strategic management thinkers are questioning traditional industrial-age enterprise strategies
and searching for new approaches to make sense in the emerging knowledge
economy. These researchers suggest that new strategic management approaches are necessary to bridge the disruptions and discontinuities in the environment in the twenty-first century (Glouberman and Zimmerman 2002;
Leibold, Probst, and Gibbert 2002; Plsek 2000). They suggest that the industrial-age assumptions underlying traditional strategic management are inconsistent with the rapidly changing environment and argue that healthcare and
the systems within which it is delivered are best understood and managed as
complex adaptive systems (Glouberman and Zimmerman 2002).
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
Such systems maintain traditional views of how work is structured and coordinated within hierarchical organizations and systems. The health system,
being an information- and technology-intensive business, might be expected
to be a leading sector in developing approaches to complex adaptive systems.
Toffler (1980) appears to have been correct when he concluded that because
education, and possibly health, is in the information and technology business,
it is more entrenched and thus threatened by profound structural change.
The concept of systems thinking is useful in describing the evolution
of the strategy and structure of the health system as health and medical
knowledge expands and new technologies are introduced. By focusing on systems instead of structure per se, a better understanding of the evolution of
the healthcare system and what healthcare organizations might look like in
the knowledge age can be developed. The structure of healthcare organizations and systems of the future using this method is admittedly somewhat
speculative, but it is grounded in considerable knowledge of what IT can
bring to the health system. Most of the evolution can be described as one of
change based on a fundamental set of assumptions about the roles of health
professionals and healthcare organizations in delivering health services. These
assumptions constitute the underlying principles on which systems and organizations are based. What might structures look like under assumptions of the
information age?
123
124
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
FIGURE 6.1
Sociocultural
Network of
Health Systems
Resource Node
Medicare
Medicaid
Employers
Private third-party payers
Purchasing co-op
Integrator
Capitated-based
financing
Specialist and
Hospital ON
Framework of
agreements and
incentives
Info/Comm
on system
CommunityBased Services ON
Family
service
agencies
Specialist
Independent
specialist
Knowledge-Based ON
Senior
service
agencies
Outcomes
management
Protocol
management
Transportation
Schools
Hospital
Chronic Care
ON
Hospice
Rehab
Assistedliving
housing
Primary Care
Distributor ON
Primary care
physician hroups
Independent primary
care physicians
Department of
health clinic
Skilled
nursing
facility
Home
health
ON = Operational node
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
125
126
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
because it joined units that were at the same stage in the production process.
Hospitals were determined to maintain their dominant position through consolidation, increased efficiency, and intense effort to increase reimbursement.
Consolidation and hospital closings gave rise to increased competition
as hospitals gave attention to doctors, who ultimately controlled the hospitals
fate because they controlled admissions. The dependence on referring physicians was well understood, but its importance increased with the falling rate of
hospitalization. The emerging corporate relationships between doctors and
hospitals caused a reexamination of their historically independent roles, as discussed in Chapter 3. The combination of increased competition and the
prospective payment financing system gave rise to doctors developing their
own group practice organizations or in some other way linking with hospitals
through physician-hospital organizations (PHOs). Vertical integration of the
system initiated a new set of assumptions about corporate structuring and the
relationship between doctors and hospitals. New strategies and structures
were forming but within the same set of assumptions about the dominant position of hospitals and specialists, who made up most of the PHOs.
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
rules and financial incentives (see Chapter 3) introduced by managed care insurance firms were resisted by hospitals, physicians, and patients because they
restricted freedom of choice and available benefits, which blunted the development of the hoped-for population-based care emphasizing prevention and
health promotion. The primary care operating node remained as a new structural form in the health system. In some ways new structures and relationships among health professionals and between health professionals and organizations were developed. The structure of these hospital- and specialistdominated systems continued to be based on traditional strategic and operational approaches.
127
128
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
a high degree of autonomy. These hierarchical product structures are familiar to managers and consistent with a business strategy to deliver new services in competitive and changing markets. Product structures are motivated
to maximize the performance of the product and therefore optimize the business performance of the system. This might be an effective business strategy,
but a structure designed to optimize the performance of individual business
units inherently conflicts with the goal of integrating clinical services across
business units. Product line structures within integrated delivery systems raise
many of the same limitations as hierarchical functional structures in traditional hospitals. They typically have their own manager and management
structure. Information strategies have focused on supporting this organizational strategy when the strategy might be flawed.
Information strategy thus frequently resulted in automating existing
organizational strategies instead of being the driver to change them. This has
been the limitation of many traditional information strategies. The above discussion points to the propensity of health management to apply complicated
(machine) strategic management thinking to complex, multifaceted chronic
illness issues that are heavily interconnected and require much more coordination and integration of services across organizations and professionals. The
CASE 6.1
Riverside
Hospital
Develops a
Community
Health
Network
Riverside Community Hospital has served its community for 55 years and has
prided itself on being a full-service hospital serving all the people in its service
area. Over the past decade the hospitals leadership has seen a trend that more
and more of its patients illnesses (e.g., heart disease, cancer, stroke, chronic obstructive pulmonary diseases, injuries, diabetes mellitus) have lifestyle and social
antecedents (e.g., tobacco use, substance abuse, obesity, violence) requiring a
comprehensive approach to patient care beyond the traditional medical model.
The health of these patients is shaped by the individuals genetic profile, environmental and other risk exposure, socioeconomic status, education, and family and
community context. For chronic conditions these at-risk individuals and families
need a broad array of services that are coordinated and integrated to adequately
address the interacting social, environmental, and lifestyle as well as physiological forces that influence health.
The hospital has an abundance of primary and specialty physicians and
other healthcare professionals and acute, ambulatory, and long-term care services. These services address primarily biomedical needs and are not oriented to
patient lifestyle or psychosocial aspects of health and disease. The community has
a fragmented collection of specialized human service organizations and professionals funded and operating within the boundaries of their organizational mandates and functional specialties and thus lacking coordination and integration with
other related service entities.
In response to its mission to serve the needs of the community, Riverside
took a leadership role in the formation of a regional community health collaborative to link human service agencies into an integrated service network to better
meet the multidimensional health needs of patients and their families. The community health collaborative is composed of representatives of community-based
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
management of childrens asthma, for example, will inherently require the involvement of schools, as they are where kids spend much of their time. The intervention will involve, for example, cleaning mold from school walls and getting children in primary grades off dirty rugs for naps. The Austin, Texas,
school systems $27 million appropriation in 2002 to clean mold from between walls in its schools has the potential of doing more to address the problem of childrens asthma than does the emergency room. The inclusion of the
community-based services operating node into the health system has extended
the traditional boundaries of healthcare organizations and the health system.
129
130
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
Advanced IT that can support the sharing of information among member agencies
of the collaborative involves a number of issues. Most agencies do not have electronic records or information dissemination beyond the Internet. Those agencies
that have electronic systems, frequently state or county human services agencies,
have designed them within their own functional structures. To a large degree the
issues faced by community collaborative organizations are similar to those found
historically within hospitals and healthcare organizationsfunctional silos and
the problems of interoperability of databases. The issues are complicated in this
case by the fact that no central administrative and governance structure exists.
Beyond the issues of interoperability of information systems are the traditional challenges of developing collaborative goals, individual agency roles, and
governance structure. To a large degree the operating structure of the collaborative can be built around its information structure, which includes
data standards to ensure interoperability;
information on agency qualifications and capability embedded within the
system;
treatment protocols matched with agency capacity; and
outcomes measured against standardized benchmarks.
Think about the structure of collaborative networks with regard to the commitment of each member to its specialty area, ease of adding or reorienting services, and capacity to provide integrated community-based services. Each of the
participating agencies has a statement about integration and community- or patient-oriented care but can address only a few facets of this complex challenge.
They attempt to integrate within the context of the services a given organization or
agency provides. It is essential that a true client- or patient-oriented system views
care from the perspective of the client or patient. An information-based collaborative or organizations can bring the level of integration needed without bringing all
of the agencies within a single hierarchical structure. Each agency can focus on its
priority and what it does best. How many other services within large complex integrated delivery systems might also be better managed through such a structure?
131
PROBLEM
SOLVING 6.1
Riverside
Hospital
Develops a
Community
Health
Network
132
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
133
134
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
their health-creating systems (Normann 2001). In this reframing, the healthcreating space not only shifts from the provider to the consumer but it also
centers on the customers personalized cocreation of health experience (Prahalad and Ramaswamy 2004). Harnessing the competencies of the consumer
involves more than just setting up a dialog. Health managers and clinicians
also have to realize that the customer is no longer merely interested in receiving health information or services. The information or service is increasingly
becoming an artifact around which customers have a value-creating experience (Prahalad and Ramaswamy 2004).
Organizations, including healthcare organizations, are using tools like
customer knowledge management, communities of practice, network incubators, organizational knowledge audits, as well as the socialization-externalization-combination-internalization (SECI) model to promote interorganizational knowledge sharing, creation, and transformation. Organizations that
want to improve their performance in providing personalized cocreation of
health experience will focus on three sorts of knowledge: (1) knowledge
about patients and/or populations that allows clinicians and healthcare organizations to understand the patients and/or populations health-creating
system and needs; (2) knowledge for patients and/or populations that informs clinicians and the healthcare organizations of the information needs
patients have in their interactions with healthcare providers; and (3) knowledge from patients and/or populations that allows melding of patients
knowledge of their lifestyles, behaviors, body functioning experiences, and
health-creating support system with provider knowledge and technology to
provide more robust healthcare solutions (Nonaka and Takeuchi 2004).
Like the World Bank, organizations may create communities of practice to informally link people across traditional boundaries by sharing expertise, interest, and mutual enterprise passions either in face-to-face meetings or
virtually via the World Wide Web. Other mechanisms that organizations like
Ford and Honda have used to promote knowledge creation and deployment
are network incubators and SECI models. A network incubator is a mechanism to foster partnerships and facilitate the flow of knowledge and talent
and the joint development of innovative products. SECI creates knowledge
within an organization or interorganizational network through the interactions between explicit and tacit knowledge.
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
Personalization requires the ability to manage health services across organizations and systems as well as across communities of consumers that are
part of the patients health-creating system. A single institution or professional
as the unit of analysis does not provide sufficient structure to manage cases
across professionals, institutions, systems, and consumer communities. The
backbone of the structure will be an integrated information platform that allows for accessing information, multiparty dialog and sharing of information
among and between the network of providers and communities of consumers,
coordinating work, and embedding knowledge in health experience products
provided to patients. These information and knowledge systems include but
extend beyond the current clinical decision support systems within hospitals
and clinics. Successful strategic management in the emerging healthcare environment is critically dependent on managing knowledge effectively across an
organizations sociocultural business system, which includes consumers. Figure 6.1 identifies the knowledge-based operating node representing the movement into an information- and knowledge-based health system.
135
136
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
Transformed Structures
Information technology coupled with growing consumerism can be expected to further affect the historical primacy of location and geographic determinism in health and healthcare because cyberspace is not geographically
located or clearly demarcated with borders. The ability of digital technology
to break the link between the information or knowledge and the physical
world is an important tool in transforming the very structures and processes
by which health is cocreated. Traditionally, healthcare offerings (outputs
provider-patient encounters, diagnostic tests or images, procedures, prescriptions) have primarily consisted of frozen information or knowledge
packaged in activities and processes whose delivery has been physically constrained by time (when things can be done), place (where things can be
done), actor (who can do what), and constellation (with whom it can be
done) (Normann 2001). Healthcare organizations must now shift from designing products as frozen knowledge to cocreating personalized experiences through sequences of being, unbundling information or knowledge
liquefying (digitizing)and rebundling it based on the patients changing
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
137
138
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
139
140
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
FIGURE 6.2
Future
Sociocultural
Business
System
Resource Node
Employers
Managed care
Medicare and Medicaid
Other insurance
Categorical funded
programs
Medical ON
Hospital and specialists
Primary care
Rehab institution,
nursing home, home
health and hospice
Public Health ON
Behavioral Health ON
Substance treatment
Mental health
Family
Support ON
Respite services
Outreach services
(home visitation)
Peer counseling and
crisis intervention
Recreation and
enrichment
141
Keystone
Organization Node
Promotion and
education
Sanitation
Health inequalities
ON = Operational node
142
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
143
144
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
Environmental Analysis
Organizational leaders need to step back from the day-to-day activities of
their institutions and markets to focus on trends occurring in the broader
health system and society. The external environment needs to be considered
from two perspectives. First, strategy should be examined using existing assumptions about providers and consumers based on current patterns of behavior. This is the traditional approach. Such an analysis would include the
current status of the environment and market as well as its projected status at
some future date. Such an analysis would include demographic conditions,
existing technology, current and potential competitors, and current utilization patterns of hospitals and clinics. This provides a single-loop analysis of
current and future conditions on which to base strategic assumptions.
Environmental analysis also needs to be carried out based on new assumptions about the environment in which the organization functions, including what services are valued in the market. It is difficult to predict the future based on new assumptions because one cannot use historical data as the
basis for visioning the future. Trend lines will not take us to this future. However, because it has occurred in the past, there is a high probability that fundamental change will occur in the future, necessitating new assumptions
about the system. We are also experiencing an environment changing at an
increasing rate. Although we are not able to use past changes to predict the
future, we know that there will be change and it will occur in some logical
but unknown way. This type of change is considered double-loop learning,
where fundamental assumptions on which all existing markets and strategies
are based are no longer assumed valid.
The Future
The transformation to a knowledge-based system will require visionary leadership to provide innovative solutions. Leaders will have to master the art of
managing profound change in systems that are historically very change resistant. Many of todays leaders have the skills to lead but lack the vision required
for transformative change.
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
Conclusion
Migrating to knowledge-based systems will require radical transformation of
system and organizational structures. For example, the underlying assumption
for paying physicians for services has been based on a physician encounter. The
debate on value-added contribution, for example, under resource-based relative value scale, is on changing the basis for reimbursement for services based
on the resources related to a given procedure measured by a Clinical Procedure Terminology code. The intent is to raise the reimbursement for cognitive
services such as office visits relative to procedural services such as a surgical intervention. This is a complex and worthy debate. The focus of the debate,
however, is on the added value of a given clinical procedure carried out by an
individual physician. In a knowledge-based system it is the knowledge that the
physician embeds in the system that has value. An endocrinologist in a major
medical center might manage a population of patients using evidence-based
decisions. The services might be provided by a range of individuals, including
the patient, family, local nurse practitioner, local family physician, or optometrist. The center might achieve a level of care where 98 percent of the
panel of patients receive annual eye examinations, foot examinations, and other
maintenance services. The endocrinologist might not encounter the patient directly. Such practice has been illegal historically because physicians get paid
only when they are in the presence of the patient. Similarly, universities define
the amount and value of instruction based on the number of hours students
spend sitting in a university classroom. These value-added measures are obsolete and must be fundamentally rethought to enable a paradigm shift to occur.
145
146
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
4. Boundaries are a major tenet in the paradigm shifts from the industrialage model to the ecology or sociocultural business model. What are the
boundary issues in healthcare in the United States? What challenges do
these boundaries pose for the ecology or sociocultural business model?
5. Most examples of networking and virtual forms of organizing come
from IT businesses. What factors are causing healthcare organizations to
cling to traditional industrial-age organizational structures rather than
shift to more loosely coupled, network, and virtual forms of organizing?
6. Knowledge management and intellectual capital management have received much attention in the past few years. Discuss the relationship between knowledge management and intellectual capital management in
traditional healthcare organizations and sociocultural networks.
7. Have you been or are you a part of a community of practice? If so,
describe this community and your role in it. If you are not a part of
one, explain why and how you would join a particular community of
practice.
8. What are the paradoxes or tensions in todays healthcare environment?
How should health managers and clinicians cope with these challenges
of paradox in the rapidly changing healthcare environment?
References
Anderson, P. 1999. Seven Levers for Creating the Evolutionary Enterprise. In
The Biology of Business, edited by J. H. Clippinger, 11352. San Francisco:
Jossey-Bass.
Asoh, D., S. Belardo, and R. Neilson. 2002. Knowledge Management: Issues,
Challenges and Opportunities for Governments in the New Economy.
Conference paper presented at the IEEE Comput. Soc., Los Alamitos, CA.
Proceedings of the 35th Hawaii International Conference on System Sciences,
174554.
Balas, E. A., and S. A. Boren. 2000. Managing Clinical Knowledge for Health Care
Improvement. In the Yearbook of Medical Informatics: Patient-Centered Systems, edited by J. Bemmel and A. T. McCray, 6570. Stuttgard: Schattauer
Verlagsgesellschaft mbH.
Begun, J. W. 1994. Chaos and Complexity: Frontiers of Organizational Science.
Journal of Management Inquiry 3 (4): 32935.
Davenport, T. H., and G. J. B. Probst (eds.). 2002. Knowledge Management Case
Book: Siemens Best Practices. Erlangen, Germany: Publicis MCD/John Wiley
& Sons.
A l i g n i n g I n f o r m a t i o n St ra t e g y a n d B u s i n e s s a n d C l i n i c a l St ra t e g i e s
147
CHAPTER
7
E-HEALTH AND CONSUMER INFORMATICS
George Demiris
Key Terms
Chapter Outline
Consumer
informatics
1.
2.
3.
4.
5.
e-Health
Learning Objectives
Telemedicine
Tele home care
Patient
empowerment
Disease
management
Chapter Overview
This chapter introduces concepts of e-health and consumer informatics and
demonstrates how information technology (IT) can enhance the care delivery
process and enable a shift from institution-centric systems to patient-centric
ones. Case 7.1 illustrates some of the issues involved in the decision to adopt
e-health technology. The use of such advanced technologies can enable patients
to be active participants in the decision-making process. However, several issues, such as cost, privacy, access to care, acceptance, and usability, need to be
addressed to ensure a proper and effective integration of such systems into the
healthcare field. The introduction of e-health applications will affect both the
process and outcomes of health services. This chapter provides an in-depth
149
150
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
CASE 7.1
Green Valley
Home Care
Green Valley Home Care is a for-profit home care agency affiliated with the Green
Valley Hospital, a private 60-bed hospital. The agency is considering the option of
purchasing portable monitoring devices such as spirometers, blood pressure cuffs,
digital weight scales, and videophones and integrating them into the care plans of
their patients suffering from chronic diseases. The home care agency director anticipates that this infrastructure can enhance the quality of delivered services and
could reduce costs, especially in cases where nurses interact with patients over the
videophone instead of traveling to their residence. The equipment can operate over
regular phone lines, which almost all of the agencys clients do have in their homes.
The home care director anticipates that frequent patient monitoring enabled by the
technology can reduce travel costs and time for the agency but also reduce rehospitalization rates for patients by allowing early detection of symptoms and signs.
The affiliated hospital administrators need more information before they
approve of such a tele home care intervention and would like to see benefits other
than controlling hospitalizations and emergent care use. They are concerned with
the initial investment cost to purchase and maintain the technology as well as train
the personnel in its use.
The administrators have held informal meetings with healthcare providers
and realized that reactions are mixed. Some providers are excited about the opportunity to monitor their patients more effectively, whereas others have concerns
about the usability of the equipment. Two physicians are opposed to the idea of allowing patients to access their own medical records via the web and are not convinced of the patient empowerment features of tele home care.
Problem Solving 7.1 discusses the organizational considerations surrounding implementation of such a tele home care system.
analysis of current and future trends in e-health and the technical, policy, and
ethical challenges that lie ahead.
The reactions to the tele home care proposal in Green Valley Home Care are indicative of the diverse views and attitudes of healthcare providers and administrators
toward telemedicine applications.
Virtual visits can provide a cost-effective alternative to traditional home
care. Cost savings from the use of tele home care systems can be realized if several
of the following outcomes can be demonstrated: (1) reduction of unnecessary visits
to the emergency room; (2) prevention of repeat hospitalizations or overall decrease of rehospitalization rates; (3) reduction of unnecessary or unscheduled visits to the physicians office; (4) early detection and intervention; and (5) patient education that leads to improvement of lifestyle choices and medication compliance.
It is important to emphasize that one needs to take into account the viewpoint for the cost-benefit analysis, namely which group the benefits apply to. In
this case the home care agency is linked to the hospital; thus, hospital administrators may perceive the advantage of repeat hospitalization reduction as less relevant. It becomes clear that the measurement of potential cost savings associated
with a telemedicine application depends on the interest group (e.g., patient,
health maintenance organization, provider, society). It is a general assumption, for
example, that telemedicine decreases the opportunity costs for patients in seeking care (by reducing, e.g., travel expenses). On the other hand, cost savings that
might be accomplished by unit price decreases may be offset by an increase in volume. That is, increasing access to health services could lead to increased demand.
Healthcare providers had some concerns about the web feature that would
allow patients to access their medical records. Such concerns refer to patients
lack of medical expertise, which could lead to confusion or misinterpretation of
findings and notes. The argument for such a web feature would be that, in addition
to accessing their medical records, patients would have increased access to medical information, be involved in the monitoring process, and receive an infrastructure that facilitates frequent communication with their healthcare providers.
If the home care agency director wants to gain institutional support, she
will have to demonstrate that the application will be of benefit to the institution
and increase the quality of care without placing additional training burden or time
constraints on medical staff. Furthermore, she will have to demonstrate evidence
of the effectiveness of this intervention in other similar clinical settings.
and determine their own care choices. Feste and Anderson (1995) argue that
the empowerment model introduces self-awareness, personal responsibility,
informed choices and quality of life. Empowerment can be perceived as an
enabling process through which individuals or groups take control of their
lives and managing their disease.
E-health bridges the clinical and nonclinical sectors and includes tools
oriented to both individual and population health. It encompasses different
applications and concepts such as telemedicine applications that aim to bridge
geographic distance using video and audio devices, web sites, online services
for patient support groups, medical advice and diagnosis, consumer information services, and portable monitoring tools that transmit physiological data
to a central server.
151
PROBLEM
SOLVING 7.1
Green Valley
Home Care
152
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
153
home-like settings. These short- or long-term services include nursing, rehabilitation, social work, and home health assistance. More than 20,000
providers deliver home care services to approximately eight million individuals diagnosed with acute illness, long-term health conditions, permanent disability, or terminal illness (National Association for Home Care 2000). Annual expenditures for home health care were estimated to be $41.3 billion in
2001 (National Association for Home Care 2000).
Home health care has to face a variety of factors, such as increased life
expectancy, population growth, and funding limitations, that could threaten
its viability. All these factors constitute a set of new, challenging realities that
will lead to changes in the definition and focus of home care in the twentyfirst century. People 65 and older are projected to represent 20 percent of
the population in 2030 (U.S. Department of Commerce, Economics and
Statistics Administration 1994). Social Security and Medicare programs
could experience financial difficulties in the near future, as the ratio of workers paying taxes to retirees drawing benefits has long been decreasing. The
number of workers paying into Social Security per beneficiary is expected to
decrease to 2.1 by 2020 (U.S. Social Security Administration 2000).
