Crossing the chasm on digital transformation 

February 26, 2021 9:08 pm

Historically, many conversations between the CFO and the chief marketing and patient experience officers of health systems were limited to budget negotiations. And while the CFO has long been asking questions about ROI, it has only been in recent years that the chief marketing officer has been well equipped to respond. Beyond building the brand, marketers and patient experience executives are now better able to facilitate optimal choice for patients as consumers. These approaches allow health systems to better understand which patients have the highest propensity for requiring services (and thus, generating revenue or improving patient outcomes), and to target engagement efforts toward them.

As health systems continue the evolution of telehealth to include value-based care and population health, combined with the technological ability to connect on a personal level with patients, physicians, payers and other critical partners, the relationships among leaders must be disrupted and transformed. 

In the October issue of hfm, we argued that digital is not IT from the point of view of the patients’ experience or the health systems’ internal capabilities. Also important are how operations of a health system must change to effectuate the digital transformation that is afoot for many of them. Rethinking relationships across the C-suite is critical to crossing the “chasm” of internal capabilities. Creating meaningful touchpoints both digitally and in-person with patients requires coordinated and highly responsive action from multiple departments.  This requires a transformational restructuring of C-suite relationships. 

Out with the Old

Traditionally, the finance function in health systems has operated primarily as a facilities investor and a controller, particularly as it relates to IT. Often (but in our view, incorrectly) conflated with digital, IT has been seen typically as a cost center. Acting in the capacity as controller, finance has mainly looked to control cost, especially in the wake of the COVID-19 pandemic, such as we have seen through application rationalization and automation and/or outsourcing of IT and IT security operations. Similarly, the relationship among finance, marketing and patient experience is often one where finance is in a passive, cost-controlling mindset. 

In our experience, most health system marketing functions are only now beginning to truly adopt the new world of targeted marketing, where personalization — around a patient’s clinical attributes, lifestyle and correlated purchases, for example — is a key factor in engaging the patient. Sophisticated lifestyle segmentation tools such as PRIZM codes, which segment individuals by categories such as education, income and other socioeconomic attributes, have been available for awhile. Health systems also have engaged more at the individual level through social media and health portals. However there remains for most systems a large gap between interacting with patients and truly engaging with them.

The result is the emergence of an integrative function that is truly patient centric, where the internal operations should align to how patients are served and where digital experiences serve to humanize patient engagement. But in our observations, this integrative function represents a massive chasm in the internal operations across strategy, finance, marketing, patient experience, IT and other areas. Instead, we have seen:

  • An inability to start, or to start with real momentum that touches the patient and alters their digital and in-person experiences in a meaningful way.
  • General proxy measures to indicate a feeling of loyalty, instead of actual patient loyalty metrics that are directly correlated with real patient behavior, action and ultimately patient success (HCAHPS surveys serve a valuable purpose, but do the results truly help your organization drive meaningful patient engagement, success and loyalty?).
  • A siloed project, often led by IT, focused on maximizing technology features that appear as aggregations of technologies from the electronic health record and other new patient experience technologies.
  • Centralization of disparate call centers that focus only on outcome metrics (e.g., number of appointments made, percentage of dropped calls, hold times) rather than process outcomes that demonstrate and generate positive patient engagement.
  • High turnover of call center agents who are not fully empowered with a consistent set of tools to serve the patient.
  • Standardization of appointment types across clinical service lines that may increase throughput but not patient loyalty or success (e.g., by matching the right clinician to the right patient).
  • An omnichannel positive patient experience (e.g., via call center, in-person visits, telehealth, digital monitoring and transfer center) due to multiple departments having to coordinate across the organization and not always having the incentive to do so.

In with the New

It is now imperative for finance to have a relationship with those focusing on digital. If your organization has a digital office or department, great. If not, create one. Have it sponsored by the CEO or chief strategy officer and led by a chief digital officer, a role with high visibility and accountability for transformation. 

There should be active and visible involvement from other C-suite executives as well. An organization’s digital leadership (often housed as a function within marketing or IT) should be granted an independent seat at the table. Modern digital capabilities are different from the traditional marketing or IT siloes, and the DNA of digital talent is different from IT talent. Digital requires its own voice. 

The new alliance between finance and digital will require different perspectives and approaches, including from other engaged leaders. Finance should allocate investment for digital and innovation just as it would allocate capital for other projects. 

Ask the critical questions, including, what are the expected benefits? And what evidence will show that the strategy is working? 

And set a blend of finance, digital, marketing experience and operations goals that are consistent and incrementally measurable. You want not only to ensure you’re still advancing as planned, but also to celebrate short-term wins along the way. 

Change management is key. No transformation can occur without proper governance and execution from the top, so CEO backing is an imperative. 

Meanwhile, seek adoption, not just buy-in through engagement of clinical and operations leadership. 

5 principles to drive your health systems digital transformation

The irony of the complex problem of digital transformation for health systems is that the starting point doesn’t matter. What does matter, however, are the following five key operating principles.

  1. Let the digital department do the driving, with strategy or finance as a sponsor and with special visibility from the CEO. In all of our case observations of successful digital transformation journeys, digital, as a separate and accountable entity, is  the driver.
  2. Pick a few critical value drivers in the context of the new strategy and be sure finance is strategy ready. Contrary to popular belief, value drivers are not easy to tailor to the given culture, geography and payer dynamic for a given health system. A concerted effort must be placed to select a few yet pervasive value drivers that will optimize true engagement from the stakeholders (e.g., marketing, patient experience, clinical, operations, IT) with a new strategic mindset. Particularly in a post-COVID-19 world, as health systems begin to recover, healthcare organizations will face the reality that previous strategies have a short expiration date. Your digital strategy should be designed to help gain margins from operations to selectively, and in waves, reinvest those gains back into the overall strategy.  For example, it is often difficult to decide what the value drivers should be. The standard leading indicators, such as patient experience scores on the likelihood to recommend a certain health system, might be used. But it is not always clear, per the data, whether a patient’s positive response adds tangible value to the health system, because it doesn’t specify which key factors (such as the specific step in the experience, convenience factors such as distance or first available appointment slot or the provider’s courtesy) drive that response. Health systems should strive toward better health equity and real effectiveness simultaneously. While raising health equity in their respective communities, health systems should use value-driver metrics such as community health access, quality and actual patient engagement.
  3.  Invest in new blood. One of the most common factors we have seen in successful transformation is the introduction of new DNA into the leadership ranks, often from industries outside of healthcare. We don’t recommend changing out the entire C-suite for this, as healthcare is still unique, and nuances of the healthcare industry must be considered by the sponsoring executives. One or two strategic hires from other industries, who can provide that novel voice, is ideal.
  4.  Redefine and measure actual patient loyalty based on actual patient behaviors. This is not the same as experience or other regulatory measures and needs to be tailored to your organization’s patient segmentation strategy.
  5. Ensure you have a small critical mass of leadership. Less is more. Broad involvement for input and adoption is important, but too often we have seen leadership (and ownership) by committee fail.


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