Measuring IT Investment From A Risk Mitigation Approach (Rather Than ROI)

Most buyers of healthcare/health insurance IT are, by nature, risk-averse. There are very legitimate reasons for concern: IT infrastructure is expensive, complex organizations are structurally resistant to change, system implementations are prone to unforeseen challenges, and benefit expectations are difficult to realize.

In summary, a daunting situation!

How do I create a stand-alone ROI from all of that!?

There is a more critical measure than ROI. It is a question of risk mitigation.

The risk of inertia can be many times greater than the risk of embracing change. Competitive market forces and the ever-expanding role of government guidance/oversight are constant. Failure to keep up (by investing in people and infrastructure) is unforgiving, and the price to be paid is steep and sometimes fatal.

Key market-drivers that if not sufficiently addressed (and thus high-risk items) include:

  • The underlying foundation migration of B2B business that is becoming more C2C member-centric
  • The data and process challenges associated with payer/provider integration
  • Overall transparency demands while adhering to privacy requirements
  • Constant growth and change of regulations and compliance

At some point in time, the amount of road remaining for “investment modernization” of existing organizational structure, use of data/business intelligence, and legacy technology is depleted. Ultimately the risk of minimal maintenance, or worse, doing nothing, is by far greater than “taking the big transformational jump.”

How do I minimize the risk of “Transformation Supported Through Big IT Investment?”

First, there must be a recognition that this is not just an IT initiative. Forward-looking, well-defined, and measurable strategic business objectives must be clearly articulated.

Second, the rollout of an operations transformation plan that includes people, process support (and yes, underlying technology) MUST be developed and aligned with strategic objectives.

Third, while the effort is large, segmenting into integrated, bite-sized chunks is essential for buy-in and monitoring activities that all constituents won’t necessarily embrace.  Some of these bite-sized chunks might include:

  • A listing and prioritization of key foundation-based (versus transaction-driven) transformation goals
  • An agile/collaborative model that acknowledges all key stakeholders and does not let perfection get in the way of progress
  • The development of a new company approach, where the benefits of the transformed environment can be both realized (due to fewer legacy barriers) and identified by wary stakeholders

In summary, acknowledging and developing the framework to measure both the tangible and abstract rewards associated with risk mitigation (versus a singular focus on the “supposed hard numbers of ROI”) will provide a much better mechanism for developing and recognizing the benefits of the investment value proposition.

About the Author

Mike Comick

Mike Comick
VP, Strategic Partnerships 

Mike Comick is a HealthEdge Vice-President, leading the company’s Strategic Partnership program.  Mike has over 35 years-experience in health insurance core systems and associated business transformation.  Prior to joining HealthEdge, Mike was co-founder of Healthcare Technology Management Services (which was later acquired by Emdeon), a partner with First Consulting Group, and Vice-President of the Core Claims/Administration practice at CJ Singer / Gartner Group.  Mike has published company profiles, market win/loss reports and health plan IT aggregate budget analysis.

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