Telemedicine, or e-health in general, is viewed as a method of healthcare delivery that could address issues of cost as well as problematic access to home
care for underserved patients in both rural and urban areas. The use of technology has the potential to decrease travel time and costs for nurses and increase the number of patients that a home health care nurse visits in a given
day. Telemedicine in home care, also known as tele home care, uses telecommunication and videoconferencing technologies to enable a healthcare
provider at the clinical site to communicate with patients at their homes.
Such an interaction is called a virtual visit. In this context the term actual
visit is used to describe the traditional visit of the healthcare provider to the
patients home (with a face-to-face interaction).
With the development of portable monitoring devices and the diffusion of the Internet, the number of tele home care applications started to increase in the 1990s. Different studies evaluated applications that utilized
telemedicine technologies for home care patients. Sparks et al. (1993) investigated the use of transtelephonic exercise monitoring as an alternative for
cardiac rehabilitation patients unable to return to a hospital-based program.
The study was conducted as a randomized controlled trial and indicated that
this kind of monitoring is an effective supplement to hospital-based monitoring. Turnin et al. (1995) developed and evaluated a telemedicine system for
self-monitoring and dietetic education of diabetic patients; the system had a
positive effect on patients dietetic knowledge and some clinical outcomes
(total cholesterol, LDL cholesterol). Also, Wu et al. (1995) evaluated the
clinical usefulness of transtelephonic arrhythmia monitoring, which they
Telemedicine
154
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
found to be more effective than ambulatory electrocardiography for the detection of arrhythmias. A randomized controlled trial by Friedman et al.
(1996) demonstrated a positive effect of automated telephone patient monitoring and counseling on patient adherence to antihypertensive medications
and blood pressure control. Mehra et al. (2000) studied the efficacy of electronic home monitoring in chronic heart failure and identified the need to
further investigate this approach. Johnston et al. (2000) evaluated the use
and costs of remote video technology in the home care setting and determined that this approach achieves cost savings and improved access to home
care support while producing no differences in clinical outcomes when compared to traditional home care.
Portable
monitoring
devices
Currently, there are numerous commercially available portable monitoring devices such as pulse oximeters, blood pressure monitors, spirometers, weight
scales, and glucose monitors. These devices are tested for accuracy and approved by the Food and Drug Administration (FDA) before they become
available on the market. In some cases data are stored in the device and retrieved at a later time or displayed on a monitor at completion of the test session. Devices that allow the automatic transmission of data over regular phone
lines, or in accordance with the systems transmission architecture, are preferred over devices for which the patient has to read the results and announce
them to a nurse during a virtual visit. The latter can impose a burden on elderly or visually impaired patients and affect test accuracy.
Videoconferencing
Sensors
155
Smart homes
156
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
Disease e-Management
The concept of disease management refers to a set of coordinated healthcare interventions and communications for populations with conditions in
which patient self-care efforts are significant (Disease Management Association of America 2002). These interventions aim to enhance the care plan
and provider-patient relationship while emphasizing prevention of deterioration and complications using evidence-based practice guidelines. Further
goals include the improvement of outcomes, decrease of costs, patient education, and monitoring.
The concept of disease e-management is defined by the utilization of
IT such as the Internet to allow patients suffering from chronic conditions to
stay at home and be involved in the care delivery process. Such technologies
can link home care with hospital and ambulatory care and facilitate information exchange and communication among patients, family members, and care
providers. Patient education is an essential component of disease management and can be supported by the transmission of tailored health information or automated reminders to patients or their caregivers. The integration
of commercially available household items such as TV sets, mobile phones,
videophones, medication-dispensing machines, and handheld computers introduces new communication modes and patient-empowering tools.
The Internet has been used as a platform for several disease management applications and in different clinical areas (Demiris 2004). Disease management for asthma patients, for example, has the potential of early detection
and timely intervention, as demonstrated by the home asthma telemonitoring
Peer-to-Peer Applications
The widespread diffusion of the Internet has enabled the creation of electronic
peer-to-peer communities, namely structures that allow people with common
interests, clinical conditions, or healthcare needs to gather virtually to ask questions, provide support, and exchange experiences. Such applications enable
157
158
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
Reimbursement
More than 35 states have enacted legislation that enables healthcare providers
to be reimbursed for specific types of e-health or telemedicine consultations
billed to the state Medicaid program. Many insurance providers reimburse for
specific types of telemedicine services. The federal governments Medicare
program is also reimbursing healthcare providers for some services on a
demonstration basis. Healthcare providers can in many instances use their patient visit charts to indicate to certain service providers or reimbursement companies (e.g., Kaiser Permanente, BlueCross) that the patient visit took place via
a telecommunication network. For home-based applications such as tele home
care, the issue of reimbursement becomes more challenging. The Health Care
Financing Administration has initially denied Medicare reimbursement of tele
home care, emphasizing that it has not been proven to be cost effective. There
is some evidence demonstrating the cost effectiveness of traditional disease
management. For example, a retrospective analysis of 7,000 patients found a
$50 per member, per month savings in diabetes treatment costs over 12
months and an 18 percent decrease of admissions (Rubin, Dietrich, and Hawk
1998). However, there is little evidence as of yet of the cost effectiveness or
even possible long-term cost reduction through utilization of the Internet or
other advanced telecommunications in disease management and home care.
159
160
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
The Balanced Budget Act (BBA) of 1997 has allowed for telemedicine
reimbursement in specific cases, especially for rural locations that the BBA
has defined as healthcare professional shortage areas. In these cases reimbursement is provided for Medicare patients staying at home and receiving
healthcare services via telemedicine. In 2000 a new means of paying for
home care, the so-called prospective payment system, went into effect. This
system apportions payment per episode of care (using 60-day periods) instead of payment for each visit, allowing for home care agencies to integrate
virtual visits within the care plan as they see fit.
Cost analysis and cost effectiveness studies will contribute to discussions about possible reimbursement issues of web-based monitoring services
and the question of which party will bear the costs of implementing and
maintaining such a web-based system.
Many argue that one of the reasons the issue of reimbursement of ehealth services has not received great attentionand that not much progress
has been made in that directionis the lack of a federal e-health authority.
Since the early 1990s, state and federal health agencies have focused on increasing the number of high-quality online health resources. Several institutions and agencies of the U.S. Department of Health and Human Services
have been sponsoring e-health-related initiatives. While there is no official
federal e-health coordinating agency or e-health federal committee, the two
major federal agencies with regulatory authority over e-health matters are the
FTC and FDA.
Accessibility
A large portion of patients requiring home care services or disease management interventions are elderly who in some cases have functional limitations
caused by aging or the diseases with which they are diagnosed. A functional
limitation describes a reduced sensory, cognitive or motor capability associated with human aging, temporary injury, or permanent disability that prevents a person from communicating, working, playing or simply functioning
in an environment where other people in the population can function
(Telecommunications Industry Association 1996). While many argue that
the Internet and advanced telecommunication technologies have the potential to empower patients and even revolutionize the process of healthcare delivery, members of the fastest growing segment of the U.S. population (i.e.,
people over the age of 50 years) are at a disadvantage because software and
hardware designers often fail to consider them as a potential user group. Usability and accessibility issues are important quality criteria for web-based interventions, but they are frequently ignored by designers and evaluators
(Bellazzi et al. 2001). The design of usable web-based IS becomes a challenge when they target users inexperienced with the technology and who
have possible functional limitations. Therefore, systems targeting home care
Outcomes
Obviously, the measured outcomes of e-health applications should be at least
the same as those of traditional care, or the applications should have a greater
positive impact on patients health, if we are to adopt these applications and
make them part of standard care. The impact of e-health on clinical outcomes
has been investigated to some extent, but a need exists for large randomized
clinical trials that would clearly demonstrate such an impact. Johnston et al.
(2000), for example, studied tele home cares effect on medication compliance and ability for self-care in a quasiexperimental study with a control group
(receiving traditional care) and an intervention group (receiving in addition
access to a remote video system); they found tele home care to be no different from traditional care. Jerant, Azari, and Nesbitt (2001) conducted a oneyear randomized trial to assess the effectiveness of tele home care delivered via
a two-way videoconferencing device with an integrated electronic stethoscope
and found that this technology could reduce hospital readmissions and emergency visits for congestive heart failure patients.
The premise of most e-health applications that utilize telemedicine is
that this technology can enable more intensive and frequent physiological
monitoring, which can lead to early detection and intervention. In addition,
telemedicine can be used as a tool to monitor medication compliance and promote patient education. As mentioned earlier, the time has come to move
from small-scale feasibility studies to large clinical trials to test this hypothesis.
Processes
One may argue that video-mediated or web-based communication alters the
relationship between healthcare providers and patients and decreases quality
of care because of the lack of personal contact. Face-to-face interactions are
considered more spontaneous, and free-flowing than videoconference interactions (OConaill 1997). Therefore, it might be expected that the range
of issues addressed during a virtual visit, and the communication between the
161
162
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
participants in general, differs from that in an actual visit. One could also
argue that the use of telemedicine technology might intimidate patients and
result in their limited participation during the visit. The lack of patient participation is potentially significant because patients tend to value the opportunity to express their concerns, questions, and opinions when seeking care
(Ende et al. 1989; Street 1992). Furthermore, patient participation in medical care often contributes to improved postconsultation outcomes such as
greater satisfaction with care (Lerman et al. 1990), greater adherence to
treatment recommendations (Rost, Carter, and Inui 1989), a stronger sense
of control (Street and Voigt 1997), and overall more successful disease management (Kaplan, Greenfield, and Ware 1989).
In addition, addressing technical issues, such as focusing the camera or
adjusting the audio, constitutes an additional theme of communication that
does not take place in an actual visit and therefore could dominate the virtual
visit. Thus, the study of a care delivery process that utilizes telemedicine becomes of great importance.
One study reviewed 122 virtual visits and performed a content analysis to determine themes of interaction (Demiris, Speedie, and Finkelstein
2001). Time was apportioned among the following categories of communication: assessing the patients clinical status, promoting compliance, addressing psychosocial issues, general informal talk, education, administrative issues, technical issues, assessing patient satisfaction, and ensuring accessibility.
While some activities clearly cannot be conducted during a virtual visit, those
findings indicated that home-based e-health has the potential to enrich the
care process. Further studies and direct comparisons between actual and virtual visits will provide a clear insight into the process of a virtual visit.
Whether e-health enhances or inhibits patients communication of their discomfort, symptoms, and emotional state, and accordingly whether it encourages or inhibits the doctors communication of instructions or expressions of
empathy, has yet to be determined (Bashshur 1995).
Access
Healthcare institutions and patient advocate groups need to determine
whether a wide implementation of e-health services would indeed increase access to care for underserved patients in rural and urban areas. Whether these
services provide the means for more frequent monitoring of patients or could
be used as a cost-saving method that deprives them of actual visits or consultations also needs to be assessed. Specifically, such an effort should aim to investigate how e-health addresses decreased utilization of services, particularly
at the entry to care, and the associated structural, financial, or personal barriers. When discussing access barriers in relation to Internet and other
telecommunication technologies, the digital divide comes to mind. This term
refers to the gap in computer and Internet access between population groups
Cost
A comprehensive evaluation of e-health applications must include a cost
analysis, namely a comparison of specified sets of inputs and outputs with
those of traditional healthcare. Inputs involve the level of medical expertise,
facilities, technology, service personnel, and client characteristics. The focus
is on assessing the effects of known quantities of healthcare (e.g., episodes of
care, hospital stays). Cost savings from the use of home-based e-health systems can be realized if the following outcomes can be demonstrated:
163
164
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
surrogates. The success of this form of healthcare delivery requires that patients accept its use. The way in which patients understand the concept of ehealth will influence its level of acceptability and consequently its rate of diffusion. Patient and family member acceptance of and satisfaction with an
e-health system becomes essential, considering possible functional limitations
and inexperience with the technology.
Few instruments measuring patients perception of or satisfaction with
e-health applications have been tested for reliability and validity. One such instrument is the University of Minnesotas Telemedicine Perception Questionnaire (Demiris, Speedie, and Finkelstein 2000), developed to assess patients perceptions of the advantages and disadvantages of tele home care.
This instrument was tested extensively and found to show a high level of internal consistency and very high test-retest reliability. The instrument covers
domains such as perceived effect on quality of and access to healthcare, time
and money (including time saving for the patient and nurse and reduction of
costs for the patient and healthcare agencies), factors related to the conduct
of a virtual visit (including ease of equipment use, equal acceptability of virtual and actual visits, protection of privacy and confidentiality, lack of physical contact, reduced sense of intimacy, and patient ability to explain medical
problems in a virtual visit), and general impression of the concept of tele
home care and its role in the future (Demiris, Speedie, and Finkelstein 2000).
Provider Acceptance
The success of e-health applications that involve healthcare providers depends
only on patient acceptance but also on that of the care providers themselves.
Many e-health applications alter provider practice patterns and have an impact on their workflow. Providers who will be conducting videoconferencing
sessions or utilizing the web have to accept this mode of care delivery and be
comfortable using the required equipment and interacting with their patients
via alternative modes of communication. As is the case with all technological
innovations, organizational commitment is essential to optimum system utilization. This can be a challenge, as many complex institution-centric systems
do not currently support the infrastructure or endorse a strategic agenda for
e-health applications. Adoption of e-health in this case implies a redefinition
of the institution and its services.
industrialized countries in implementing technology in healthcare and redesigning their healthcare systems. This could be achieved by avoiding the development of high-cost institution-centric systems. In industrialized countries
such as the United States, e-health could address some of the current systemic
challenges. The U.S. Centers for Medicare & Medicaid Services (2004) estimate that total spending for healthcare in the United States will rise to $2.1
trillion by 2007, almost 17 percent of the gross domestic product. As the
healthcare sector aims to curtail expenditures, an emphasis is being placed on
outpatient services; as a result and given the increase of life expectancy and the
aging population, the number of patients being cared for at home is increasing. As home health care services become more costly, and given the current
home health provider shortage, e-health technology has the potential to provide a cost-effective alternative.
Modern telecommunications and networking technologies are considered to have the potential for contributing to the ability of patients to actively understand, participate in and influence their health status (Bruegel
1998). Patients are viewed as consumers of healthcare who can participate in
their own care through prevention and treatment. As a result of the advances
of medical technology and the increase in the aging population, more emphasis is being placed on utilizing telemedicine for chronic diseases and elderly persons. The success of e-health in this area will be determined by the
extent to which it is integrated into the process of care delivery, meets the
needs of users, and is accepted by them.
While the number of e-health applications keeps growing, we are still
lacking specific guidelines for their development and evaluation. Such
guidelines would refer not only to technical aspects that will ensure the security and protection of hardware and software but also to clinical and other
selection criteria that will ensure the appropriateness of the application for
a specific population. The American Telemedicine Association (2002) has
produced a set of clinical guidelines for the development and deployment of
tele home care applications. These guidelines refer to patient, provider, and
technology criteria. Patient criteria involve a set of recommendations such
as the need for informed written consent from patients, selection of patients
able to handle the equipment, and training. Health provider criteria refer to
the need for plans of action, training issues, and after-hours support. Technology criteria refer to the operation and maintenance of equipment, establishment of clear procedures and safety codes, and protection of patient privacy and record security.
This initiative by the American Telemedicine Association points out
an important factor to take into consideration when aiming to implement a
tele home care application: the need to determine the appropriateness of the
innovation. Several patient factors, such as stability of disease processes,
level of functional limitations, home infrastructure, and mental state, must
165
166
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
be considered when determining if use of technology is ethical and appropriate for a particular patient.
Conclusion
Numerous powerful technologies and trends are clearly emerging in the
healthcare field. Their convergence can revolutionize the healthcare field and
shift the paradigm from institution- to patient- or consumer-centric systems.
Wireless systems, biosensors that monitor a persons health status on an ongoing basis, interactive tailored multimedia systems, and smart clothes and residences are introducing a new reality in healthcare, one that seemed remote
and almost impossible few years ago. The readiness of researchers, healthcare
organizations, and policymakers to properly adopt these technologiesand
our capacity to evaluate and make informed decisions about their appropriate
usewill be challenged. Policy, ethical, and legal issues associated with ehealth will have to be addressed. Consumer informatics can provide appropriate tools for the design and evaluation of effective e-health applications.
References
American Telemedicine Association. 2002. ATA Adopts Telehomecare Clinical
Guidelines. [Online article; retrieved 8/17/00.] www.americantelemed.org
/icot/hometelehealthguidelines.htm.
Baker, A. M., J. E. Lafata, R. E. Ward, F. Whitehouse, and G. Divine. 2001. A
Web-Based Diabetes Care Management Support System. Joint Commission
Journal of Quality Improvement 27 (4): 17990.
Bashshur, R. L. 1995. On the Definition and Evaluation of Telemedicine.
Telemedicine Journal 1 (1): 1930.
Bellazzi, R., S. Montani, A. Riva, and M. Stefanelli. 2001. Web-Based Telemedicine Systems for Home-Care: Technical Issues and Experiences. Computer
Methods and Programs in Biomedicine 64 (3): 17587.
Bruegel, R. 1998. Patient EmpowermentA Trend that Matters. Journal of the
American Health Informatics Association 69 (3): 3033.
Chan, M., H. Bocquet, E. Campo, T. Val, and J. Pous. 1999a. Alarm Communication Network to Help Carers of the Elderly for Safety Purposes: A Survey
of a Project. International Journal of Rehabilitation Research 22: 13136.
Chan, M., H. Bocquet, F. Steenkeste, E. Campo, B. Vellas, E. Laval, and J. Pous.
1999b. Remote Monitoring System for the Assessment of Nocturnal Behavioral Disorders in the Demented. In Proceedings of the European Medical and Biological Engineering Conference EMBEC 99, edited by P. Rehak
and H. Hutten, 904905. Vienna, Austria: IEE Society.
Demiris, G. (ed.). 2004. E-Health: Current Status and Future Trends. Amsterdam:
IOS Press.
Demiris, G., S. M. Finkelstein, and S. M. Speedie. 2001. Considerations for the
Design of a Web-Based Clinical Monitoring and Educational System for Elderly Patients. Journal of the American Medical Informatics Association 8
(5): 46872.
Demiris, G., S. M. Speedie, and S. M. Finkelstein. 2000. An Instrument for the
Assessment of Patients Impressions of the Risks and Benefits of Home
Telecare. Journal of Telemedicine and Telecare 6: 27884.
. 2001. The Nature of Communication in Virtual Home Care Visits. In
Proceedings of the 2001 AMIA Annual Symposium, edited by S. Bakken,
13538. Philadelphia: Hanley & Belfus.
Disease Management Association of America. 2002. Definition of Disease Management. [Online information; retrieved 9/25/02.] www.dmaa.org
/definition.html.
Elger, G., and B. Furugren. 1998. SmartBoAn ICT and Computer Based
Demonstration Home for Disabled People. In Proceedings of the 3rd TIDE
Congress: Technology for Inclusive Design and Equality Improving the Quality
of Life for the European Citizen. Helsinki, Finland. [Online article; retrieved
4/04.] www.stakes.fi/tidecong/content.html.
167
168
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
Ende, J., L. Kazis, A. Ash, and M. A. Moskowitz. 1989. Measuring Patients Desire for Autonomy: Decision-Making and Information-Seeking Preferences
Among Medical Patients. Journal of General Internal Medicine 4: 2330.
Eysenbach, G. 2000. Consumer Health Informatics. British Medical Journal 320
(7251): 171316.
Eysenbach, G., J. Powell, M. Englesakis, C. Rizo, and A. Stern. 2004. Health Related Virtual Communities and Electronic Support Groups: Systematic Review of the Effects of Online Peer to Peer Interactions. British Medical
Journal 328 (7449): 119093.
Feste, C., and R. M. Anderson. 1995. Empowerment: From Philosophy to Practice. Patient Education and Counseling 26: 13944.
Finkelstein, J., G. OConnor, and R. H. Friedmann. 2001. Development and Implementation of the Home Asthma Telemonitoring (HAT) System to Facilitate Asthma Self-Care. In MedInfo 2001, edited by V. Patel, R. Rogers, and
R. Haux, 81014. Amsterdam: IOS Press.
Friedman, R. H., L. E. Kazis, A. Jette, M. B. Smith, J. Stollerman, J. Torgerson,
and K. Carey. 1996. A Telecommunications System for Monitoring and
Counseling Patients with Hypertension: Impact on Medication Adherence
and Blood Pressure Control. American Journal of Hypertension 9: 28592.
Georgia Institute of Technology. 2000. Smart Shirt Moves from Research to Market. [Online article; retrieved 4/04.] www.gatech.edu/news-room/archive
/news_releases/sensatex.html.
Jerant, A. F., R. Azari, and T. S. Nesbitt. 2001. Reducing the Cost of Frequent
Hospital Admissions for Congestive Heart Failure: A Randomized Trial of a
Home Telecare Intervention. Medical Care 39 (11): 123445.
Johnston, B., L. Wheeler, J. Deuser, and K. H. Sousa. 2000. Outcomes of the
Kaiser Permanente Tele-Home Health Research Project. Archives of Family
Medicine 9: 4045.
Kaplan, S. H., S. Greenfield, and J. E. Ware, Jr. 1989. Assessing the Effects of
Physician-Patient Interactions on the Outcomes of Chronic Disease. Medical Care 27 (3 Suppl.): S110S127.
Kidd, C. D., R. Orr, G. D. Abowd, C. G. Atkeson, I. A. Essa, B. MacIntyre, E.
Mynatt, T. E. Starner, and W. Newstetter. 1999. The Aware Home: A Living Laboratory for Ubiquitous Computing Research. In Cooperative
BuildingsIntegrating Information, Organizations and Architecture, Proceedings of the Second International Workshop on Cooperative Buildings
(CoBuild 99), edited by N. Streitz, J. Siegel, V. Hartkopf, and S. Konomi,
19198. Berlin: Springer.
Lerman, C., D. S. Brody, G. C. Caputo, D. G. Smith, C. G. Lazaro, and H. G.
Wolfson. 1990. Perceived Involvement in Care Scale: Relationship to Attitudes About Illness and Medical Care. Journal of General Internal Medicine 5: 2933.
169
170
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
Industries Alliance and the Electronic Industries Foundations. [Online information; retrieved 6/18/04.] www.tiaonline.org/access/guide.html.
Terry, N. P. 2000. Structural and Legal Implications of e-Health. Journal of
Health Law 33 (4): 60514.
Turnin, M. C., C. Bolzonella-Pene, S. Dumoulin, I. Cerf, G. Charpentier, D. Sandre-Banon, P. Valensi, J. L. Grenier, G. Cathelineau, C. Mattei, et al. 1995.
Multicenter Evaluation of the Nutri-Expert Telematic System in Diabetic
Patients. Diabete et Metabolisme 21 (1): 2633.
University of Wollongong. 2001. Intelligent Knee to Save Costly Sporting Injuries. [Online article; retrieved 4/04.] www.uow.edu.au/science/research
/ipri/kneesleeve.html.
U.S. Centers for Medicare & Medicaid Services. 2004. National Health Accounts. [Online information; retrieved 8/17/04.] http://cms.hhs.gov
/statistics/nhe/.
U.S. Department of Commerce, Economics and Statistics Administration. 1994.
How We Are Changing: The Demographic State of the Nation. In Report P23-188. Washington, DC: U.S. Census Bureau.
U.S. Department of Health and Human Services. 1999. Office of the Secretary
Standards for Privacy of Individually Identifiable Health Information: Proposed Rule. Federal Register 64 (212): 5991760016.
U.S. Federal Trade Commission. 2002. Eli Lilly Settles FTC Charges Concerning
Security Breach. [Online article; retrieved 6/18/04.] www.ftc.gov/opa
/2002/01/elililly.htm.
U.S. Social Security Administration. 2000. The Future of Social Security. Social Security Administration Publication No. 05-10055. Washington, DC: U.S.
Government Printing Office.
Wahr, J. A., and K. K. Tremper. 1995. Non-Invasive Oxygen Monitoring Techniques. Critical Care Clinics 11 (1): 199217.
Wu, J., D. K. Kessler, S. Chakko, and K. M. Kessler. 1995. A Cost-Effectiveness
Strategy for Transtelephonic Arrhythmia Monitoring. American Journal of
Cardiology 75: 18485.
CHAPTER
8
GENOMIC MEDICINE: INFORMATICS
IMPLICATIONS AND OPPORTUNITIES
Mark A. Hoffman
Key Terms
Chapter Outline
Genomic
medicine
1. Genomic Medicine
2. Current State
3. Emerging Trends
Clinical
genetics
Learning Objectives
Molecular
pathology
Bioinformatics
Pharmacogenomics
Molecular
diagnostics
Decision
support
Personalized
medicine
Standardization
Chapter Overview
This chapter represents the current state of the use of genomic (or genetic)
information in the practice of medicine. While the primary focus of the chapter is the application of genomic information to the delivery of patient care,
a brief discussion of the use of genomic information for biotechnology research is also provided.
Case 8.1 demonstrates the chapters central themes. A discussion of
the promise of genomic information follows to reveal the potential for the
development of improved diagnostic and therapeutic options. The presentation of background information on genetics, informatics, and the genome
171
172
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
project is then used to describe the current state of the art of genetic medicine. A discussion of the importance of standardization in systems for genetic
and clinical information follows the introductory material. Next, a description of emerging trends, including pharmacogenomics and direct-to-consumer genetic testing, illustrates opportunities related to genomic medicine.
The chapter concludes with a discussion of various information technology
(IT) projects that will enhance the ability of the care provider to better utilize genomic information in the delivery of healthcare.
Genomic Medicine
We are entering a transformational period in the practice of medicine. Recent
advances in biomedical science combined with hard-earned understanding of
human genetics have created the foundation on which clinicians and researchers hope to create a new approach to medical practice. Much of this
hope is based on the results of the human genome project. The expectation
is that the results of this major advance will create the foundation for improved healthcare through
Together these advances will create the basis for genomic medicine, in
which many clinical decisions are made using a high degree of precision to
match an individual patient to the most optimal plan of care (see Case 8.1).
Clearly, these advances have many implications for the information systems
(IS) utilized in the delivery of patient care (see Problem Solving 8.1). This
chapter introduces genomic medicine in its current state. Several IT projects
and resources that are indicators of the path between the current and anticipated future state will be discussed.
Current State
The current state of the art is most accurately described as genetic medicine,
in which clinical decisions are made based on information about a single
gene. As this section demonstrates, genetic medicine is a fairly mature discipline. In contrast, genomics is a systems approach to the complex interplay
among the full set of genes found in an organism, in this case a human being.
The potential of the genomic approach is not yet widely practiced but is an
area of major research investment.
Jean, an eight-year-old girl, was playing at the home of a friend when she fell,
struck her head, and suffered serious injuries. She was raced to the hospital,
where she required emergency surgery. Her parents could not be reached, but the
mother of Jeans friend provided the emergency department with Jeans name and
home address, which allowed them to associate the child with her parents in the
system. Interacting with the healthcare information system of the hospital, the surgeon entered an order for the protocol she was planning to use to treat Jean.
Among the details included in the protocol was the use of halothane, a type of
anesthesia. While Jean had never been the subject of genetic testing, her father
had a genetic test performed that found a mutation in the ryanodine receptor
(RYR1) gene. When persons with this mutation are exposed to halothane, they can
experience malignant hyperthermia, an often fatal reaction in which the core body
temperature can reach 106F. The hospital information system used the demographic person-person relationship between the father and his daughter and embedded pharmacogenomics decision support capabilities to infer that Jean is at 50
percent risk of also possessing this rare mutation. The system provided an interactive alert to the surgeon, who was unaware of this genetic association. She responded to the alert by activating an alternative surgical plan that did not include
the use of halothane. A potentially catastrophic clinical event had been averted.
Problem Solving 8.1 explores the implications of this type of genomic medicine for health IS.
Genetic medicine is currently demonstrated in three areas: clinical genetics, molecular pathology, and the molecular detection and classification of
infectious diseases. Before citing examples from these areas, it will be useful
to provide some general introductory information.
Overview of Genetics
All genetic conditions have as their basis a change in a molecule called deoxyribonucleic acid (DNA). In humans and all other higher organisms DNA
is packed into cellular structures called chromosomes. Normally, a human inherits 23 unique chromosomes from each parent for a total of 46 chromosomes. The full complement of DNA included in these chromosomes is a
genome. The information stored in the DNA molecule is referred to as a
genotype; an observable state influenced by a genotype is called a phenotype.
For example, sickle-cell anemia is a phenotype caused by a change in the
genotype of the hemoglobin gene.
DNA is a long, threadlike molecule made of four types of building
blocks (nucleotides) represented by the letters A, C, G, and T. The precise
sequence of these letters in DNA, for example, ATGCTATTAGGC, provides
the instructions that determine how another category of biological moleculesproteinsare assembled. Proteins perform the majority of the activities in the body including generating energy, providing structural support,
and protecting the body from pathogens.
CASE 8.1
A Family
Matter
173
174
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
PROBLEM
SOLVING 8.1
A Family
Matter
Jeans case illustrates the promise of genomic medicine to improve the quality of
healthcare. Genomic medicine is a new biological science that has major implications for clinical decision making. It will also cause a major increase in the demands on health IS. In the example described in Case 8.1, the use of pharmacogenomics decision support helped a surgeon avert clinical disaster.
Matching an individual patient to the most optimal plan of care requires the
capability to selectively filter and process large amounts of information for
clinically relevant associations.
Genomic medicine further illustrates the need for interoperability of data, information, and knowledge throughout a healthcare organization.
Achieving the interoperability of genomic and clinical information will be a
transforming force in healthcare.
Variations from the normal sequence of a gene (generally the instructions for a single protein) can often have severe physiological consequences.
For example, a change in a single nucleotide in a gene called CFTR can lead
to cystic fibrosis. When a change in DNA causes a functional change in the
protein encoded by the gene, it is called a mutation. Other DNA changes causing functionally neutral variations are called polymorphisms. Polymorphisms
are important clinically because many commonly tested characteristics, including blood type, are based on functionally neutral variations. Polymorphisms are
an important subject to consider, but a discussion of mutations will occupy the
earlier portion of the chapter. Macro-level variations in chromosomal structure
can lead to the exchange of entire regions of chromosomes or even the complete duplication (or deletion) of a chromosome. For example, Down syndrome is associated with a duplication of chromosome 21. Accurately and rapidly detecting these genetic variations is the basis for most of the diagnostic
capabilities currently utilized to deliver genetic medicine.
Clinical
genetics
Molecular
pathology
175
176
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
Infectious
disease
Informatics Approaches
The current state of the art in IS utilized by the cytogenetics or molecular diagnostics laboratory indicates some of the informatics challenges ahead.
There are many bioinformatics platforms designed for the research setting,
leading to a common misperception that these research applications can be
easily extended into the clinical diagnostics laboratory. Some of the differentiating information requirements for the clinical genetics laboratory include
the ability to document and respond to clinician orders for genetic tests;
the ability to capture discrete results;
the ability to generate reports that comply with regulatory guidelines
including the Health Insurance Portability and Accountability Act
(HIPAA), Clinical Laboratory Improvement Amendments, 21 Code of
Federal Regulations part 11 (electronic signatures), and other requirements of self-governing organizations such as the College of American
Pathologists;
support for systemwide compliance with HIPAA; and
the ability to integrate with applications capable of generating appropriate billing documents.
This authors discussion with multiple molecular diagnostics laboratories indicates three common approaches to these requirements:
1. The use of a niche application for documenting genetics observations or laboratory work flow: Generally designed for the smallest of laboratories,
these applications are often low cost and were built with limited or no
ability to integrate into a larger clinical system. Importantly, many such
systems were built using architectural components that were not designed to be fully compliant with HIPAA. For example, HIPAA requires
that transactions be logged in order to trace user inquiries against specific
elements of the database; many systems fail to comply with this requirement.
177
178
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
The Genome
During the late 1990s and the beginning of the twenty-first century an international consortium of public organizations, including the U.S. National Institutes of Health and the Burroughs Welcome Foundation of the United Kingdom, raced against a private company, Celera, to determine the full DNA
sequence of the human genome. These projects applied the latest in robotics,
computing, and biology to accomplish this aggressive goal in 2001, with the
coordinated publication of the findings generated by these two groups (International Human Genome Sequencing Consortium 2001; Venter et al. 2001).
These efforts yielded the DNA sequence of each of the 28,000 to 32,000
human genes (the precise number is still a hotly debated topic), providing a
wealth of information for researchers and technology companies to utilize in
seeking to better understand human biology. Of equal importance to the solution of the genome sequence was the development of the first databases describing human variability at a population level (Sherry et al. 2001). These efforts identified the positions in genes at which variations are most likely to
occur, allowing researchers to focus their efforts more precisely.
The determination of the complete DNA sequence of the human
genome in 2001 was widely expected to usher in a new era in healthcare.
Promises of new medications, new diagnostic tests, personalized medicine,
and gene therapy generated significant public enthusiasm, yet with the exception of a few new diagnostic tests, most patients have seen very few tangible
benefits of the human genome project. There are multiple reasons for this
transitional phase, including the following:
The development cycle for new drugs averages 7 to 11 years.
Gene therapy has had a very limited set of successes and some major recent failures. Establishing a long-term viable ethics framework for testing
gene therapies will also be a long-term effort.
Single-gene disorders were already fairly well understood before the
completion of the genome sequence; deciphering the genetic influences
involved in complex disorders such as diabetes will be a lengthy undertaking.
Training clinicians to utilize existing genetic knowledge, much less how to
adopt the rapidly growing body of new knowledge, has proven difficult.
The solution of the genome sequence is important to drug development
for a number of reasons. First, the improved understanding of fundamental
human biology will allow researchers to better understand the mechanisms of
179
Human gene
therapy
Microarray
analysis
180
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
The genomic approach to medicine will clearly alter diagnostic practices and provide many opportunities to improve patient care. The detection
of a single mutation for a patient does not create a genomic record (it does
create a genetic record, as it is based on a single gene). The systems approach
to genomic medicine will require EMR systems capable of seamlessly integrating genetic and clinical information and accurately representing the complex relationships between these sources of information.
Standardization
As discussed in Chapter 5, standardizing clinical information provides a number of benefits. The use of controlled vocabularies such as the Systematized
Nomenclature of Medicine Clinical Terms (College of American Pathologists
2004) and Logical Observation Identifier Names and Codes (The Regenstrief
Institute 2004) enables organizations to exchange clinical orders, results, and
other information through HL7 or other messaging systems. However, these
vocabularies lack sufficient concepts to describe the detailed findings of the
molecular diagnostics or cytogenetics laboratory. Bioinformatics resources, including those provided by the National Center for Biotechnology Information (NCBI), were developed to meet the needs of researchers (Maglott et al.
2000; Pruitt and Maglott 2001; Sherry et al. 2001) and are generally not appropriate for the clinical setting because they were not developed with the
quality control processes required to support clinical practice.
One resource being developed to address the gap between the clinical
vocabularies and bioinformatics resources is the Clinical Bioinformatics Ontology (CBO) (Hoffman, Arnoldi, and Chuang 2005). CBO is a curated resource that structures observations generated by current clinical practice in a
semantic network. This structure allows the association of complex reference
data; for example, CBO maintains information providing the chromosomal
band(s) in which a gene is located, the intron or exon in which a mutation is
found, or the mode of inheritance for a given gene. The CBO information is
structured in formats that are machine readable, including comma space
value and rich data format. These formats allow developers of clinical IS to
integrate this genomic reference information into their applications and support the exchange of clinically significant results using a standardized format,
allowing for the accomplishment of multiple clinical and research goals including the following:
Facilitating the communication of clinical orders and results between organizations: For example, standardization will enable reference laboratories to better send results to the clinicians who ordered tests. Multiinstitutional integrated delivery networks such as Kaiser-Permanente and
Tenet Health Care will also benefit from the standardization of genomic
results among facilities.
Emerging Trends
So far, this discussion has focused primarily on the ability of genomic medicine to support advanced diagnostic practices and the development of new
therapies. Of equal or greater significance are emerging trends that will alter
physician behavior and decisions based on these diagnostic findings. Increased patient access to genetic tests is also an emerging trend of significant
importance to the designer of healthcare systems.
Pharmacogenomics
People vary widely in their response to medications. Most respond within a
statistical norm and benefit from a medication as expected. Some, however,
require either a higher or lower dose than the general population before they
can benefit from a medication. A few individuals suffer severe or even fatal adverse drug reactions that are based on genetic variations in genes involved in
drug metabolism. The analysis and application of emerging knowledge about
these genetic influences on drug metabolism is called pharmacogenomics
(Evans and Relling 1999). For example, 7 percent of the population lacks
both copies of a gene, CYP2D6, involved in metabolizing codeine and many
other commonly prescribed medications. These individuals fail to benefit from
treatment with codeine. One in 300 persons has a variation in the TPMT
gene, which is involved in the response to mercaptopurine, a chemotherapeutic agent. These people can have potentially fatal reactions to mercaptopurine.
Researchers at St. Jude Hospital in Memphis, Tennessee, developed a genetic
test that identifies persons with mutations in the TPMT gene (Krynetski et al.
1995). When the mutation is detected, physicians at St. Jude can adjust the
dosage of mercaptopurine to avoid the risk of an adverse reaction.
Not all pharmacogenomics applications are based on hereditary variations. Recent studies have demonstrated how pharmacogenomics can be applied with very exciting results to the management of small-cell lung cancer.
By determining whether somatic mutations are present in the EGFR gene, clinicians can predict whether a patient will respond to the drug gefitinib (Paez
et al. 2004). Significantly, the 10 percent of patients with these mutations had
a 100 percent response rate to the medication. Thus, screening for these
181
182
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
EGFR mutations can be an important predictor of whether this costly medication is likely to be successful.
Testing bacterial pathogens for susceptibility to antibiotics has long
been a common laboratory practice and is considered among the first steps
toward personalized medicine (Fierz 2004). Now, through the application of
DNA sequencing technology, molecular diagnostics laboratories are able to
determine the sequence of HIV genes to predict whether a given patient harbors a strain of the virus that will be resistant to one or more of the antiretroviral medications in their combination therapy regimen. HIV genotype analysis is currently the most widely adopted pharmacogenetic test. Kits approved
by the Food and Drug Administration are offered by Bayer and Celera Diagnostics. The benefits that precision prescribing practices can have for AIDS
patients have been demonstrated by a number of studies, including one that
showed an improved survival rate (Weinstein et al. 2001) and another that
demonstrated an increase in quality-adjusted life years (Saag 2001) when
therapy decisions are guided by genotype information.
Clinician Information
One of the most difficult issues involved in the translation of knowledge generated in the research setting into active clinical practice is educating the clinician in the conceptual basis of genomic medicine. Several studies, including the Biomedical Information Science and Technology Initiative, have
proposed high-level curriculum suggestions that would support interdisciplinary training (Friedman et al. 2004). The rapid pace of change in genomic
information is such that the specifics of genomic training will quickly become
out of date; thus, the focus should be on learning how to approach genomic
questions.
The increasing availability of useful online resources provides options
for the clinician. The PharmGKB project described earlier is an example, although it assumes a certain level of knowledge and emphasizes the needs of
the pharmacogenomics researcher. Another valuable online resource, designed for the clinician, is the GeneTests directory, managed by the University of Washington in Seattle (Pagon et al. 2002). This web site provides a
valuable source of information for the clinician who has determined which
disease or condition he or she suspects and wants to learn more about the
condition and identify sites where testing is performed. Another useful web
site for both clinicians and patients is the Genetics Home Reference, managed by the National Library of Medicine (Mitchell, Fun, and McCray
2004). This project aims to deliver information using accessible terminology
and concepts, while also providing links to the more technical information
likely to be of interest to the advanced clinician. The Online Mendelian Inheritance in Man (OMIM) web site provided by NCBI offers very detailed
descriptions of hereditary and malignant conditions (Hamosh et al. 2002);
however, the OMIM content makes assumptions about the training of the
user and has a number of errors and inconsistencies. Table 8.1 contains access information for the web sites just discussed.
A clear limitation of using web sitebased information to inform the
clinician is that clinicians are required to anticipate the need for such knowledge. When a genetic finding has not been widely communicated to the
practicing clinical community, physicians are unlikely to recognize the need
to query any of the resources cited above. Because physicians are increasingly
183
184
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
TABLE 8.1
Web Sites
Providing
Genomic
Information
for Clinicians
and Patients
using CPOE, structured clinical documentation, and other healthcare IT solutions to execute the administrative and clinical transactions involved in their
daily activities, embedding genomic information in these systems is a logical
means to deliver up-to-date genomic information. Embedding genomic information in the context of a healthcare IT system offers the following advantages:
Opportunity to reduce variance among users: All users will be working in a
system in which the same decision support capabilities are implemented.
Updates are transparent to the user: Other than the need for a small
group of internal reviewers who determine which decision support capabilities to adopt locally, the wider group of users does not need to be
continuously trained about new findings. Some specific decision support
capabilities may require brief training.
Ability to combine active and passive content: Active content is delivered
in the form of on-screen alerts that require the user to respond to continue with his or her actions. Active content is appropriate for providing
medication alerts related to drug-gene interactions. Passive content is
encyclopedic in nature; it is easily accessible to users but requires them
to deliberately seek information.
Ability to reanalyze historical results: By capturing all genetic test findings in an EMR, whether or not their clinical significance is understood
at the time of capture, it becomes possible to reexamine previous results
against newly generated knowledge and take action based on newly
identified associations.
The ability to generate and manage clinical pedigrees online: Unlike
stand-alone applications that generate clinical pedigrees, the integration
Conclusion
The era of genomic medicine will clearly transform healthcare. Already genetic testing and analysis is a significant part of clinical genetics, molecular
pathology, and the management of infectious disease. Integrating clinical,
family history, and genetic information in a common repository can offer
many benefits both as a research tool (McMahon et al. 1998) and in the delivery of patient care. The advent of pharmacogenomics-based clinical decision making and advanced diagnostic technologies such as DNA microarrays
will contribute to the deepening utilization of genomic information in the
delivery of patient care.
In terms of healthcare informatics this transformation has major implications for the design and implementation requirements of healthcare IS.
Among these requirements are
support for the expanding volume of the molecular diagnostics laboratory, including its unique work flow;
clear representation of the precision and accuracy of the methods used
to determine molecular diagnostic results;
standardization of genomic information to facilitate messaging systems
utilized between affiliated providers;
protection of patient privacy and the security of EMRs; and
useful and clear tools to help clinicians interpret and apply genomic
findings.
These requirements can be satisfied by well-designed clinical IS offering significant opportunities, including the following:
streamline and optimize work flow within the molecular diagnostics laboratory;
provide decision support capabilities that simplify the process of managing genomic information for the clinician;
185
186
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
References
Blaese, R. M., K. W. Culver, A. D. Miller, C. S. Carter, T. Fleisher, M. Clerici, G.
Shearer, L. Chang, Y. Chiang, P. Tolstoshev, J. J. Greenblatt, S. A. Rosenberg, H. Klein, M. Berger, C. A. Mullen, W. J. Ramsey, L. Muul, R. A. Morgan, and W. F. Anderson. 1995. T Lymphocyte-Directed Gene Therapy for
ADA-SCID: Initial Trial Results After Four Years. Science 270 (5235):
47580.
Burrill & Company. 2002. Biotech 2002. 97. San Francisco: Burrill & Company.
College of American Pathologists. 2004. SNOMED Clinical Terms. Northfield, IL:
SNOMED International.
Evans, W. E., and M. V. Relling. 1999. Pharmacogenomics: Translating Functional
Genomics into Rational Therapeutics. Science 286: 48791.
Fierz, W. 2004. Challenge of Personalized Health Care: To what Extent Is Medicine Already Individualized and what Are the Future Trends? Medical Science Monitor 10 (5): RA111RA123.
187
188
I n f o r m a t i o n a s E n t e r p r i s e St ra t e g y : T h e St ra t e g i c U s e o f I n f o r m a t i o n Re s o u rc e s
C. Abair, A. Malmin, M. Barclay, and R. D. Palepu. 2002. GeneTestsGeneClinics: Genetic Testing Information for a Growing Audience. Human
Mutation 19 (5): 501509.
Pruitt, K. D., and R. R. Maglott. 2001. RefSeq and LocusLink: NCBI GeneCentered Resources. Nucleic Acids Research 29 (1): 13740.
Saag, M. S. 2001. HIV Resistance Testing in Clinical Practice: A Qaly-fied Success. Annals of Internal Medicine 134 (6): 47577.
Sherry, S. T., M. H. Ward, M. Kholodov, J. Baker, L. Phan, E. M. Smigielski, and
K. Sirotkin. 2001. dbSNP: The NCBI Database of Genetic Variation.
Nucleic Acids Research 29 (1): 30811.
Sorlie, T., C. M. Perou, R. Tibshirani, T. Aas, S. Geisler, H. Johnsen, T. Hastie,
M. B. Eisen, M. van de Rijn, S. S. Jeffrey, T. Thorsen, H. Quist, J. C.
Matese, P. O. Brown, D. Botstein, P. Eystein Lonning, and A. L. BorresenDale. 2001. Gene Expression Patterns of Breast Carcinomas Distinguish
Tumor Subclasses with Clinical Implications. Proceedings of the National
Academy of Sciences of the United States of America 98 (19): 1086974.
The Regenstrief Institute. 2004. Logical Observation Identifier Names and Codes
(LOINC). Version 2.13. Indianapolis, IN.
vant Veer, L. J., H. Dai, M. J. van de Vijver, Y. D. He, A. A. Hart, M. Mao, H. L.
Peterse, K. van der Kooy, M. J. Marton, A. T. Witteveen, G. J. Schreiber,
R. M. Kerkhoven, C. Roberts, P. S. Linsley, R. Bernards, and S. H. Friend.
2002. Gene Expression Profiling Predicts Clinical Outcome of Breast Cancer. Nature 415 (6871): 53036.
Venter, J. C., et al. 2001. The Sequence of the Human Genome. Science 291
(5507): 130451.
Weinstein, M. C., S. J. Goldie, E. Losina, C. J. Cohen, J. D. Baxter, H. Zhang,
A. D. Kimmel, and K. A. Freedberg. 2001. Use of Genotypic Resistance
Testing to Guide HIV Therapy: Clinical Impact and Cost-Effectiveness.
Annals of Internal Medicine 134 (6): 44050.
Zitner, A. 2002. Firms Sell Gene Tests Directly to Public. Los Angeles Times,
Aug. 11, A1.
PART
III
INFORMATION STRATEGY:
MANAGING INFORMATION
RESOURCES
Enterprise strategy
Clinical strategy
Business strategy
Organizational strategy
Information strategy
art III focuses on the management of information resources by healthcare organizations. Information technology (IT) is considered from
the perspective of its contribution and value to the overall organizational and enterprise strategies. It is viewed as a transforming technology
rather than a data processing support function. This perspective envisions the
role of the chief information officer (CIO) as that of an enterprise leader in
articulating the strategic implications of IT. The IT function is also considered in relationship to the human resources function as healthcare organizations develop into knowledge-based systems. As the organization assumes
greater responsibility for clinical outcomes, a consideration of access to and
use of information goes beyond issues of security and policy and becomes an
organizational, ethical basis that defines how care is provided and people are
treated. All aspects of IT change when it starts to be viewed as a powerful resource for transforming processes, not just for automating them.
Chapter 9 explores ways IT brings value to healthcare organizations
and how the valuation of IT depends on how it is viewed within the organization. The realization of the value of IT depends on its relationship to and
effective integration with organizational and enterprise strategies. The focus
of the chapter is on how value is assessed and realized. This chapter includes
discussions on
determining IT valuation based on assumptions about the role of IT in
the organization;
how to make sound IT investment decisions and deliver superior business value to support the health services organization;
the assumptions of planned change implicit in most investments in information resources that must be managed if anticipated return is to be
achieved; and
the social value of IT and the sources of investment funds.
Investment decisions in IT are important because they require considerable financial resources; the value potential depends on how effectively they
are applied and used. The success of IT investment depends not on the IT
function but on how well the IT function is integrated with and leads change
in the organization.
191
192
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
193
CHAPTER
Key Terms
Chapter Outline
Value
Investment
1.
2.
3.
4.
5.
Evaluation
Return on
investment
(ROI)
Benefit-cost
analysis
Learning Objectives
Business case
development
Economic
value added
Chapter Overview
The application of information technology (IT) in healthcare organizations
supports the organizational and enterprise strategies and is as varied as these
strategies themselves. Information technologys value to the organization depends on how effectively it is managed and integrated with these strategies.
This chapter considers how to make sound IT investment decisions and deliver superior business value to support the health services organization,
healthcare system, and health of the population. Information technology in
this context is a change enabler, serving as a transformational tool to deliver
strategic value at a number of levels both within and beyond the organizationto the patient, providers, and other stakeholders. Consequently, IT is
very expensive, complex, and difficult to evaluate. In this context IT requires
195
196
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
a better framework and tools to manage and deliver value effectively. Information technology is only one component, albeit an extremely important
one, of an organizations portfolio of assets. The present discussion of the
value of IT takes place within this context.
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
197
60% of surveyed organizations postponed or rejected plans for an IT initiative during that time (Adams 2004). Moreover, When the IT plans failed
or fell short, it was rarely caused by technical failures or poor performance
by vendors or consultants. Instead, the most prevalent reasons for disappointing results stemmed from inadequate high-level planning and execution of business strategies behind IT initiatives (Adams 2004, 32). This indicates that the problems of value realization are not directly related to the
technology per se, but rather to the openness and ability of the people involved to be change agents themselves.
The
operational
standpoint
The second category, tactical, expands the business and clinical processes
to include decision support. The value of IT in this instance is broad. Its
expanding use in decision support creates an added value that healthcare
providers may not have recognized previously. For example, a basic CPOE
system is strictly a replacement for manual systems of writing, placing, and
recording orders and results, limiting its value to eliminating transcription
errors, eliminating handwriting legibility issues, and improving efficiency
in record keeping. The true value of CPOE occurs when it is used in decision support through the provision of information on drug interactions,
duplicated orders, and patient-unique characteristics (e.g., allergies). Decision support systems enhance efficiency, reduce medical errors, improve
quality of health services, and should reduce liability. This category of IT
investment often requires a change in thinking and in the way of doing
things. Thus, it is more difficult to implement, has a greater failure rate,
provides important evaluation difficulties, and its benefits are more difficult to realize.
The
tactical
standpoint
198
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
The
strategic
standpoint
The third category, strategic, is the broadest conceptual view of IT, and it encompasses the enterprise, organizational, and information strategies (see Figure 2.1 in Chapter 2). Here, IT is considered to be an integral component of
a product line. Information technology considerations are involved in the
strategic plan, tactical development, product development, quality considerations, and other key components associated with the organization. It is a necessary component for the efficient and effective operation of the firm. Indeed,
IT becomes a product line in and of itself. This means that IT investments are
to be evaluated in the same fashion, and with the same requirements, as other
product lines.
The strategic aspect is a concept not often associated with the IT function. This concept requires the examination of IT from a different dimension
than the traditional operational point of view. Within the strategic function,
IT has a role in the formation of the organization, how it develops, with
whom it has relationships, how it delivers health services, and the extent to
which it is a leader or follower, agent for change, innovator, or organization
that lets others take the initial risk.
Information technology as an enterprise strategy has the greatest potential for failure for a variety of reasons. The obvious ones are that it is expensive, is complex, and requires a completely different way of thinking on the
part of all users. No matter how wonderful the technology or how capable the
system of providing for process improvement, if the individuals involved in
working with the system are not willing to change, do not embrace the future,
or are not open to the possibilities presented by the new technologyor more
accurately, the information and knowledge base created by the technology
the implementation is doomed to failure. Most often, the failure will be placed
on the CIO and the technology rather than on the organization. Evaluation
in this context is extremely important but also very difficult to accomplish.
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
The Health Center (HC) had been using paper medical records since its opening.
HC had grown over the years and as of 1997 consisted of the main hospital and five
outpatient clinics placed strategically around the community. With the paper medical records, most patients usually had multiple records located in various sites.
They generally had both an inpatient record and one or more outpatient records.
Thus, when an individual was hospitalized or referred to a specialist in another
clinic, it was often difficult for the physician to have all relevant information available in one location. The need for a more centralized location for patient information became apparent.
HC had a long-standing relationship with a specific vendor; therefore, when
the medical staff and administration began clamoring for a sophisticated electronic clinical information system, they naturally looked to this vendor to meet
their needs. The vendors response was a proposal to provide, incrementally, a set
of 30 to 40 modules that would provide HC with the capabilities to meet its clinical information needs for the foreseeable future. Expectations were that this modular system would take five to seven years to implement completely.
HC accepted the proposal and negotiated a contract with the vendor to
begin implementing the project. The first step undertaken was to integrate each of
the clinical modules with the already existing IDX business modules and modify
existing processes to be consistent with the new clinical modules.
As the first modules began to be implemented, the CIO recognized a need to
determine how the new systems would fit with the currently existing systems and
with any additional systems that might be needed over the next few years. This
analysis would permit the organization and IT department to plan for the future of
the clinical information system, its linkages to the existing business system, and its
integration into a decision support system to improve the quality of health services
delivered. The vendor was asked to assist in the development of this plan.
Then, business managers and the public recognized the technological uncertainties of the year 2000, which delayed the implementation of modules. Financial difficulties experienced by HC also took their toll. However, new administration
provided additional support for the project, and by 2004, three of the modules had
been implemented.
As the CIO started discussing the plan for the IT department, the CEO decided that perhaps a plan to explore the fit of the developing IT systems to the rest
of the organization was needed. Such a plan could provide guidance for the CIO
and other business unit leaders, recognizing the fit between the activities of IT and
the rest of the organization.
Problem Solving 9.1 provides a discussion of the lessons to be learned from
HCs experience.
* This case is based on a real event, but the institution is fictitious.
much smaller than the benefits to individuals in general, while all of the costs
(at least at present) must be borne by the organization. From the standpoint
of the healthcare system, benefits may outweigh costs. From the standpoint of
the organization, however, benefits may be much lower than costs. In this case
an obvious underinvestment will be taking place.
CASE 9.1
EMR
Valuation*
199
200
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
PROBLEM
SOLVING 9.1
EMR
Valuation
In this case the plans of Health Center and its vendor were not consistent or realistic. The complete installation of the modules remains unfinished at the end of
the initial six-year period. One lesson to be learned from this experience is that
vendors and clients must develop realistic plans that include organizational strategic decision making, not just IT departmental strategic decisions.
This case provides a number of topics that must be considered as issues
that may have resulted in better outcomes with a shorter time horizon.
Is convenience and familiarity with a past vendor sufficient justification for not
performing a broad examination of other providers?
Were a sufficient number and variety of stakeholders involved in the decisionmaking process?
A strategic plan for the IT department is not sufficient to capture the complexity and organizational interrelationships involved in decision support systems.
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
% of IT Projects
% of Responses
Not Used
11%
<20%
61%
2040%
22%
4060%
0%
6080%
0%
>80%
6%
formula. Return on investment is what the organization expects to gain as a result of the investment: what forms it will take, who it will involve, the best way
for the organization to realize the benefits, the total costs of ownership, who
needs to be involved in the decision process, and myriad other considerations.
The fourth consideration has to do with governance issues. No matter how
good the technology, planning, analysis, or project appears on paper, it will be
doomed to failure if appropriate systems are not in place to support it. These
systems must include the people who will be most involved with its use and
most affected by its existence. A lack of personnel support can sink any project.
The progression of IT from operational tool to key component of an
organizations transformational strategy leads to the conclusion that administrators and executives must create a framework for the investment so that evaluators might accurately assess IT investment. This framework should be designed to force the broadest possible view of IT investments and enable
evaluators to think beyond the application of traditional financial analysis tools.
The framework suggested here provides a comprehensive approach to
the evaluation of IT, premised on the belief that previous evaluations of IT
have been limited and incomplete and fail to recognize the true value-enhancing capabilities of IT investment. This model provides a framework
under which evaluation of the investment decision can be performed and by
which organizational assumptions can be tested.
This framework can be visualized as a cube. While additional dimensions may exist, the cube emphasizes that evaluation is multidimensional. In
addition, evaluations have tended to be focused narrowly on a particular project without consideration of its ramifications for all other projects and the interrelationships that exist within and among projects. The effects of IT investment projects often extend beyond the organizations walls, especially in
healthcare, where patients, physicians, competitors, potential partners, and
even the population at large can be affected.
Figure 9.1 demonstrates the three dimensions of the cube: stakeholders, functionality, and project-specific characteristics. Each of these dimensions is defined very broadly. This cubic representation is designed to provide
201
TABLE 9.1
Percentage of
IT Projects
Subjected to
Formal
Evaluation
Process
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
FIGURE 9.1
Evaluation
Framework
for IT
Functionality
Stakeholders
202
Project-specific characteristics
Stakeholders
There are a variety of stakeholders, participants, or potential partnerssome
with a vested interest in IT systems, others not even recognizing the effects
of potential projects for them. Stakeholders are both internal and external to
organizations. Stakeholders in healthcare organizations are somewhat unique
compared with other industries, as physicians, patients, payers, and government regulators may be more affected by individual organizations IT investment decisions than similar stakeholders in other industries. These stakeholders can take different rolesas users, partners, coproducers, reactors, and
consumers. These myriad possible roles result in a complex evaluation process
and multiple interrelated goals and objectives. A major difficulty in considering the implications for stakeholders is ensuring that the goals and objectives
are aligned to the greatest extent possible.
The stakeholders are made up of the units within the organization
(chief financial officer [CFO], chief executive officer [CEO], CIO, business
functions, clinical functions); providers (hospitals, physicians, managed care
organizations); patients, consumers, or clients; payers; employers; regulatory
agencies; competitors; vendors; potential partners; governments; and the
general population. These stakeholders have different objectives and expectations from IT investments. In addition, the extent to which each stakeholder
realizes the benefits will be dependent, at least partially, on the activities of
that stakeholder. The existence of stakeholders at different levels and the fact
that healthcare is often considered to be a public good result in a variety of
different potential levels of analyses.
Figure 9.2 indicates three different levels of analysis. Most IT investment decisions are made at the organizational level (organization-centric);
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
Public/social good
Benefits
Patient centered
Organizationcentric
Costs
203
FIGURE 9.2
Stakeholder
Analysis Focus
204
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Project-Specific Characteristics
This dimension of IT decision evaluation attempts to ensure that no aspect
of value is ignored in a project. It includes the benefits, costs, risks, sensitivity to assumptions, value mapping, interdependencies, and every other aspect
of the particular project appropriate for inclusion in the evaluation. The articulation of potential benefits associated with IT investment must precede
measurement. Many benefits will be difficult to identify and measure, but this
difficulty should not be used as justification to simplify the process. Ease of
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
measurability does not justify using a benefit as the basis for measurement. Indeed, the issue of definition of benefits should play a larger role in the evaluation process. However, it is not the traditional approach toward identification
of benefits that is important; rather, the recognition that the users of the information will determine the benefits of IT investment is the important point to
keep in mind. It is up to the creativity and acceptance of users and potential
users to determine the true value of the contribution of IT to the organization.
Costs are often assumed to be the most easily identifiable and quantifiable attributes. The important issue here involves the production function, which
ensures that efficiency is maximized. Of course, there are initial investment
costs, and these are not inconsequential, but it is the ongoing costs and associated benefits that will determine the extent to which a project is acceptable.
To the extent that CIOs are held accountable for the costs of IT investments
they often become focused on a particular project, rather than looking beyond the project to the business and strategic implications. Business and clinical leaders, especially physicians, often reinforce this focus.
While costs are often the easiest aspect of IT investment to identify and
measure, the same cannot be said of risks. The risks are what make IT investments difficult. The risk involved in accurately identifying and then realizing
benefits cannot be overstated. Sophisticated mathematical analysis can provide precise numbers for the ROI associated with an investment in IT. However, the realization of the benefits is more a function of individual acceptance
and willingness to change than a direct consequence of the hardware and software design providing the hard numbers.
Costs and
benefits
Risks and the estimation of their impact need to be incorporated into all IT
investment decisions. From the standpoint of risk it is obvious that not all
projects are equal. Business and clinical functionalities have relatively low risk,
as they are performing old functions with new technology. Errors may arise
because of inappropriate application of historical processes, but the risks are
generally manageable and predictable. On the other hand, decision support
and strategic investments result in a completely different form and set of risks.
These risks include lack of consistency and direction in a changing environment.
Traditional riskscost overruns, timetable lapses, inability to deliver
on promises, and so oncannot be ignored. These risks, however, are not the
ones that result in investment failure. Failures are the result of
Risks
lack of accountability;
inability to identify and plan for how an investment fits with organizational strategy and other investment projects; and
lack of follow-through, monitoring, and willingness to make changes on
a continuing basis.
205
206
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Risk is an inherent part of life and business, and any investment will
have some associated risks, so this does not mean that all risks should be
avoided. The traditional financial concept of the risk-reward trade-off is relevant here: if the potential rewards are large enough, the risk is worth taking. Again, this approach requires recognition of IT investments as strategic
assets rather than narrowly focused projects, with input from units beyond
those under the CIOs purview.
Sensitivity
Value mapping
Interdependencies
The last specific project characteristic mentioned is interdependencies between and among projects. Any IT investment must be considered as part of
a portfolioof projects, assets, products, or investments. This view of the individual investment recognizes that most projects have interdependencies or
other relationships with other projects or organizations. These interdependencies, or portfolio impacts, must be considered explicitly when considering
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
investment in IT. A strict financial management view of portfolio theory requires consideration of the covariability of projects: they may move in the
same direction at the same time, a move in one may force a move in another,
or they may move in different directions in recognizable patterns. These and
other interdependencies are important when considering projects and can be
used to improve the forecasts associated with any one project.
While this framework may not include all aspects of IT investment in
healthcare, it is designed to make evaluators think with more breadth than
would the traditional financial evaluation approach. Strategic advantages of
IT investment in healthcare extend beyond the boundaries of the organization, and the majority of investments cannot be evaluated as stand-alone
projects because of program and project interdependencies.
207
208
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Tools can provide a more systematic approach to evaluating IT investments but might not make the outcome of the analysis any easier to sell. Executives view the expenditure as an investment with a clear financial return
within a reasonable period. Schmitt and Wofford (2002, 53) observe that,
Executives are loath to commit millions of dollars to a project unless they can
be assured of positive cash flows within a reasonable period of time. Unfortunately, demonstrating this return can be challenging because many of the
[EMRs] benefits are either non-financial or inherently difficult to quantify.
The tools suggested here are best represented as an inverted pyramid,
where the top level is the broad economic concept of benefit-cost analysis.
Any decision has economic consequences, and the application of benefit-cost
analysis is always appropriate whether the analysis is performed explicitly or
implicitly. For projects as large as most IT investments the explicit application
of a benefit-cost analysis is appropriate. At the specific application level are
three methodologies, each providing a different form of decision-making information: ROI, which measures a rate of return; EVA, which measures a
dollar value; and payback period, which measures a time period. Taken individually, none of these tools provide a complete picture of the financial implications of an IT investment. Taken together, however, they provide a great
deal of information to inform decision making, especially when combined
with risk and sensitivity analyses.
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
place a dollar value on the intangibles, this does not mean that they can or
should be ignored. Intangibles are extremely important to the decision, and
their consideration must be made explicit.
Business case analysis requires input from all parts of the organization
that will be affected. Consideration from this standpoint requires that individuals in addition to the CIO provide information regarding the potential effect
of a particular project. This is an important step in the process, as it requires
explicit consideration of the potential for IT to behave as a transformational
agent. Care must be taken to ensure that all potential stakeholders are considered in the listing of benefits and costs and that all potential uses of the information and processes are considered. The purpose of the analysis is to provide
a heuristic for making explicit as many of the assumptions as possible.
Tangible benefits and costs are the elements typically included as inputs into the mathematical tools. However, almost 70 percent of CIOs estimate that intangible benefits are equal to or greater than tangible benefits
(Pisello 2003). The reason is that value is created by the information and
what is done with it, not by the technology. Indeed, the information creates
knowledge, which is even more difficult to identify and quantify. But knowledge is the foundation of the value creation on which IT investment is based.
ROI
The first application of benefit-cost analysis is referred to as ROI. This term
has been used in two different contexts in the IT literature. First, it has been
used as a catch-all term to include all generic forms of return on an investment. Thus, it often includes most of the traditional forms of evaluationinternal rate of return, net present value (NPV), benefit-cost ratio, EVA, value
at risk, and payback period. In this context ROI is an imprecise phrase without a specific definition. In the financial management literature and in this
chapter, however, ROI is a particular tool associated with the application of
benefit-cost analysis to IT investment.
Return on investment is calculated by dividing net benefits (benefits
minus costs) by net investment. It provides an interest rate, or rate of return,
that can then be compared with some benchmark or desired level. Decision
makers will then deem the project acceptable or not according to the ROI
relative to the benchmark. These benchmarks are most often internally generated and are equal to the cost of capital, risk-adjusted cost of capital, or
some other benchmark established by the organization.
The assumption is that investment in IT with a desired level of ROI
will provide value to the organization. A study of more than 10,000 public
companies found only limited correlation between investment in IT and financial performance (Pisello 2003). The conclusion was that financial performance is more closely related to how the investments are managed than
to the amount invested. This lends credence to the importance of evaluation
209
210
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
EVA
Economic value added is an indicator to measure value derived from operations or a particular investment project. Theoretically, EVA is the dollar
amount by which the value of an organization will increase (or decrease if it
is negative) if the investment is made. This amount would normally accrue
to stockholders in an investor-owned organization or enhance the value of
the organization in the case of both investor-owned and tax-exempt organizations.
The numerator of the ROI formula (net benefits) presented above
has been variously defined as NPV or EVA. This number expresses how the
value of the organization is changed by the investment. The theory behind
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
this concept has to do with valuation as presented in any financial management text. It takes into consideration the required rate of return of all sources
of capital and the fact that cash flows received at different points in time have
different values. This is the premise of the U.S. stock markets and stock valuations and the premise for determining the value of any organization involved in merger or acquisition activities. While the authors have used NPV
and EVA to mean the same thing in this chapter, they are not precisely identical; an explanation of the differences is beyond the scope of this chapter.
While the concept of EVA is fairly straightforward and the result is easily understood, its application to IT is fraught with difficulties. This is because of the fluid nature of many IT investments and the speed with which
the technology is changing. In addition, all IT projects have a life cycle, as do
products and strategies. The point at which the IT investment falls into the
life cycle of interdependent projects will help to determine the life cycle of
the IT project. Life cycle analysis is an important part of the assessment of
EVA. The EVA technique involves consideration of the timing of cash flows.
However, given the rate of change in technology, rate of obsolescence of IT
projects, and risks associated with IT investments, the time horizon most
often used is extremely short. Therefore, discounting techniques may not be
used, and only one years worth of cash flows is sometimes used in these formulas.
Value realization may also be elusive because much of the impact of IT
investments is new, having never been experienced. For instance, the EMR
cannot be precisely defined in terms of what it looks like and what its effects
will be. It has never been experienced, so it is difficult to identify a complete
list of potential benefits. To the extent that IT investments are envisioned as
key components of an organization there will likely be unintended consequences. This provides both a risk and an opportunity for all potential users.
Payback Period
The payback period is how long it takes for the original investment to be returned. Econmic value added may be acceptable and ROI may be above the
required level because of discounted cash-flow techniques when large cash
flows are expected to be received in the distant future. A payback period allows an organization to make an explicit decision that the risk associated with
waiting for the future is too great. Thus, a payback criterion can override the
other two criteria.
Each of these tools provides information that is alone insufficient to
make a valid decision. However, combined, and using consistent assumptions
and forecasting inputs, these tools will provide a picture that has a better
chance of leading to an appropriate decision than any one tool taken individually. Now, the question is how to apply these tools to increase the chances
of making an appropriate decision.
211
212
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
have implications for the revenues and costs of the organization for a period
greater than a year. This investment needs to be budgeted because it is expensive and resources are limited. Given the complexity, dollar figures involved,
and time factor (which is generally relatively long), a systematic approach toward evaluating alternative investment projects is a worthwhile endeavor. It
must be remembered that IT investments must compete with other potential
investment projects for a limited amount of resources.
The generic steps involved in the IT investment process are as follows:
1.
2.
3.
4.
5.
213
214
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
Organization
Business Clinical
Information Enterprise
(or business ecosystem)
Patient Public
Tangible Benefits
One time
Continuing
Periodic
Intangible Benefits
One time
Continuing
Periodic
Tangible Costs
One time
Continuing
Periodic
Intangible Costs
One time
Continuing
Periodic
The tangible benefits are those most easily identified and measured.
They may be in the form of increased revenues through improved coding and
fewer lost charges; expanded product line and increased market share; cost
reduction through more efficient enrollee identification and processing; cost
reduction through improved efficiency, fewer medical errors, and less rework;
and numerous other examples. These benefits might be one-time bubbles, as
in the case of improved collection period; continuing, as in the case of increased market share and improved coding; or periodic, as in the case of annual screening processes or fund drives involving patient records on chips or
bracelets. These benefits should be listed according to who is going to realize them. It is important to recognize explicitly the locus of the benefits in
order to improve the likelihood that the majority of benefits are being captured. In addition, the matrix shown in Figure 9.3 will help to identify where
accountability for benefits realization should lie.
The intangible benefits are much more difficult to identify. Examples
are an enhanced reputation resulting from recognition as one of the top 100
information facilities in the United States or as a center of excellence because
of integrated patient health records and process improvements associated
with a particular disease or diagnosis. Pisello (2003) provides the following
list of potential intangible benefits:
Brand advantage
Strategic advantage
FIGURE 9.3
Stakeholder
Matrix
215
216
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Competitive advantage
Intellectual capital
Organizational advantage
Risk avoidance
Tangible costs are often the most easily identifiable, at least in the initial phase, because they include information provided by the vendors in many
cases. This category includes software, hardware, facility modifications, training, and any other associated costs. Capital costs are generally one time or periodic, whereas operating expenses are continuing.
Intangible costs are more difficult to identify and may often be unanticipated. These costs may take such forms as staff resistance to change, lack of
acceptance, and loss of reputation as a result of start-up problems. While the
benefits associated with a CPOE system are in the area of improved legibility,
physicians complain that CPOE systems often increase the amount of time they
must spend placing orders, making them reluctant to use these new systems.
This step is discussed in the more generic discussion of benefit-cost
analysis presented above. It is probably the most difficult and yet most important step in the evaluation process.
0%
Low Risk
1015%
Medium Risk
1530%
High Risk
30% or higher
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
10%
12%
5
6
7
8
9
10
$ (20,921.32)
$ 35,526.07
$ 86,841.88
$133,492.62
$175,902.38
$214,456.71
$(39,522.38)
$ 11,140.73
$ 56,375.65
$ 96,763.98
$132,824.98
$165,022.30
14%
$ (56,691.90)
$ (11,133.25)
$ 28,830.48
$ 63,886.39
$ 94,637.18
$ 121,611.56
16%
$(72,570.63)
$ (31,526.41)
$ 3,856.54
$ 34,359.09
$ 60,654.39
$ 83,322.75
As mentioned, included in this step are the ROI, EVA, and payback
metrics. Return on investment provides a rate of return expressed in the form
of an interest rate. As such it is easily understood. The primary disadvantage
of ROI is that it does not take into consideration the scale of the project. For
example, one project may have a high ROI but be the result of a relatively
small investment: a 50 percent ROI on a $100,000 investment will provide
only $150,000 in benefits, whereas a 10 percent ROI on a $1,000,000 investment will provide $1,100,000 in benefits.
Economic value added is an important adjunct to ROI because it provides a dollar value indicating the extent to which the value of the organization is enhanced by the project. This value, to the extent it is realized, is an
absolute dollar figure and shows how much the value of the firm would theoretically increase in the stock market.
Payback is significant, as it indicates how long it takes the project to
pay for itself. This is important because some organizations may have a short
time horizon regardless of the ROI or EVA values. Payback is most frequently used for infrastructure projects and often requires a one-year payback
period. Other techniques are not used because revenues are difficult to associate with infrastructure projects.
Sensitivity analysis should be applied as one mechanism to account for
risk. There is so much uncertainty associated with IT investmentand so
many organizations have had bad experiences with IT investments, especially
realizing ROI or anticipated benefitsthat this step should not be left out.
An example of sensitivity analysis is provided in Table 9.2, where the cost of
capital and anticipated life of the project are allowed to vary. The sample figures in the table are designed strictly to indicate the informational value of
performing a sensitivity analysis. In this example the project should not be
undertaken if there is a high probability that the expected life of the project
will be less than six or seven years.
217
TABLE 9.2
Example of
EVA Sensitivity
Analysis
218
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Reevaluation of Decisions
Continuous monitoring and reevaluation of all previous investment decisions
is also an extremely important step. Once the investment has been made, it is
imperative that the results of the investment be tracked: Do results meet expectations? What outcomes have been improved? Are there unanticipated consequences (both good and bad)? This step can be used to improve forecasting
associated with future IT investments, modify current or past investments, and
make a decision to discontinue implementation or make additional expenditures to ameliorate an incorrect past decision. While reevaluation is an important step, it is often overlooked: Many CIOs reported that their companies
undertook no auditing or follow-up to determine whether IT projects failed
or succeeded (Davis, Rath, and Scanlon 2004, 59). This is a fatal error in IT
investment and an indication of bad IT management.
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
219
220
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Conclusion
This chapter provides the opportunity for IT investments to be considered as
an integral part of any organizationas a required component, part and parcel of the strategic plan. Decision makers, when considering IT investments,
must remember the overused phrase thinking outside the box. Traditional
methods of valuation and evaluation do not fit the role of IT in the modern
health services system. This chapter provides not only a different way of thinking about IT investment but also different mechanisms for its evaluation.
I n ve s t i n g i n I n f o r m a t i o n Te c h n o l o g y
References
Adams, J. 2004. Questions of Leadership. Modern Healthcare May 34 (21):
3235.
Davis, K. B, A. S. Rath, and B. L. Scanlon. 2004. How IT Spending Is Changing.
The McKinsey Quarterly, 2004 Special Edition: What Global Executives Think,
5967.
Pisello, T. 2003. IT Value Chain ManagementMaximizing the ROI from IT Investments. [Online article; retrieved 7/28/04.] www.alinean.com
/AlineanPress_ITValueChainManagement.asp.
Schmitt, K. F., and D. A. Wofford. 2002. Financial Analysis Projects Clear Returns
from Electronic Medical Records. Healthcare Financial Management 56
(1): 5257.
Thorpe, J. 2003. The Information Paradox: Realizing the Business Benefits of Information Technology. New York: McGraw-Hill.
Further Reading
Baldwin, G. CIO Secrets to Calculating Return on Investment. Health Data Management [Online article; retrieved 9/7/04.] www.healthdatamanagement.com
/HDMSearchResultsDetails.cfm?DID=7275.
Christenson, C. 2003. The Innovators Dilemma. New York: HarperBusiness.
Litwin, B. 2004. ROI from IT: Enhancing the ROI from IT. Healthcare Informatics Online. [Online article; retrieved 9/7/04.] www.healthcare-informatics
.com/issues/2004/02_04/litwin.htm.
Murphy, T. 2002. Achieving Business Value from Technology: A Practical Guide for
Todays Executive. New York: John Wiley & Sons.
Sullivan, A. C. 2002. Connected EMRs Yield Measurable ROI. Healthcare Informatics Online. [Online article; retrieved 9/7/04.] www.healthcare-informatics
.com/issues/2002/05_02/casereport.htm.
221
CHAPTER
10
MANAGING INFORMATION TECHNOLOGY
SERVICES
Anthony N. Duminski and Timothy B. Patrick
Chapter Outline
1.
2.
3.
4.
Key Terms
Information
technology (IT)
governance
and leadership
Chief
information
officer (CIO)
IT strategic
planning
Learning Objectives
1. Understand IT management from both a strategic and day-to-day point
of view.
2. Understand the importance and fundamentals of project management.
3. Understand the concepts of an IT customer and IT response to customers.
Chapter Overview
Within a major U.S. healthcare organization, information technology (IT)
management activities include strategic and tactical efforts. These efforts are
conducted within the firms IT governance framework. A key point to keep
in mind, as discussed in Chapter 3, is that IT can be considered an essential
enabling factor for organizational transformation but in itself will not produce transformation. Information technology management, whether at the
strategic or tactical level, is not merely a matter of management of the technical details of IT infrastructure and applications. In fact, successful IT management requires management of the IT function as a productive component
of the overall organization. In addition, the reporting relationship of the top
IT officer in the organization plays a significant role in facilitating realization
of business benefits by the organization.
IT project
planning
IT life cycle
planning
IT department
organization
Chief
technology
officer (CTO),
chief medical
information
officer
IT customer
223
224
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
CASE 10.1
A Finger in
Every Pie
The IT infrastructure and organization at a large Midwestern academic health sciences center was undergoing significant change. A multiyear implementation of an
enterprisewide electronic medical record (EMR) system was in progress. A key
challenge faced by the IT leadership was the management of systemwide adherence to software and hardware equipment standards. Effective ongoing management of department-specific IT personnel, not heretofore under the direct control
of the enterprise IT management, was therefore required. Because well-trained IT
staff were in short supply as well as expensive, enterprise IT management struck a
deal with individual departments across the organization. Enterprise IT management would provide, to each department who requested one, a user-support employee well trained and certified in the IT applications proposed for adoption
across the enterprise. Enterprise IT management would split the cost of the employee with the department, paying 25 percent of the salary while providing training and support for the employee from the enterprise IT organization.
Problem Solving 10.1 highlights a few of the factors to be considered in organizational strategy to manage IT staff distribution.
M a n a g i n g I n f o r m a t i o n Te c h n o l o g y S e r v i c e s
The CIO who is not viewed as a fellow executive is likely doomed to quick
failure.
In addition to the CIOs responsibility in furthering a shared IT vision
and IT strategic plan, the organization must have a clear-cut ability to plan
and execute IT projects, provide daily operational functions, and work
smoothly with the other components of the healthcare organization. These
activities are largely influenced by IT leadership practices, IT business
processes, and IT personnel selection and development. The CIOs relationship with key suppliers will also have a notable effect on the IT departments
performance.
To be successful the CIO must be able to work just as effectively at the
board level as at the executive and senior management levels. These characteristics are typical of those required for other successful senior executives.
225
226
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
the principal roles of executive management is to provide leadership and commitment in the formulation of the multiyear IT strategic plan that informs and
is informed by the healthcare organizations overall long-range strategic plan.
A key point to keep in mind is that an IT strategic plan makes most sense
within the context of the overall long-range strategic plan. Failure of the leadership to provide a strategic plan for the enterprise as a whole or to consider
IT plans in the context of such a plan may have equally deleterious effects on
the success of IT for the organization. For example, the lack of a formal longrange institutional strategic plan may make formulation of an IT strategic plan
problematic, resulting in plans that are based solely on considerations of business as usual. On the other hand, even if a broader enterprise strategic plan
exists, failure to consider IT in the context of it may result in failure to incorporate changes made possible by IT in the healthcare organizations strategic
direction. Similarly, major planned organizational changes, such as mergers or
acquisitions, may not be anticipated in IT strategic plans, forcing IT management to address them ultimately on an ad hoc or tactical basis.
Strategic IT Planning
Planning Period
Generally, the IT strategic plan is crafted for a minimum three-year period.
Often, the planning period chosen is five years, with individual implementation projects within the plan usually of a one- to two-year duration. Thus, a
five-year plan must include implementation projects starting in years four and
M a n a g i n g I n f o r m a t i o n Te c h n o l o g y S e r v i c e s
five that may continue to be underway in years six and seven. Typically, the
plans are updated on a two-year cycle; hence, implementation projects starting in years three through five are reconsidered at least once from a strategic
planning perspective. Obviously, the longer the planning time horizon, the
greater the inaccuracies can be in the later years. Updating a five-year plan at
least every two years helps to bring greater accuracy to those projects in the
later years of the original plan.
IT Vision
Key to the creation of an IT strategic plan is the development or updating
of an IT vision, which should extend across the entire organization and be
227
PROBLEM
SOLVING 10.1
A Finger in
Every Pie
228
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
FIGURE 10.1
Sample IT
Vision
Statement
consistent with the firms strategic direction. This vision should establish
broadly stated goals for the use of IT within the firm. Figure 10.1 depicts a
sample IT vision statement.
The IT vision should be crafted with the involvement of both executive
and operational management. Often, there are executive and operational management committees that can serve to formulate or approve the IT vision.
Many healthcare organizations have also established an IT steering committee, typically consisting of members from the senior operational management
ranks. Additionally, IT steering committees often have members from the key
physician organizations, either community based, hospital based, or both. The
IT steering committee or a subcommittee thereof can serve as the staff to develop the IT vision. There may also be an IT executive management committee composed primarily of executive leadership to review and approve the IT
vision that has been developed. Alternately, the review and approval role can
be performed by the general executive management committee of the healthcare organization. The involvement of a healthcare IT strategy consultant may
be helpful to facilitate the IT visioning process. The experience and independent viewpoint of an outside consultant can facilitate the development of consensus among the participants and help in the art of creating an IT vision that
balances both scope and specificity. Once crafted, the IT vision statement can
serve as the cornerstone for creating or updating the IT strategic plan.
M a n a g i n g I n f o r m a t i o n Te c h n o l o g y S e r v i c e s
The initial focus of the project is defined in the conceptual stage. This
definition includes the scope, business purpose, possible IT creation technologies, or alternative sources for the projects components. The emphasis
is on determining the feasibility and benefits for a project and whether to
proceed to the efforts of the next stage.
The second stage, selection, develops sources and timelines, quantifies
expected benefits, and outlines staffing, technology, and financial requirements for the project. The conclusion of this stage could either be a determination to terminate the effort or a decision to enter into the third stage,
implementation.
During the implementation stage a detailed implementation plan is
created and executed, the components for the project obtained or developed,
and the initial benefits hopefully realized. During the implementation stage
it is customary to use a detailed project plan based on the Critical Path
Method and Program Evaluation Review Technique project planning and
management methodologies (Frame 2003), two of the project management
models that have influenced the creation of Microsoft Project and many
other modern, commercially available computerized planning tools. Healthcare applications licensed by software vendors are often accompanied by a
typical computerized project plan, which is refined to fit the specific needs of
the clients implementation of the application. Some institutions use computerized planning tools in conjunction with best practices templates. These
templates are commercially available not only for the implementation of new
projects but also for other life cycle stages. As a firm builds experience in
using computerized project planning templates, it can customize these best
practices templates to fit its institutional needs.
Following the implementation stage the project enters the review
stage. This stage focuses on whether all expected benefits are being realized
and what corrective action should ensue if they are not. For example, during
this stage additional training might occur, and other project implementation
problems would be identified and corrected. During review, the fit, risk, and
cost expectations are contrasted to actual outcomes. This review stage should
recur at least annually, with later years used to identify when a replacement
project should be initiated.
IT Department Organization
The IT department is often divided into two major functional areas: operations management and applications management. Information technology
operations management typically includes all personnel for the daily operation
of the centralized computers, data network, desktop computers, institutional
IT help desk services, IT security, and IT technology services. Information
229
230
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
technology applications management includes all major IT applications development, implementation, and maintenance staff. There may also be IT staff
devoted to financial administration, budgeting, human resources, and other
support functions.
IT Operations Management
Information technology operations management includes planning and management of centralized computers (e.g., mainframes, servers), distributed
computers (e.g., desktop computers), and the data networking equipment to
interconnect them. Key aspects of these activities are system availability and
capacity planning, reliable oversight, and control of operations. The operations management organization may be headed by a chief technology officer
(CTO). In addition to daily operational responsibilities, the CTO and his or
her organization may set IT standards for the entire healthcare organization.
Support
services
One of the daily application and infrastructure support functions is the provision of support services to help IT customers using the various application
systems. This support activity is generally provided through an IT help desk,
which provides detailed frontline interaction with the IT customers. The help
desk is usually a component of the IT operations organization. The IT help
desk staff is called on to address a diverse range of questions and problems.
Support services can range from problem resolution to routine matters such
as password resets. In some cases the user problem is as simple as needing a
reminder on how to use a certain feature of the application software. At other
times problems result in the need to fix a bug in the application software or
supporting infrastructure. Usually, help desk personnel are supported by
databases of frequently asked questions, third-party infrastructure knowledge
bases, and call logging and resolution management software applications.
Application software problems can be categorized as either bug fixes or
feature enhancements. Bug fixes in turn are usually triaged into urgency categories. Some demand immediate attention and rapid resolution, but most are
less urgent.
Problems that cannot be handled by the help desk personnel are referred to the appropriate staff member in the IT department. In addition to
problem resolution, the help desk may generate requests for application system changes; these can range from changing the layout of a data entry or display screen to requests for additional features. Handling these application system change requests is often a challenge for IT management and includes
tracking requests, aggregating them into logical groupings for resolution, providing feedback to the requestor regarding resolution status, and balancing
application changes with new application planning and replacement activities.
For many IT customers the help desk personnel present the daily
image of the IT department and its capabilities. Information technolgoy
M a n a g i n g I n f o r m a t i o n Te c h n o l o g y S e r v i c e s
231
Network
monitoring
Technology
support
232
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
wiring closets or other secured locations throughout the institution. Deployment and maintenance of wiring cables and equipment are the responsibility
of the data networking staff. Often, installation of cable in the physical plant
is outsourced to a wiring contractor. Relocation of departments within existing facilities can place unexpected demand on the network and desktop staff
needed to relocate any associated equipment, install additional cables, or relocate cable outlets. Maintaining records of desktop equipment location and associated wiring infrastructure is an ongoing challenge.
Security
U.S. healthcare organizations have many applications that still run on mainframe computers. These computers may be executing legacy applications or
providing computational power as shared servers. In either event a central
computer operations staff is needed to manage the operation of this equipment. The operations staff may be located in the computer room or an associated computer room control center. Centralized computers are located in
secured, environmentally controlled, fire-protected facilities with reliable
sources of electrical power. The centralized computers usually monitor their
own performance and may automatically generate warnings about possible
problem areas. These warnings can be automatically communicated to the
service department of the equipment manufacturer, or they may require response from the operations staff. Likewise, environmental and power management sensors may generate warning alerts for the operations staff. Fire
warning indicators are often tied directly to the local fire department and
local fire-extinguishing systems and alarms. Facility intrusion detectors and
monitoring cameras are often tied to the healthcare organizations security
department.
System availability must be provided within a security structure that
provides reasonable protection against unauthorized or malicious access. As
most institutional systems are interconnected via a data network, provision of
network monitoring and control capability is significant. Protection of data
through backup procedures is essential, as is the ability to provide IT capability during institutional or community disasters. Disaster recovery may be
supported by off-site recovery centers. Less significant disasters, such as
power outages, can be self-supported, for example, through the use of uninterruptible power systems and motor generators. It is essential to test the security, auditability, and recovery capabilities periodically. Discovering unexpected problems or weaknesses during these tests is not uncommon.
Associated with many computer applications is the production and distribution of reports. These reports may be actually printed and distributed to
the user departments or distributed electronically. Printed media are managed by a media control activity within operations management. The creation
of routine backup media and storing them securely are often the responsibility of centralized computer operations management.
M a n a g i n g I n f o r m a t i o n Te c h n o l o g y S e r v i c e s
Each of the functional areas discussed in this section may be staffed as a team
within the IT operations management organization. Smaller healthcare organizations may not have sufficient staff to cover each of these functional
areas and may need to outsource some of them. Even large IT departments
may have periodic independent review of certain areas such as security, technology support, and disaster recovery.
Healthcare providers with multiple large hospitals and a centralized
executive organization have additional IT organizational complexity. In some
instances this is addressed by establishing institutionwide standards and providing operational IT departments at each healthcare provider site or regional
cluster. In other instances much of the IT department is centralized, with
only a small distributed component.
IT Applications Management
Information technology applications management includes managing implementation of new applications, ongoing support for legacy (existent) applications, and their minor and major enhancements. It is not uncommon for
legacy applications to consume the majority of a healthcare centers IT applications organizational effort. Thus, implementation of new applications
can stress application staffing levels and their legacy application support
functions. Significant new application projects often necessitate additional
staffing, usually through temporary project personnel. These temporary staff
members can be obtained from vendors, consulting firms, contract labor organizations, or short-term hiring.
The IT application staff is often organized by functional area. Thus,
one group may focus on accounting and administrative systems while another
may focus on patient care and diagnostic systems. Within the latter group,
some personnel may be managed by the IT department; others, say, for a
clinical laboratory system, may report to the management of the clinical lab
itself.
Each application group or subgroup is expected to work closely with
the leadership of the customers their systems serve. In some cases this interaction occurs with healthcare organization leadership, but in other areas,
such as patient care systems, this interaction must include both hospital- and
community-based physicians. One of the key new project activities in many
U.S. healthcare organizations is the selection and implementation of computerized physician order entry systems. The challenge is not only to bring application functionality of sufficient value for community physicians to want to
use the system but also to provide an effective management interaction with
these diverse physicians. As IT plays an ever greater role in the clinical
processes, it is not uncommon to find nurses, pharmacists, and physicians in
the IT staff. Many advanced healthcare organizations have added the position
of chief medical information officer.
233
Organizational
integration
234
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
IT Customers
A key concept in many current IT departments is that they exist to provide
services to IT customers. Professional behavior in meeting the IT customer
needs is stressed by IT management. The IT department is depicted as an
internal vendor providing services to other components of the organization. In some organizations the IT function is entirely outsourced to an external vendor. Today, for most healthcare organizations the initial creation
of IT application software is outsourced to application package software
vendors. Often, these standardized products provide a suite of related software. Thus, a healthcare organization may acquire departmental application
products to meet the needs of ancillary services, clinical care, or administrative departments. Other vendor-provided standard applications, such as a
M a n a g i n g I n f o r m a t i o n Te c h n o l o g y S e r v i c e s
Conclusion
While IT is an essential factor that enables and facilitates organizational
transformation, it is not itself enough to cause such changes. To serve its
function as facilitator, IT must be managed as a productive and fully integrated component of a healthcare organization. The full realization of the
transformational benefits IT can afford healthcare organizations requires
effective governance and leadership at the highest levels of the organization. Effective leadership is predicated on a broad vision grounded in specific details and plans. Only such management can offer the operations and
applications divisions of IT departments the focus and the freedom they require to advocate and to facilitate the transformations of which they are capable.
235
236
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
References
Frame, J. D. 2003. The New Project Management: Tools for an Age of Rapid
Change, Complexity, and Other Business Realities. San Francisco, CA: JosseyBass.
Further Reading
IT Strategy
Carr, N. G. 2003. IT Doesnt Matter. Harvard Business Review 81 (5): 4149.
Feld, C. S., D. B. Stoddard, J. W. Ross, P. Weil, and T. H. Davenport. 2004.
Making IT Matter. Harvard Business Online. Product 5895. [Online information retrieved 3/9/05.] http://harvardbusinessonline.hbsp.harvard
.edu/relay.jhtml?name=itemdetail&id=5895&referral=9451.
Project Management
Project Management Institute. 2004. A Guide to the Project Management Body of
Knowledge, 3rd ed. (PMBOK Guide). Newtown Square, PA: Project Management Institute.
Meredith, J. R., and S. J. Mantel, Jr. 2003. Project Management: A Managerial Approach, 5th ed. New York: John Wiley & Sons.
Stover, T. 2003. Microsoft Office Project 2003 Inside Out. Redmond, WA: Microsoft
Press.
CHAPTER
11
INFORMATION SECURITY AND ETHICS
Kenneth W. Lobenstein
Key Terms
Chapter Outline
Ethical
precursors
1. A Security Framework
2. Aspects of a Basic Security Program
3. A Zone-Based Architecture
Security
architecture
Protection
strategy
Learning Objectives
1. Understand the various topics and their historical context with regard
to information security and ethics.
2. Be able to develop an integrated framework for designing an information and security program in a healthcare organization.
3. Be able to assess the adequacy and appropriateness of proposed security
plans within organizations.
4. Understand the organizational responsibility for the development and
management of an effective information security system.
5. Be able to develop a structure for managing information security and
ethics within a healthcare organization.
Chapter Overview
This chapter first presents a framework that healthcare administrators may
use to guide their consideration of the adequacy and appropriateness of proposed security plans within their organizations. This framework focuses on
three fundamental motivations for attention to security matters in a healthcare organization: ethics, business imperatives, and legalities. The ethical
motivation underscores all other considerations. Case 11.1 presents a brief
scenario to illustrate common information security problems within a healthcare framework. A discussion of basic aspects of a security program with emphases on physical, logical, and managerial security follows. Consideration of
an exemplary system protection architecturezone-based architecture
237
238
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
CASE 11.1
Conveniently
Unsecured Files
The cardiology department of a university-affiliated hospital unilaterally purchased a document management system from a vendor to provide a common
repository for all residents pre- and postoperative notes. The department chair
uses the system to allow him to more easily evaluate the residents work. The vendor assured him the system is Health Insurance Portability and Accountability Act
(HIPAA) compliant.
The document management system has been installed on a computer at
the desk of the department secretary. As a matter of convenience, and because
there is no room at the desk for a second computer, the secretary also uses that
same computer as the primary workstation for administrative tasks. In addition,
the computer is connected to the hospitals network and functions as a web server
so that the chair can connect through the Internet while traveling in case he needs
files the secretary has created. This arrangement seems to work very well, as the
chair has remote access to the entire hard drive through a simple but unsecured
web connection.
Sometime after the new document management system was installed, the
chair had a conversation with the chief information officer (CIO) of the hospital. The
chair extolled the virtues of the new system and urged the CIO to consider adopting the system for other departments. The CIO was surprised and somewhat concerned to hear about the unilateral actions taken by the cardiology department. In
particular, the CIO was concerned about potential liability regarding HIPAA and
asked the cardiology chair whether the system was HIPAA compliant. Without hesitation, the chair replied that there was no need for concern because the vendor had
assured him that the new system was in fact fully HIPAA compliant.
Problem Solving 11.1 explores how such issues with information security
can arise.
A Security Framework
Information security has become a hot topic in healthcare, spurred by a few
highly reported compromises of medical information and the security rules issued pursuant to the Health Insurance Portability and Accountability Act
(HIPAA) of 1996. The former might be viewed as ministering to self-interest,
the latter as unnecessary red tape. Both could in fact be leveraged in support
of an ethical obligation the healthcare industry long has had on paper but too
rarely put into practice.
This section presents a consideration of a broad security framework
that healthcare executives may use as they consider the adequacy and appropriateness of security plans proposed within their organizations. This broad
framework consists of three basic types of motivations or rationales for keeping patient information secure. The first is a long-standing ethical motivation,
notably represented by the ancient oath of Hippocrates. The second motivation concerns business imperativesthe need to maintain a practice patient
base as well as adherence to professional standards of conduct. The third motivation concerns legal bases for keeping patient information secure.
Ethics
Whatever, in connection with my professional practice or not in connection
with it, I see or hear, in the life of men, which ought not to be spoken of
abroad, I will not divulge, as reckoning that all such should be kept secret
(Adams 2000).
Business Imperatives
In the computer age, ceteris paribus, healthcare organizations that manage
their information systems (IS) to ensure the technical equivalent of the
nondisclosure of privileged information might expect to keep their patients,
whereas those that fail to secure their IS might expect to see their patients expressing concern or worse. Minor variations in security practices may not be
obvious to patients, but to the extent that significant variations in security
239
240
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
HIPAA
The HIPAA Privacy Rule (U.S. Department of Health and Human Services
2003) mandates that all patient data held by a healthcare system, insurer, or
clearinghouse are subject to privacy considerations (see Case 11.1 and Problem Solving 11.1). These covered entities must have in place a notice of privacy practices and issue it to all patients; restrict access to patient data to the
minimum necessary for treatment, payment, or operations; keep records of
access to patient data; and provide to patients reports concerning access on
request by the patient. The Minimum Necessary Rubric is most significant to
the present discussion.
The HIPAA Security Rule (U.S. Department of Health and Human
Services 2003) requires that any data subject to the Privacy Rule that are held,
processed, or transmitted in electronic form must be managed to ensure the
availability, integrity, and confidentiality of those data. Confidentiality is defined as the property that data or information is not made available or disclosed to unauthorized persons or processes.3 The physical, logical, and
managerial controls healthcare organizations put in place must offer reasonable assurance that this property is maintained.
Some healthcare organizations adopt a view that consent allows unfettered disclosure within the institution, citing the Treatment, Payment, and
Operations Rubric of the HIPAA Privacy Rule. Such a view certainly makes
systems and hospital administration easier. But healthcare organizations must
consider whether this view is consistent with the Minimum Necessary Rubric
241
PROBLEM
SOLVING 11.1
Conveniently
Unsecured Files
While exceptions do occur, always be concerned about whether system selection by a clinical department will have included steps that address security issues, including availability and integrity issues.
What may initially appear to be innocuous data sets (e.g., the learning reports
of each resident) will often include information protected under the Privacy
and Security Rules issued pursuant to HIPAA.
Reliance on vendors for HIPAA risk assessment and management is highly
questionable. At least some level of due diligence by the customer is required.
of the same document and, more fundamentally, how such a loose interpretation squares with the historical ethical premise of medicine and the privilege accorded to patients in recognition of that ethical premise.
In the context of current systems security, these systems ought not to
be managed in ways that permit disclosure in the routine course of conducting business information that clinicians could not be compelled to divulge in
a court of law. While there are operational necessities (e.g., billing, morbidity
and mortality reviews, scheduling, and other functions) that require sharing
some information about a patients medical care with employees or agents
who are not directly involved in providing care for the patient, modern IS take
this characteristic of healthcare into consideration in the design of security
processes and controls. As those systems are designed and implemented, however, healthcare executives, clinical practitioners, and technologists should
think about the answers to need-to-know questions in the context of medical
ethics and the privileges and legal structures that flow from them because
good business practice makes it incumbent on all healthcare professionals to
abide by a medical ethic.
It is interesting to compare the European and U.S. approaches to data privacy
and security afforded to individually identifiable data. A U.S. consumer of
services must be aware of a plethora of laws and regulations concerning privacy and accuracy of personal information in each of the many industries or
market sectors in which those data may appear.4 Thus, a U.S. consumer who
is seen at a U.S. emergency room, pays the bill via an Internet payment portal using a credit card, and has the balance associated with that payment reported by the credit card company to a credit bureau would have to examine
three different pieces of federal legislation, look at all the regulations issued
pursuant to all three, and deal with three different federal offices to protect his
or her privacy and interests in those data.
Alternative
approaches
242
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Physical Security
The area of physical security pertains to who goes where within a facility. It
focuses on the space that personnel, equipment, records, and customers occupy. Physical control can range from armed guards at the doors and DNA
testing for passage through those doors to wide-open access for anyone at
243
244
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
any time. Many factors affect how much physical control different facilities
apply, including cost, mission, ownership, and clientele. It is instructive to examine this issue in two contexts: access to and within the buildings themselves and access to computers housed within those buildings.
Building and
area access
The safety of patients, their families, and the staff of healthcare organizations
is paramount, and the tremendous investments of healthcare organizations in
medical equipment, computers, and medical records are at risk if these organizations have ineffective access controls. This area of concern should result in
an audit of those areas where confidential information is stored or may be accessed electronically to determine how well access is managed. Key questions
addressed by the audit for each physical area of concern include the following:
Who can gain access to the specific area of concern?
Who has obtained access to the specific area of concern?
What might they have seen when they arrived in the specific area of
concern?
Computer
access
Physical access considerations should apply not only to confidential information but also to the ability to reach computers, printers, network switches,
and other equipment as well as to the ways they are protected against theft
and vandalism. In the case of physical access to computer equipment, there
are equivalents to each of the key audit questions noted above.
Who can gain access to a specific device?
Who has obtained access to a specific device?
What might they have stolen or vandalized?
Logical Security
Logical security addresses many elements of concern that we tend to think of
as information technology (IT) issues. Logical security is a very broad and
seemingly ambiguous grouping of security concerns. The common thread
among them, however, is the focus on managing the processes by which individual computer users, system administrators, and program routines on
other systems gain access to data and resources. Key questions for logical security are,
Who can gain access to a particular computer system?
Who has obtained access to a particular computer system?
What information might they have seen when they were using it?
Software
Everything done with computers involves the use of software (i.e., programs). Key logical security concerns regarding software are how well the
245
Development
and change
control
This section examines what data healthcare entities are protecting. In its simplest form a data security program has the following four objectives:
Data
Tasks to Be Done
Rationale
Operations
Development
Necessary to understand
effect on existing systems
Change Control
Vendor Involvement
Ensures change-control
processes are followed
Malicious Software
Intellectual
property
TABLE 11.1
Development
and ChangeControl
Security Issues
246
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
TABLE 11.2
Forms of
Intellectual
Property
Legal
Theory
Source of
Law
Trade
Secret
State law
Trademark
Federal and
state law
Patent
Federal law
Copyright
International
treaty and
federal law
Area Covered
Applicability
Much of the content in human resources systems and virtually all of the information in clinical and billing systems is categorized as confidential data.6
HIPAA, state and federal labor laws, contracts, and other considerations will
also create the need to treat certain data as private or confidential.
247
Risk of theft,
misuse, or loss
It may be helpful, depending on the size of the organization and the complexity of its IS profiles, to codify security levels and assign each computing
resource to a level to determine the protections appropriate for that resource.
Criticality
248
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
There are many different schemes for security level designation. Organizations building such a program from scratch may want to start with a very
straightforward and relatively simple example, such as the one in place for the
National Institutes of Health (U.S. Department of Health and Human Services 2002). National Institute of Health looks first at the sensitivity of a system and its data, assigning systems to one of four levelslow, moderate, and
high sensitivity, and national securitybased on the data content of the system.
National Institute of Health also classifies the criticality of systems to
measure the effect on the organization if a system becomes unavailable or unreliable. A system that has low criticality can be down without significant impact on the organization. A zip code lookup system is a very useful tool, but
inability to find the zip code for a given address in order to put it on a bill
will not threaten the life or health of patients. A moderately critical system is
important, but its operation is not imperative. A system placed in the high
level, however, is essential to operations. The loss of heart-monitoring systems in a cardiology ward would cripple the unit.
Beyond operational concerns, the time dimension must be considered
when assessing criticality. For example, loss of a payroll system for a day at the
beginning of a pay period may be of very low criticality, but a two-hour loss
of that system as payroll checks are being processed would be highly disruptive. Likewise, the context in which the system becomes unavailable can also
be a factor in setting the criticality level. Loss of emergency department users
access to the lab results system, even for a few minutes, can be life threatening, whereas loss of such access in the office of the administrator of the internal medicine department for an entire weekend may not be critical at all.
Sensitivity and criticality assessment may not result in identical or even
consistent assignments for a given system. Employee performance data, for
example, are very sensitive, but in most organizations such data are critical
only once a year. Conversely, drug interaction data may not be the least bit
sensitive, but a system that makes these data available at the point of care may
be among the most critical in the organization.
Access,
authentication,
and
authorization
As indicated above, a common thread in logical security is a focus on managing the processes by which individual computer users, system administrators,
and program routines on other systems gain access to data and resources. It is
important, for example, to determine which users or other systems should
have access to which resources. Systems must be included in the consideration
of access privileges. For example, a scheduling system may need to access a
clinical system to share information about new arrivals, or the billing system
may need to obtain information about diagnoses.
Once all considerations of access privileges have been settled, an organization is ready to set up a method for verifying the identity of users or
249
systems that try to reach data and resources. The process of verifying identity is authentication. Authorization, on the other hand, is the comparison of
verified identity information with lists of users or systems that are allowed to
reach a given computing resource. When the access being sought matches
those lists, a system will authorize the access.
Managerial Security
Managerial security addresses the many so-called soft areas of management,
controls relating to how people use IS, and how administrators manage that
use.
The tendency in most organizations is to assume that this area of responsibility, like the logical security areas discussed above, is the province of the IS
office and security officer. Such a view inevitably will get the enterprise into
one or more sticky situations, if not in worse predicaments. The issues in this
section are not about technology at all, but rather are about how healthcare
organizations prepare their workforce for the use of technology and supervise that use in a business context.
Administration
User access
rights
management
Personnel
250
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
Training and
awareness
Incident
response
Auditing
251
skill set than is present in most financially trained audit staffs. Finding adequate and properly trained staff to conduct a security audit is often a challenge.
Such audits too often simply compare security policy with the results
obtained from asking users and systems administrators whether they comply
with those policies. Assuming the tools are in place to carry out the security
administration functions, and in particular the tools needed for effective incident management and response, the security audit should be based on actual
data taken from the organizations systems. Interviews to augment data with
practical observations and clarifications are important, but they should not be
the primary source of audit data.
Information security is a mature discipline in many industries, such as banking and defense, but not in healthcare. Concepts and approaches are still
being defined in many organizations, with the added complication of provisions of the rule insisting that physical security is part of the responsibility of
the healthcare security official named under HIPAA. Even where information security is robust and well established, the connection between it and
physical security remains elusive, and career paths that include both are
poorly defined. Healthcare must quickly address both of these issues in setting appropriate emphasis on the full scope of the Security Rule.
In addition to this scope issue, organizational placement of the security function is often problematic. The title seems to make relatively little difference; an information security officer can be every bit as effective as a chief
security officer. There has been some inclination to merge security and privacy functions, but this creates less synergy than some initially had thought.
The privacy function is centered on which information is subject to privacy
protection and how disclosures should be managed, whereas the security
function is concerned with how to protect a wide range of technical resources.
Placement of the security function within the IT organization often
leads to an inherent conflict of interest, with the IT mission focusing on dayto-day operational priorities and the security office trying to shift the focus to
larger and longer-term architectural and policy issues. Moving the security
function to the chief executive officer or chief operating officer may elevate
attention, but it will also separate the mission from the technical resources
fundamental to designing, implementing, and maintaining the technical architectures that are imperative to the security function. Enterprise leadership
will need to weigh these considerations very carefully in deciding how to
charter and where to place the security function and evaluate the efficacy of
those choices as the security program develops.
Structure and
organization
Contingency
planning
252
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
that do not start, jeans that do not fit, and phone calls to friends or colleagues
whose lines are busy. Healthcare executives should have such plans for hospital and clinic IS.
Contingency planning is complex in that achieving the objective of
having an effective plan involves ensuring that every aspect of normal business operations has been reviewed to guarantee the existence of an alternative method of accomplishing imperative operations and specific plans for recovering from a major loss of capability in relatively short order.
In an oversimplified model of contingency planning a manager can
think in terms of a finite list of key steps. In reality this list is highly interrelated, and each item on it has multiple linkages external to the list. The most
overlooked step generally is routine and persistent testing of the plan.
A Zone-Based Architecture
Security Zones
Zone-based architecture is based on the level of protection the data in the system must have. Data that can be and routinely are released to the public require relatively little protection other than to ensure back-up against loss. Data
that would be released for certain personal information or business strategies
(e.g., home phone numbers or marketing plans) are placed in a so-called business core. Data that have intellectual property value or are protected by contract terms (e.g., with a research grant) are placed in the intermediate core so
managers can control more carefully which users and processes may access it.
Systems holding confidential data (e.g., patient information) are in a fourth
region or zone called the hardened core. As users move from public to hardened cores, managers place increased restrictions on which network connections may reach those destinations and which users may access those systems.
Figure 11.1 represents a zone-based architecture.
Managers may allow Internet connections into their networks, but
they should do so by creating a separate region, called the DMZ, where specialized servers are placed to control external connections. Only public data
would be stored on these servers; software programs and access rights tables
would regulate controlled access to systems in the nonpublic cores.
Data in the business core can be copied to the public region once
redaction has been done; from there it may be released across the Internet,
but the business core itself is not directly available over the Internet. In addition, access by support staff to the hardened and intermediate cores for
maintenance of those systems may need to pass through a dedicated support
team access server to control who can connect to those systems directly
rather than through an application with all of its security features.
External Internet
DMZ
Border firewall
Public
zone
Unknown
devices
Known,
wireless,
remote
Printers
Business
core
Other
customer
data
Workstations
Special
purpose
firewall
Intermediate
core
Internal
firewall
Hardened
core
Remote
support
Conclusion
A zone-based architecture would be ideal for a healthcare organization covered under the provisions of HIPAA. Such an architecture provides the flexibility necessary to execute business imperatives efficiently while simultaneously
ensuring compliance with HIPAAs Minimum Necessary Rubric for access to
patient data. By adhering to such a rubric, healthcare entities demonstrate a
commitment to both good business practice and the medical ethic that underscores such practice.
Notes
1. See, for example, the following web sites:
253
FIGURE 11.1
Zone-Based
Approach to
System
Protection
254
I n f o r m a t i o n St ra t e g y : M a n a g i n g I n f o r m a t i o n Re s o u rc e s
www.itsc.state.md.us/best_practices/SecPolicy.asp
http://csrc.nist.gov/
www.microsoft.com/technet/treeview/default.asp?url=/technet
/security/bestprac/default.asp
2. See, for example, Missouri Revised Statutes, 491.060 (5). The American
Medical Association has attempted to cast the matter in more practical
terms (see the first paragraph of www.ama-assn.org/apps/pf_new
/pf_online?f_n=browse&doc=policyfiles/HnE/E-5.05.HTM&&s_t
=&st_p=&nth=1&prev_pol=policyfiles/HnE/E-4.07.HTM&nxt_pol
=policyfiles/HnE/E-5.01.HTM&). For some legal exceptions, such as
sexually transmitted diseases or abuse, see the second paragraph of
www.ama-assn.org/apps /pf_new/pf_online?f_n=browse&doc=
policyfiles/HnE/E-5.05.HTM&&s_t=&st_p=&nth=1&prev_pol=
policyfiles/HnE/E-4.07.HTM&nxt _pol=policyfiles/HnE
/E-5.01.HTM&.
3. Code of Federal Regulations 165.304.
4. The Fair Credit Reporting Act governs the rights to privacy and accuracy of personal credit information. The Graham-Leach-Bliley Act governs privacy and accuracy of personal data related to electronic payments
via the Internet with credit cards. HIPAA governs privacy and accuracy
of personal data related to medical care and health insurance.
5. Articles 10 and 11 draw a distinction as to use based on whether the information was collected directly from the subject.
6. These two categories are not mutually exclusive. Intellectual property
may be private and confidential (indeed, all of our trade secrets must be
in order to be protected), and some of our private and confidential data
may be protected as intellectual property (e.g., research data).
References
Adams, F. 2000. Translation of Hippocrates Oath. [Online information; retrieved 8/20/04.] http://classics.mit.edu/Hippocrates/hippooath.html.
European Parliament and Council of the European Union. 1995. Directive
95/46/EC of the European Parliament and of the Council of 24 October
1995 on the Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data. [Online information;
retrieved 8/20/04.] http://europa.eu.int/smartapi/cgi/sga_doc?smartapi
!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=31995L0046&model=
guichett.
Legal-Dictionary.org. 2004. The Legal Dictionary. [Online information; retrieved 8/20/04.] www.legal-dictionary.org/.
. 2002. NIH Security Level Designations. [Online information; retrieved
8/20/04.] http://irm.cit.nih.gov/policy/DHHS_SecLev.html.
. 2003. Standards for Privacy of Individually Identifiable Health Information. [Online information; retrieved 8/20/04.] www.hhs.gov/ocr
/combinedregtext.pdf.
Further Reading
Carnegie Mellon Software Engineering Institute. 2004. CERT Coordination Center. [Online information; retrieved 8/20/2004.] www.cert.org.
U.S. National Institute of Standards and Technology. 2004. Computer Security Resource Center. [Online information; retrieved 8/20/2004.] http://csrc.nist
.gov.
255
PART
IV
BUILDING A HEALTHCARE
INFORMATION INFRASTRUCTURE
PART
IV
BUILDING A HEALTHCARE
INFORMATION INFRASTRUCTURE
INTRODUCTION TO PART IV
260
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
The power of IT to transform organizations goes beyond local or regional markets and includes national and global markets and policies. This
potential is inherent in IT and its power to overcome space and time and to
integrate systems.
CHAPTER
12
CONCLUSION: MANAGING INFORMATION
TECHNOLOGY IN THE FUTURE
Gordon D. Brown and Jim Adams
Key Terms
Chapter Outline
Teleological
change
1.
2.
3.
4.
5.
Dialectical
change
Learning Objectives
1. Identify factors that will stimulate or impede the application of IT in
healthcare organizations.
2. Understand the type and nature of new business and clinical strategies
in the health system.
3. Explain the importance of standardizing vocabularies and databases as
policy issues for the development of health system infrastructure.
4. Become familiar with how various countries have developed national patient health records and health data networks.
Leapfrog Group
Consumerism
National
Health
Information
Infrastructure
(NHII)
Consolidated
Health
Informatics
(CHI) Initiative
Business
ecosystems
Chapter Overview
The U.S. health system is on the verge of profound change as health professionals work to redesign business and clinical processes and healthcare organizations develop innovative business and clinical strategies. The need for
change is being fueled by consumer and payer demands and an increased
sense among health professionals that something needs to be done. The technical capacity exists to develop innovative solutions in large part because of
the availability of advanced information technology (IT) and knowledge in
261
262
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
CASE 12.1
Jane Keuhnes
Story*
Jane Keuhne arose at 5:00 a.m. in Los Angeles to make an early departure after a
business trip. She appreciated the hotel having booked her into her favorite room
overlooking the ocean. She flipped on her video phone and made a quick call to
her family to reassure her son that she would be there for his sixth-grade basketball game that evening. From her phone she confirmed that her flight would be on
time and the weather conditions in flight and on arrival. It was going to be a beautiful day. On the limosine ride to the airport Jane checked the closing markets in
Tokyo, London, and Hong Kong and, after consulting her broker, adjusted her portfolios buy/sell ceilings/floors for the day.
She arrived at Los Angeles International Airport, proceeded through security, and boarded the plane; her identity had been confirmed through a fingerprint
scan matching the name, address, and personal identifier number embedded in
her e-ticket to information in a national database. On deplaning in Philadelphia,
Janes main thought was being on time for her 2:00 p.m. doctors appointment. She
had returned early for the appointment, which she had scheduled four weeks earlier. She had seen the doctor six weeks ago for recurring pain and numbness in her
leg, which had not subsided. He had prescribed six physical therapy treatments,
which he had hoped would solve the problem.
She started her car and received a readout of tire pressure, battery power,
fuel injection efficiency, brake condition, and tire wear. Some unusual wear was
noted in the right front tire, and a diagnostic test indicated a slight alignment problem; a reminder was recorded to trigger an alert to check it at the next scheduled
maintenance. As Jane left the parking lot, the on-board navigation system scanned
the traffic flow and advised her of the best route to take and the time of arrival. An
alternate route would enable her to arrive in time to have lunch. She parked her
car and checked her phone for the address of the nearest specialty sandwich shop;
the phone gave her a routing map and voice prompts as she neared the address.
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
Jane arrived at her appointment at 1:45 p.m. and gave her address and insurance number to the receptionist. She paid in cash the $20 deductible required
by the insurance carrier and was informed that there would be a slight wait, as the
doctor had a difficult patient late that morning and was running behind. She took
a seat and thumbed through an issue of Field & Stream while waiting for her appointment; last months copy of Time magazine was being read by another patient.
At 2:35 p.m. Jane was called to the examination room and had her weight and
blood pressure taken and written in her chart. After a ten-minute wait, she met
with her doctor, who thumbed through her medical chart while talking to her to refresh his memory on her condition and course of treatment. He inquired about her
level of pain and whether it was constant or intermittent. He also observed that
her blood pressure was 160 over 80, higher than he recalled it being on previous
visits; he said they would keep an eye on it. Jane did not know what it had been
but did not think it had been high and inquired as to the meaning of a reading of
160 over 80.
Jane reported that the pain radiating down her leg continued, and her doctor indicated that it might be something more serious than a pulled muscle in her
back. He told her they would get her an appointment at the medical center nearby
as soon as possible to get a scan of her back. He would have the receptionist call
for the appointment. The doctor said he could give her some medication for the
pain and asked if she was allergic to any pain medications. She indicated that
codeine made her ill, and he prescribed an alternative medication. Jane left the
clinic into the bright sunlight of a Philadelphia afternoon.
Problem Solving 12.1 highlights the disparity between Janes experience of
IT in the healthcare system and in other aspects of her day.
* The names and events in this case are fictitious.
263
264
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
Dialectical change produces innovation and the potential transformation of the entity. Specifically, it produces a second-order change that does
not follow the basic assumptions of the past. This model characterizes the nature of change in organizations as the fundamental transformation of business and work processes, including business and clinical strategies. Dialectical change is predicated on the assumption that forces exist sufficient to
create enough disequilibrium to cause organizations to invest the energy and
take the risks inherent in transformation. The forces causing disequilibrium
in the health field need to be analyzed to assess whether they are sufficiently
strong and sustained to produce change and the direction in which they will
push change.
It is difficult to assess the role industry will take in transforming the healthcare field. One can cite that health benefits are currently the third most costly
factor input to industry and by far the most rapidly increasing, going from
$139 billion in 1986 to an estimated $389 billion in 2003 (Bleil, Kalamas,
and Mathoda 2004). This is certainly a growing concern, particularly as U.S.
industry engages in an increasingly competitive global market. The issue is
not that U.S. firms cannot be competitive in the market but rather that industry in no other country assumes the burden of high and rapidly increasing health costs as a cost of production. This phenomenon is an artifact of
the early postWorld War II era, when factor costs of health benefits were insignificant and the United States was the overwhelmingly dominant world
producer of goods and services. Neither is now true.
Commercial industry can take different approaches in dealing with the
health system. First, it can become more involved in pressuring and assisting
the health system to undertake reform. This has been the strategy used since
the 1970s, resulting in the managed care movement, which has had some success in controlling costs but has not produced the expected reforms. Second,
industry can address the seemingly uncontrollable high costs of healthcare by
shifting costs to consumers. This strategy will likely not occur by reducing
benefits but instead through defined contributions to health insurance plans
as opposed to defined benefits as has been the case historically. This strategy
has working in addressing similar problems with retirement benefits. Shifting
costs to consumers is more politically appealing because it allows the employee
more control and flexibility in investing in health insurance.
Industrys
contribution
Industry can approach the issue of high cost of medical care by directly assisting health providers by giving technical management expertise and political power to force the redesign of care processes. It is instructive that industry was well represented on the Institute of Medicines (IOM) Committee on
Quality of Health Care and was instrumental in defining the problem and
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
identifying solutions. The Leapfrog Group program has evolved through the
leadership of industry and developed measures of quality and introduced
quality improvement techniques (Leapfrog Group 2004). If industry chooses
this course, it will likely contribute to the dissonance necessary to effect fundamental redesign of health processes and organizations. It has the power
and expertise, and it might have the resolve.
Industry brings two assets: (1) an increasing concern for costs associated with health benefits and (2) the belief that the health sector can do
something to reduce these costs. Industry stakeholders feel their knowledge
of business process redesign and the application of advanced IT can be applied directly to the health system. The ease of accomplishing this is probably overestimated because industry experts do not recognize the inherent
complexity of the clinical process and of medical and nursing decisions. However, it is not only the expertise that industry brings that is important but also
the belief that clinical processes can be standardized and managed and the
recognition that healthcare executives are slow to lead the process of change.
This belief too could contribute to the creation of the needed dissonance
within the health system that would convince healthcare executives to lead
transformative change.
Much expertise on process redesign already exists within the health
system, but it has not been applied effectively because of the entrenched nature of processes within the system and the complex balance of power between organizations and practitioners, each representing a different approach to a solution. The commitment of the health professions to maintain
responsibility for the care process will tend to preserve existing practices and
structures. The challenge is for organizations to redesign clinical processes
without restricting or destroying the commitment of the professions to their
patients. Hospitals continue to consider IT as a means of developing outreach services to attract more patients and thus preserve the current enterprise and clinical strategies. External political forces constitute the potential
seeds of change.
The contribution that can be made by corporations outside the health
industry is the knowledge gained from years of development of quality improvement efforts. Another impact that leaders from corporate America will
bring is the knowledge and expectation that the health industry can and must
make significant improvements in quality. With the cost pressures on them,
industry will no longer tolerate the poor level of performance once accepted
from healthcare organizations. Industry stakeholders also understand that
the U.S. health system should focus on clinical and business process redesign,
not just on purchasing advanced information systems (IS). Industrial leaders
have learned that the acquisition and application of IT is not a strategy for alleviating cost pressures and will not in itself generate an effective strategy for
doing so.
265
266
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
Shifting costs
to consumers
Government
as payer
for health
services
The federal government has become the largest purchaser of health services
and will have an increasing role in how services are provided. Some services
are provided directly through federal health facilities such as the Veterans
Administration and the Uniform Services. Others put the federal government in the role of the payer such as through the Federal Employees Health
Benefits Program, which currently insures more than eight million federal
employees, and the Medicare and Medicaid programs for the elderly and
other categorical health groups administered by Centers for Medicare &
Medicaid Services. The high cost of health services per se will not affect the
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
267
federal government as much as the aging of the population will. The total
dependent population in the United States compared to the wage-earning
population is increasing rapidly, and the federal and state governments have
the mandate to care for this population at some level. The health system has
contributed to the dependent population problem not because of inefficiencies but because of its successes; advances in acute care have contributed to
the growth of the aging population that now relies on the government for
provisionor financingof chronic care. This is a problem, however, that
the health system will be expected to solve. The aging of the population will
place even greater demands on the system and compound the cost burden.
The government is shifting costs to patients to some extent by changing
Medicare benefits and payments, but this will not reduce the pressure on the
system to look closely at costs and quality.
Concerns about quality and costs have received public attention continuously
since the 1960s, with solutions ranging from increasing investment (HillBurton Act, Regional Medical Programs),1 changing incentives through financing (case-based reimbursement, managed care), and increasing public
control (price controls, comprehensive health planning). Institute of Medicines Committee on Quality of Health Care has been successful in creating
dissonance among health policy leaders and the public by linking its broad
study on health outcomes to commonly understandable and alarming statistics on patient safety and medical errors (Kohn, Corrigan, and Donaldson
2000). The heading Errors in Health Care: A Leading Cause of Death and
Injury gives the study focus and makes an impact (Kohn, Corrigan, and
Donaldson 2000). Reporting that 44,000 to 98,000 deaths occur each year
in hospitals because of medical errors is easily understandable and frames the
question of why these deaths occur and whether anything can be done to
prevent them (IOM 2000). Subsequent debates by health professionals on
methodology, challenging whether the correct figure is closer to 44,000 or
to 98,000, have not changed the sense of the general public, industry, and
government that the number is too high and can be reduced significantly.
A second IOM report, Crossing the Quality Chasm, focuses for the first
time on the redesign of healthcare organizations, specifically the redesign of
care processes (IOM 2001, 11727). Process improvement includes using the
best evidence in clinical decision making and improving clinical processes
based on process-outcome relationships (IOM 2001, 14563). The reports
heading Applying Evidence to Health Care Delivery makes a strong statement for evidence-based medicine and the technology to delivery it; this technology is primarily advanced IS. The call for supporting medical decisions with
evidence is one that can be easily supported by health professionals. They are
trained to seek scientific evidence to support diagnoses and treatment decisions and should be predisposed to use clinical decision support systems that
268
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
provide them this information at the point of clinical decision making. The call
for applying evidence to healthcare delivery will not be opposed by leaders of
the professions and will be a rallying point for all industry leaders. The test will
be whether there is enough concern and commitment to actually carry out
clinical process redesign. This will be done on an institution-by-institution,
service-by-service basis. If properly led, the opportunity exists to make significant steps in improving the design and management of clinical processes.
The Committee on Quality of Health Care concludes that the health
industry must undertake fundamental clinical process redesign to address the
problem of medical errors. The attention to IT as the transforming technology gives appropriate recognition to technologys pivotal role but places too
much faith in it as the agent of change. Information technology will not cause
the clinical process to be redesigned no matter how much is spent or what
system is installed; users will adapt the technology to fit their current
processes, not vice versa. It is true that IT can enable the clinical process to
be transformed. It is also true that considerable clinical process change can be
accomplished without heavy investment in sophisticated IT.
Alignment
and the Pew
Commission
Payment linked
to quality
improvement
The federal government is taking the advice of the IOM committee by aligning payment policies with quality improvement. The Centers for Medicare &
Medicaid Services has initiated, on the recommendation of the Medicare Payment Advisory Commission (Medpac), payment of a financial differential for
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
quality health services. Glen Hackbarth, the Medpac chair, concludes, Current payment systems in Medicare are at best neutral and at worst negative toward quality. All providers meeting basic requirements are paid the same regardless of the quality. It is time for Medicare to take the next step in quality
improvement and put financial incentives for quality directly into its payment
systems (Hackbarth 2004). Recognizing that all institutions might not be
equally capable of responding, Medpac also concludes that, Financial incentives for quality could encourage greater use of best practices by first identifying the best way to treat patients and then rewarding providers that follow the
guidelines (Hackbarth 2004). Incentive payment for quality is designed to
reward clinical outcomesthe ultimate indicators of quality. Medpac notes
that, By rewarding quality whether measured by guidelines or outcomes, the
program would send the strong message that it cares about the value of care
beneficiaries receive and encourages investment in quality (Hackbarth 2004).
Aligning payment for services based on their quality is a clear commitment to
clinical outcomes that, if successful, will bring organizations to carefully consider clinical process improvement.
There continue to be many disincentives to process improvement embedded in financial systems, regulations, and a broad range of individual incentives. These are systems and regulations that can be changed, but change
will not be easy. Changes will occur neither rapidly nor simultaneously; they
will be slow and incremental. The leadership must come from physicians and
nurses, healthcare executives, politicians, and consumers who can move beyond protecting the status quo and collaborate for change. The process must
be deliberate so that it does not force an oversimplification of the complex task
of structuring clinical processes and decisions. However, it is time for health
leaders to recognize that the quality of health services can be greatly improved
and costs reduced by applying well-established science for process redesign.
There is enough dissonance in the system to allow this improvement and new
reduction to happen. The challenge is finding the leaders to take on the difficulty and the risk of effecting change.
Consumerism
Consumerism in the health field is expected to have a major effect on transforming a health system enabled by advanced IT. Consumerism is a driving
force behind many of the developments in e-health. The personal computer
and the Internet did not initiate the change in values and behavior of consumers, but they played a major role in facilitating it. Increased involvement
of consumers in their health decisions will generate forces for change, including expanding access to and use of health information. The ease of use of
health information in other sectors will put pressure on the health system to
change. Industry demands for changes in health system performance are
based primarily on the demand for greater efficiency and increased quality.
269
270
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
Consumers echo this interest but also demand greater access to health information that can help them to navigate the system to make informed choices.
Health providers must redefine health IS, from medical records as repositories of information for each provider to personal health records as navigational tools for consumers to access and use information across providers and
systems. Consumer demand for information will require new ways of thinking about health information and new information architecture.
Changing
consumer
values
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
271
services. Pilot studies of extending consumer communities to form peer-topeer networks for exchanging more personalized information provide increasingly consumer-centric IS that are able to easily integrate information across
services through secure networks for exchanging personal health information
and automated brokering of requests for services and availability (Hales et al.
2003). Information technology does not create these consumer networks,
but it greatly facilitates them and in so doing creates more highly structured
networks for sharing and integrating information (Schopp et al. 2004). These
information networks are of value to healthcare organizations for identifying
services with high demand and to the consumer for importing information regarding the service. The concept of brokering requests for services places the
consumer in control of the specification of services and in a position to negotiate on price. Because these information services exist outside the domains of
provider organizations, they have the potential for creating sufficient dissonance for bringing about dialectical change in the health system.
Public and health professionals are aware of the rapid change occurring in the
banking, entertainment, travel, and business industries. These rapid changes
and the ease with which information can be accessed, stored, recalled, and
transmittedcreate an interesting contrast with the world of healthcare. Consumers and health professionals are increasingly expressing concern with this
gap, and this awareness will cause dissonance in the health system. When provided the opportunity, consumers demonstrate their desire and ability to access and understand health information, including complex genetic information. Access to and use of genetic information by individuals is available and
occurring.
Most members of the consuming population have experienced the gap
between using IT in other sectors and within the health system (see Case
12.1). Healthcare executives should note that consumers are becoming sophisticated users of IT and that they like it. There is great probability that consumers will want similar availability and ease of use within the health sector.
IT Development
It is important to understand the development of IT that enables new applications to be technically and economically feasible that were not so a few years
ago. Some of the approaches tested in the pastfor example, handheld devices and wireless networksfailed because of limited capacity and bandwidth. As devices become more powerful and wireless networks have more capacity, clinicians should be able to have more information at the point of care
in addition to the ability to collect and capture (i.e., document) more information at the point of care. This should greatly increase the use of IT by clinicians. The beginning of the twenty-first century has seen the creation of significant new technology as well as the rapid development and improvement
Expectations
derived from
other sectors
272
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
PROBLEM
SOLVING 12.1
Jane Keuhnes
Story
Consumers such as Jane Keuhne enjoy and increasingly expect to have access to
information and to make decisions using electronic media in the hotel, airline,
automobile, restaurant, finance, and other service industries. One reason these
industries have been able to effectively use advanced IT to better serve their customers is that they
Medical services are still fundamentally a cottage industry, with many small
and scattered clinics and health professionals. Clinics are located in dispersed geographic patterns, limiting the ability to concentrate resources. The nature of
health markets makes it difficult to respond to economic conditions necessary to
support the development of a national health information infrastructure. What
market and nonmarket strategies should be pursued to enable the level of investment and degree of standardization necessary to establish a national information
infrastructure?
Jane seems to be quite satisfied with her physician and the services provided by the clinic. She does not object to the fact that she was able to travel
from coast to coast and across the city to arrive on time, only to discover that her
appointment is delayed. Jane is a well-educated, sophisticated, and ambitious
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
professional who is driven by the notion that time is money. Yet, she waits patiently
for her personal appointment. Will patient expectations change as the result of the
conveniences and improved quality of services provided by other service industries?
The technology exists that would allow Janes physician to call up her medical record and see vital information like blood pressure recorded electronically
and presented over time and against baseline information linked to the latest evidence from clinical trials. Prescriptions for pain and other medications could be
tested against data in her medical record for allergies and against clinical trials on
other medications for incompatibility. Although her appointment was not specifically for high blood pressure, she might be provided her own monitor, with information sent to her medical record and monitored with periodic alerts to see if a
prescribed regimen of exercise and low-salt, low-fat diet might be sufficient to
manage this problem.
It is interesting that the low expectation Jane has for her healthcare
providers clinical and business information extends to her expectations of the
amenities supporting the clinic visit. She expects her hotel to know her preferences for a specific room, but she isfor nowcontent to read a magazine in
which she has little interest while waiting for a delayed appointment with her
physician. What might a clinic office look like in the future? How would a waiting
room and patient reception desk, for example, be redesigned for orientation to the
customer?
and Asia. Indeed, the healthcare provider who does not demonstrate comfort
in the use of the most ubiquitous information and communication devices
risks appearing out of touch or behind the times rather than simply cautious
or traditional. As mentioned above, the hard questions are being asked by patients as well as health professionals about the failure of healthcare organizations to deploy well-tested IT (see Problem Solving 12.1).
It is not surprising that the full exploitation of rapid technological advancements is hindered by familiar problems. A primary roadblock is the
continually slow process of creating, disseminating, and adopting standards.
Although key successes, such as Health Level Seven (HL7), lay the groundwork and provide hope for the future of interoperable systems, the industry
still wrestles with IS standardization in most areas. Similarly, new technologies, such as wireless communications, run head-on into old problems like
the data security regulations recently brought to the forefront by the Health
Insurance Portability and Accountability Act (HIPAA).
273
274
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
time. Two dominant banking systems developed the worlds banking transaction systems, and information technologies are based on the designs of these
two firms. These firms also have financial resources to develop the needed information capacity. The development of VISA by collaboration among banks
is analogous to the health system, but it involved comparatively few organizations and offered the potential of a significant increase in business for everyone. This is not characteristic of the health system. Likewise, defined data
standards and a rather limited range of transactions characterize the banking
system. The banking system is built on well-established standard measures,
currencies, and transactions. Compared to the health system the range of
transactions in banking is few and measures are well defined. Comparisons between these industries are useful in measuring the gap that exists with health
systems but provide limited insight as to how the gap can be closed.
Providers have undertaken some voluntary industry standardization,
such as HL7 and Systemized Nomenclature of Medicine (SNOMED). These
systems have gained widespread application and represent a significant investment by the industry. The ability of provider health institutions to demand
that vendor corporations develop vocabulary and data and messaging standards for their systems is limited because of the small size and large number
of providers. The federal government, through HIPAA, in addition to setting standards for privacy and confidentiality, standardized coding and transactions to be used in processing all medical claims, both public and private.
Although driven by reimbursement and auditing logic, this act reflects the
role of the government in setting standards for medical information transmitted electronically.
275
276
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
health services implement data standards to achieve interoperability of clinical information; there was no mandate to develop new standards, but rather
to adopt existing and widely used standards such as HL7, Digital Imaging
and Communications in Medicine (DICOM), and SNOMED. Twenty existing standards have thus far been adopted by these agencies. Figure 12.1 represents a selection of these standards.
NHII
The National Health Information Infrastructure (NHII) program will require the industry to adopt standards for the computer exchange of clinical
FIGURE 12.1
CHI Initiative
Data and
Information
Standards
Digital Imaging and Communications in Medicine (DICOM): messaging standards for medical images.
Institute of Electrical and Electronics Engineering (IEEE) 1073: standards
for medical device communication to enhance connectivity.
National Council of Prescription Drugs Programs (NCPDP): standards for
pharmacy transactions including sending prescription information from pharmacies to payers, prescription management service, and adverse drug reactions and utilization review.
Health Level 7 (HL7): vocabulary standards for demographic information, units
of measure, immunizations, and clinical encounters, and HL7s Clinical Document Architecture standard for text-based reports (five standards).
College of American Pathologists Systematized Nomenclature of Medicine
Clinical Terms (SNOMED-CT): for laboratory result contents, nonlaboratory interventions and procedures, anatomy, diagnoses and problems, and nursing.
The Department of Health and Human Services is making SNOMED-CT available for use in the United States at no charge to users (five standards).
Laboratory Logical Observation Identifier Name Codes (LOINC): to standardize the electronic exchange of laboratory test orders and drug-label section
headers (one standard).
Health Insurance Portability and Accountability Act (HIPAA): transactions
and code sets for electronic exchange of health-related information to perform
billing or administrative functions. These are the same standards now required
under HIPAA for health plans, healthcare clearinghouses, and those healthcare
providers that engage in certain electronic transactions (one standard).
A set of federal terminologies related to medications: including the Food and
Drug Administrations names and codes for ingredients, manufactured dosage
forms, drug products and medication packages, the National Library of Medicines RxNORM for describing clinical drugs, and the Veterans Administrations
National Drug File Reference Terminology (NDF-RT) for specific drug classifications (one standard).
Human Gene Nomenclature (HUGN): for exchanging information regarding
the role of genes in biomedical research in the federal health sector (one
standard).
Environmental Protection Agencys Substance Registry System: for nonmedicinal chemicals of importance to healthcare (one standard).
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
277
278
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
Health Reporting
One of the high-profile applications of IT is in health reporting, which consists of using IS to increase the availability of health information to providers
and policymakers. Access to information on health status by population category, health risk behaviors, health resource availability, costs and expenditures,
benefits, and utilization of health services can enable increased surveillance by
the Centers for Disease Control and Prevention (CDC), local and national
health policymakers, communities, researchers, and consumers. Health reporting has been the traditional approach of public health systems and the
World Health Organization. The application of IT to health reporting includes improving databases, the linking of databases, and the accessibility and
usability of information.
Many IT initiatives focus on health monitoring and reporting. This is
an important policy area for most European countries and a priority for development of the European Union. The German Health Reporting System is relatively new and typical of the development and integration of health reporting systems in Europe (Ziese 2001). The European Union has enumerated
the selection of health conditions to be monitored, standardization of measures across member states, development of a communitywide network for
sharing and transmitting health data, and development of tools for analysis
and reporting on health status and the determinants of the effects of health
policies on health status as pillars of its program (Stein 2001). The methodology for gathering much of this data will change from sampling to total population information. One of the advantages of this methodological change will
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
be the ability to analyze and compare health status, services, and utilization
using small geographic areas such as county as the basis for reporting and analyzing.
Efforts to improve health reporting based on new applications of IT
consist of improved information gathering, analysis, and access. Sources of information include the reporting of selected conditions such as cancer and genetic disorders by hospitals and clinics. Historically, information was gathered
through chart reviews and paper reporting of incidences of disease. Computers enable information to be gathered from EMRs and submitted through encrypted Internet reporting. These new technologies will enable public health
systems and health policy analysts to have more rapid access to information of
higher quality and in a form to allow comparisons and other analyses.
In the United States health reporting functions are carried out through
the CDC, programs such as the Behavioral Health Risk Factor Surveillance
System, and the various disease registries. National and international concerns
regarding terrorism have generated interest in timely health monitoring and
reporting systems. Information technology can play a key role in upgrading
current clinical care and will enable increased linkages between patient health
records and public health monitoring and policymaking. For example, risk factor information could be gathered and used by physicians and nurses for disease prevention and treatment. Risk factor information could be compiled
from health records by the CDC as the means of monitoring health risk in the
population and the outcomes of selected health interventions. This might replace investment in increasingly sophisticated sampling techniques and phone
surveys to gather some information.
The area of health reporting recognizes a social strategy for health information that must be acknowledged by health institutions. The social benefit from IT might be considerable and could present entrepreneurial opportunities for healthcare organizations or be imposed as an unfunded mandate
on them. In either event organizational leaders must understand, monitor,
and manage the external environment to develop innovative solutions to
policy issues that best serve the individual patients in the health systems as
well as their communities.
Health Networks
Health networks are distinguished from health reporting in that they link
providers and patient health records into a national or international network
for accessing individual patient information. Policymakers at the NHII program envision the accomplishment of such a program by 2015. Health networks have been under development for a number of years in other countries, such as Denmark, Sweden, and Norway, and more recently in the
United Kingdom and Canada. Each of these systems has different origins
and histories, but they have the common theme of a national health record
279
280
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
available to patients and providers over large geographic areas and across political boundaries.
Systems in
Scandinavia
Over the past ten years Sweden has developed a secure national network connecting its public hospitals, primary care centers, all pharmacies, and a number
of private institutions. The system is built on a fiber-optic network separate
from the Internet. This enables a secure reliable exchange of confidential data
such as patient records that is not suitable for transfer over the Internet (Pedersen 2004).
The Norwegian Health Network evolved from five regional networks,
one in each of the regional health systems, and currently includes all five regional networks and a national connection. The regional networks connect all
general practitioners to one another and connect practitioners with hospitals.
Nearly all hospitals and general practitioners have EMRs as the basis for this
system. The health networks are connected to one another through a national
network. Health networks are also connected to social services at the local
level through the networks for local authorities (Pedersen 2004).
The Norwegian Health Network is designed around its national health
system and social care sector. This is also characteristic of the Swedish system.
The national health system provides a number of advantages in design and
implementation. First, there exists a consistent information infrastructure
within the health and social systems, wherein physicians and hospitals share
common business and clinical systems. Because they are all under the same
governance authority, implementation and acceptance of the information
support systems are no doubt easier to achieve.
The Danish system has a history and characteristics similar to Norways. It connects the existing secure networks of its 15 regional health networks, pharmacies, local authorities, private laboratories, and nearly 90 percent of its general practitioners. It similarly connects the majority of general
practitioners, pharmacies, laboratories, and all regional health authorities
(Pedersen 2004).
The power of the Scandinavian countries accomplishments in IT is reflected in the vision and relative ease of integrating systems within countries
and now into an international network. The similarity of the infrastructures
of the three countries provides a relatively easy technical solution to connecting the national systems into an integrated Nordic Health Care Data Network. In addition to the relative ease of the technical solution, the political
and cultural orientation makes the next step a logical and natural progression.
The three national networks were integrated in 2004, and a service portal will
make health information available to citizens and providers. The designers of
the Nordic system envision extending the system to other E.U. countries in
the near future as the foundation of the E.U. integrated health information
network (Pedersen 2004).
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
281
The Nordic Health Care Data Network gives a glimpse of the future
for national and international linkage of patient health information and access by physicians and hospitals. International systems are built by linking national systems, which are themselves built by linking regional systems and
local networks. The networks can be used for medical consultation or patient
access to information at locations based on the convenience of patients, not
hospitals and clinics.
Other countries, namely the United Kingdom and Canada, are also developing national patient health record, with each approach reflecting the values,
traditions, and structure of the countrys health system. The National Health
Services (NHS) in the United Kingdom has commissioned the $5.4 billion
National Program for Information Technology. Although a major financial
and technological investment, the decision to develop and implement an integrated information network is a natural extension of the philosophy and
tradition of NHS. The core of the program is to develop the Integrated Care
Record Service, which will be used to create a basic national health record for
every patient in NHS. The national health record will enable appointments
to be booked instantly (e-booking), share prescriptions and lab results instantly, allow patients to know what is being shared with whom, and eventually include electronic prescribing and allow patients to access their own
records from home.
The United Kingdom has been divided into five geographically related
strategic health authorities that will be managed by local service providers
(LSPs) whose responsibilities include systems integration, program management, and supplier (vendor) management. The LSPs will ensure that existing
systems are compliant with national standards, facilitate data flow between
the local and national systems, deliver upgrades and new systems to the local
communities, and implement core local training for NHS staff. A regional
implementation director from the national program will be appointed and
provide oversight to the LSPs (HealthLink 2004).
The United States has started the process of developing a national patient health record much more slowly than other industrialized countries in
part because of the private, decentralized nature of the U.S. health system.
The U.S. approach will be to develop and adopt information standards, use
the health services provided or financed by the federal government to create
incentives to providers to use electronic health records and reporting systems,
and stimulate the development of new technology by current providers to
link existing services and establish best practices of information architecture,
reporting systems, and applications of decision support technology. This will
be a distinctly U.S. approach that can learn from what others are doing and
no doubt contribute to the base of clinical, informatics, and management sciences to support the development of integrated health networks on which
Systems in
other areas of
the world
282
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
health and clinical practice information will move. These secure systems will
be accessible to patientsperhaps controlled by patientsand available to
providers involved in the caregiving process. If it becomes an overlay on the
existing system, it will not meet national goals of reducing costs and medical
errors. If it is used as a vehicle to transform processes and provide best clinical evidence, it can have a profound effect on increasing quality and managing healthcare costs.
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
through outcome indicators of clinical quality and the fact that health services will be provided by the best clinical centers in the world.
283
284
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
Payers
Fiscal
Intermediaries
Providers
Purchasers
Government
Insurers
Hospitals
Wholesalers
Employers
HMOs
Physicians
Individuals
Pharmacy
benefit
managers
IDNs
Mail-order
distributors
Employer
coalitions
Pharmacies
Group
purchasing
organizations
Producers
Drug
manufacturers
Device
manufacturers
Medicalsurgical
manufacturers
collections is conservatively estimated to cost the U.S. health system $10 billion per year. One solution proposes to simplify this process is to develop a
single-payer insurance system. While a national health insurance system has
arguable merits in its own right, this presents a rather radical solution to simplify a business process. New firms are developing that supply solutions to
businesses that automate transactions between companies and allows them to
interact and transact electronically (BCE Emergis 2004). Such firms are
formed by developing networks of leading health insurers that outsource the
costly and complex area of claims processing. Although cost savings to
providers have not been systematically studied, claims of 60 percent savings
are reported.
Innovative business models such as claims processing will have broad
application across the healthcare value chain described by Burns (2002). It is
impossible to identify the range of business innovations IT will spawn across
the value chain shown in Figure 12.2. It is reasonable to predict that the possibilities for hospitals, medical groups, and other providers, as well as for all
parties connected to this value chain, are immense and will fundamentally
transform existing organizational strategies along the value chain.
285
FIGURE 12.2
Healthcare
Value Chain
286
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
Conclusion
This chapter gives a glimpse into the future potential of information as a transforming technology in the health system. It draws on other industries and the
ability of IT to enable the transformation of core production processes,
spawned new organizational configurations and industries. The degree to
which this transformation will occur in the health system is speculative, but it
is hard to imagine traditional values and ways of doing things not giving way
to the evidence-based solutions provided though management science.
The chapter describes developments in the application of advanced
information technology in other countries health systems. It would be
287
288
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
Notes
1. The Hill-Burton Act was passed in 1946 as P.L. 79-725, the Hospital
Survey and Construction Act. Originally designed to modernize hospitals, it later provided federal funds for capital investment to build hospitals. More than $4.6 billion has been invested through this program
since 1946. Its specific focus was on the construction of hospitals in underserved areas with a strong emphasis on rural communities. Access to
hospitals was equated with access to health services and directly related
to the ability of communities to recruit and retain physicians. To receive
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
References
BCE Emergis. 2004. Who Is BCG Emergis? [Online information; retrieved
8/7/04.] www.emergisresponse.com/.
Bleil, L. D., J. Kalamas, and R. K. Mathoda. 2004. How to Control Health Benefit Costs. [Online article; retrieved 8/1/04.] The McKinsey Quarterly.
www.mckinseyquarterly.com/article.
Brown, G. D., K. B. Bopp, and S. A. Boren. 2006. Assessing Communications Effectiveness in Meeting Corporate Goals of Public Health Organizations.
Journal of Health and Human Services Administration 28 (3), in press.
Burns, L. R. 2002. The Health Care Value Chain. San Francisco: Jossey-Bass.
289
290
B u i l d i n g a H e a l t h c a re I n f o r m a t i o n I n f ra s t r u c t u re
C o n c l u s i o n : M a n a g i n g I n f o r m a t i o n Te c h n o l o g y i n t h e Fu t u re
Van de Ven, A. H., and M. S. Poole. 1995. Explaining Development and Change
in Organizations. Academy of Management Review 20 (3): 51040.
WoltersKluwer Health. 2004. Clinical Tools, Medical Research, Pharma Solutions. [Online information; retrieved 8/7/04.] www.wkhealth.com
/about.htm.
Ziese, T. 2001. National Health Reporting in Germany. In The German Health
Reporting System and Current Approaches in Europe. Proceedings of the International Conference. Berlin: Robert Koch Institute.
Further Reading
National Health Information Infrastructure. [Online information; retrieved
9/9/04.] http://aspe.hhs.gov/sp/nhii/FAQ.html.
Pearlson, K. E., and C. S. Saunders. 2004. Managing and Using Information Systems: A Strategic Approach. New York: John Wiley & Sons.
Tribus, M. 2002. The Germ Theory of Management. Zumikon, Switzerland: The
Swiss Deming Institute.
Ward, J., and J. Peppard. 2002. Strategic Planning for Information Systems. Chichester, UK: John Wiley & Sons.
291
INDEX
293
294
Index
impact, 212
IT systems, 1718
operational decisions, 29
operational efficiency, 910
organizational strategy, 28, 3637
outsourcing, 28485
redesign, 1011, 14, 1517, 18
structure, 38
support structure, 3839
transformation, 911, 21
viewpoint, 16
workflow, 5
Business strategy
alignment of, 38
biospsychosocial services, 130
collaborative networks, 130
competitive advantage and, 80
customer-focused goal, 88
functionality of, 2034
integration of, 3839, 5362
IT support, 43
product structures, 128
Capacity planning, 231
Capital budget, 207, 21213
Capital costs, 216
Capitation, 54, 64
Care plans, 68
Care process redesign, 267
Carve-out model, 68
Case management model, 68
Case study
chronic care, 54, 55
clinical processes, 54, 55, 58
community health network, 128, 129,
131
e-health, 150, 151
EMR valuation, 199, 200
genomic medicine, 173, 174
IS integration, 32, 8285
IT application, 262, 263, 272
IT system upgrade, 4, 5, 2829
operational memory, 105
organizational memory issues, 101
security issues, 238, 241
staff distribution, 224, 227
CBO. See Clinical Bioinformatics Ontology
CDC. See Centers for Disease Control
and Prevention
Index
influence on, 37
integration of, 3839, 5362
IT support, 4344
organizations view, 38
restructure of, 45
transformation of, 72
Clinical support services, 12, 38, 44
Clinical systems, 2034
Clinical work processes, 8, 9
Clinician information, 18385
CMS. See Centers for Medicare & Medicaid Services
Cocreation of health experience, 132,
133, 134, 143
Code of Federal Regulations, part 11, 176
Coevolution, 138
Coherence mechanism, 13839
Collaboration, 11
Collaborative networks, 130, 131
Collaborative systems, 128, 129, 131
College of American Pathologists, 176,
276
Commercial anatomic pathology system,
177
Commercial insurance, 124, 125
Commitment-based culture, 87
Commitment-based management, 9395
Communication
support structure, 38
and knowledge, 9394
Community health network, case study,
128, 129, 131
Community informatic resources, 152
Competitive advantage
increasing, 9495
information resources and, 8485
resource utilization and, 84
strategy alignment and, 80
Competitive strategies, 125
Complex adaptive systems, 13839, 144
Comprehensive Planning Act, 125
Computer access, 244
Computerized physician order entry
(CPOE)
benefits, 204
genomic information, 183, 184
value of, 197
value mapping, 206
Confidentiality
of data, 24647
295
296
Index
interchange, 101
interoperability of, 1046
loss, 247
misuse, 247
ontology, 103
ownership, 159, 247
privacy, 159
processing, 5, 9
security of, 245
standards, 27475
warehouse, 181
Database, 177
Davenport, T.H., 108, 109
DeBakey, Michael E., 289
De Long, D.W., 108, 109
Decision making, informed, 136
Decision support, 181, 185, 197
Deoxyribonucleic acid (DNA), 173, 175,
178
Department management, 226
Diabetes Care Management Support System, 157
Diabetes management, 54, 55, 58, 65
Dialectical change, 263
DICOM. See Digital Imaging and Communications in Medicine
Digital divide, 16263
Digital Imaging and Communications in
Medicine (DICOM), 276
Digital technology, 122, 136
Direct accountability, 54
Direct payback, 21213
Direct-to-consumer genetic testing,
18283
Discount rate, 216
Disease management, 15657
Diversification, 53, 126
DNA. See Deoxyribonucleic acid
Double-loop learning, 3, 144
Drug development, 17879
Drug-gene interactions, 182
Dual structure, 37
Dynamic interactions, 138
Earl, M.J., 39
Economic value added (EVA), 206
explanation of, 21011
hurdle rates, 216
sensitivity analysis, 217
Economies of scale, 9
Index
E-health
acceptance, 16364
access, 16263
accessibility issues, 16061
case study, 150, 151
challenges, 15861
confidentiality, 15859
cost, 163
definition of, 150
development guidelines, 165
disease management, 15657
future considerations, 16466
home-based applications, 15256
implications, 11920
outcomes, 161
patient empowerment, 15051
peer-to-peer applications, 15758
portable monitoring device, 154
privacy, 15859
processes, 16162
reimbursement issues, 15960
sensors, 15455
smart homes, 15556
success factors, 16164
telemedicine, 151, 15354
videoconferencing, 154
Electronic medical record (EMR), 58
cytogenetic image integration, 175
genomic medicine and, 180
strategy, 13
valuation case study, 199, 200
Elger, G., 155
Empowerment model, 15051
EMR. See Electronic medical record
Enabling technology, 2, 46
Enterprise strategy
alignment of, 38
business process outcomes, 37
changes in, 34, 45, 119
clinical orientation, 36
clinical outcomes as, 4243
definition of, 27
development of, 35
direction of, 38
explanation of, 33, 35
focus of, 42
goal of, 35, 80
information as, 35
information strategy and, 39, 41
IS development and, 40
297
298
Index
Index
Information strategy
alignment of, 41, 7174
biospsychosocial services, 130
change and, 45, 74
characteristics, 41
clinical support system, 44, 6271
competitive advantage and, 80
components of, 39
cooperation requirement, 80
creation of, 40, 4142
customer-focused goal, 8889
definition of, 27
design, 40
development of, 74
empowerment through, 5253
enterprise strategy and, 33, 39, 41
explanation of, 34
feasibility, 40
focus of, 39
health enterprise function and, 4042
impact of, 32
implementation of, 4142
IT management and, 81
learning organization, 8889
limitations, 128
long-term plans, 41
organizational operations, 4345
organizational strategy and, 39
quality of, 39
resource-based enterprise, 8386
structure, 40
transformational stages, 9193
Information systems (IS)
case study, 82, 83, 84, 85
design requirements, 18586
evaluation of, 59
genomic medicine, 177
genomic reference information, 18081
HR integration, 8182
implementation, 81
integration, 8081
microarray analysis challenges, 179
patient-centric, 152
strategy component, 39
Information technology (IT)
application case study, 262, 263, 272
application issues, 12, 43, 19596
automation stage, 9192
behavioral issues, 220
benefit-cost analysis, 2089
299
300
Index
vision, 22728
work process redesign, 68
Information and technology revolution, 2,
3
Informed decision making, 136
InfoShare, Inc., 4, 5
Innovation, 7, 143
Innovative business model, 28387
Input standardization, 60
Institute of Electrical and Electronics Engineering (IEEE), 276
Institute of Medicine (IOM)
care process redesign, 57
clinical process breakdown, 67
Committee on Quality of Health Care,
26465, 267, 268
medical errors report, 57, 267
medical errors studies, 13, 70
patient safety report, 57
Institutional care, 9
Institution-centric, 8, 1112
Insurance companies, 64
Intangible assets, 85, 8993
Intangible benefits, 21516
Intangible costs, 216
Intangible resources, 84, 8991, 12122
Integrated Care Record Service, 281
Integrated delivery system, 127
contemporary, 73
explanation of, 7273
hierarchical structure, 73
leadership characteristics, 14344
organizational strategy, 12728
paradigm shift, 14344
strategic transformation, 127
Integrated information system, 27477
Integrated pathways, 69
Integration
business processes, 1517
case study, 32, 34
challenges of, 27
clinical processes, 1213, 1517
importance of, 3839
organization strategy, 3839
strategic, 33
Integrity, 243
Intellectual capital, 86
Intellectual property, 24546
Intelligent knee sleeve, 155
Interdependencies, 2067
Index
Knowledge economy
discontinuities, 122
forces of, 12122
shift to, 122
strategic management in, 14243
Knowledge management
definition of, 107, 108
goal of, 107
initiatives, 86, 108
interoperability and, 1079
IT-HR relationship, 82
in learning organization, 8687
objectives, 108
processes, 135
role of, 59, 143
KPMG, 87
Laboratory Logical Observation Identifier
Name Codes (LOINC), 276
Leapfrog Group program, 265
Learning organization
commitment, 8889
culture in, 8687
IT-based resources, 95
in strategic stage, 92
Leibold, M., 143
Levien, R., 140
Life cycle model, 263
Life cycle pattern, 28387
Line-integrated application, 234
Local service provider (LSP), 281
Logical Observation Identifier Names and
Codes, 180
Logical security, 24449
LSP. See Local service provider
Managed care, 64, 68, 127
Management skill set, 219
Managerial security, 24952
Mata, F.J., 95
Mayo Clinic, 83, 85
McInerney, C., 107, 108
McKinsey survey, 219
Medicaid, 125
Medical errors, 57
Medical informatics, 15
clinical decision making and, 6263
community resources, 152
consumer, 152
contribution of, 61
301
302
Index
database, 6162
field of, 4344
political issues, 71
Medical Subject Headings (MeSH), 102,
104
Medical technology, 123
Medicare, 125
Medicare Payment Advisory Commission
(Medpac), 26869
MEDLINE/Pubmed system, 102, 104
Medpac. See Medicare Payment Advisory
Commission
Mehra, M.R., 154
MeSH. See Medical Subject Headings
Message standards, 101
Metathesaurus, 106
Microarray analysis, 17980
Mintzberg, H., 5961
Missouri Regional Medical Program, 289
Misuse, 247
Molecular diagnostics, 17475, 17677
Molecular pathology, 175
Multum, 18283
Mutation, 174, 18182
National Center for Biotechnology Information (NCBI), 180
National Committee on Quality Assurance, 54
National Council of Prescription Drugs
Program (NCPDP), 276
National health information policy,
27374
National Health Information Infrastructure (NHII), 27677
National Health Services (NHS), 28182
National Institutes of Health, 248
National Library of Medicine, 102, 104,
183
NCBI. See National Center for Biotechnology Information
NCPDP. See National Council of Prescription Drugs Program
Nesbitt, T.S., 161
Network incubator, 134
Network monitoring, 231
NHII. See National Health Information
Infrastructure
NHS. See National Health Services
Niche application, 176
Index
Provider, 164
Public access, 274
Public accountability, 53
Public financing, 125
Public insurance, 64
Quality focus, 59
Quality improvement, 26869
Quality indicators, 53
RDF. See Resource description framework
Regional market, 53
Regional Medical Program, 289
Reimbursement, telemedicine issues,
15960
Relational database, 100
Remote video technology, 154
Report card, 58
Resource-based enterprise, 8386, 95
Resource description framework (RDF),
109, 11113
Resource utilization, 80, 84
Return on investment (ROI)
disadvantage, 217
explanation of, 200201, 20910
hurdle rates, 216
measurement system, 219
sensitivity analysis, 206
value realization, 196
Revenue cycle, 37
Risk, 2056, 216
Risk assessment, 212
Riverside Community Hospital, 128, 129,
131
Rochester General Hospital, 139
Rochester Heart Institute, 139
ROI. See Return on investment
Rules-based decisions, 6466
Schmitt, K.F., 208
Scientific management, 8
SECI. See Socialization-externalizationcombination-internalization
Security
basic program, 24252
case study, 238, 241
framework, 23842
of information resources, 23233
logical, 24449
managerial, 24952
303
304
Index
perspectives, 192
physical, 24344
zone-based architecture, 25253
Self-monitoring system, 153
Self-organization, 138, 14142
Semantic relationships, 1023
Semantic web, 100, 10913
Sensitivity analysis, 206, 217
Sensors, 15455
Service industries, 59
Shared vision, 143
Sharrott, Lawrence, 4, 5
Single-loop analysis, 144
Six Sigma, 22
clinical pathways and, 70
concepts of, 61
explanation of, 56
process improvement, 60
quality focus, 59
SmartBo project, 156
Smart homes, 15556
Smart Shirt, 155
SNOMED CT. See Systematized Nomenclature of Medicine Clinical Terms
Social change, 23
Social insurance, 64, 125
Social policy, 259
Social Transformation of American Medicine, The, 53
Socialization-externalization-combinationinternalization (SECI), 134, 135, 142
Sociocultural business system, 13844
Sociocultural network, 124, 135
Software, 24445
Somatic mutations, 175
Sparks, K.E., 153
Specialization, 286
Staff distribution case study, 224, 227
Staff interaction, 234
Staff-model application, 234
Stakeholder
executive accountability, 219
explanation of, 2023
matrix, 215
industry, 265
Standardization, 18081
Stanford University, 182
Starr, Paul, 53
St. Jude Hospital, 181
Strategic alignment, 212
Index
Value
chain, 1011
challenge, 196200
cocreation, 137
creation, 137
mapping, 206
migration, 12131, 143
Value-added information, 92, 135
Van de Ven, A.H., 263
Vendor, issues, 2
Vertical integration, 53, 126
ViaHealth, Inc., 139
Videoconferencing, 154, 16162
Videophones, 154
Virtual visit, 153, 16162
VISA, 3, 7
Vision, 19, 22728
Wal-Mart, 7
Wearable sensor, 155
Weed, Larry, 13
Wofford, D.A., 208
WoltersKluwer, 286
Work environment, 38
Work flow, 177, 185
Work process
automation, 46
changing, 34
improvement, 7, 5960
redesign, 68
standardization of, 5960
transformation, 6
World Health Organization, 61, 278
Wu, J., 153
XML. See Extensible markup language
Yahoo!Groups, 158
Zander, K.,68
Zone-based architecture, 23738, 25253
305
307
309
310