Emerging technologies that offer medical benefit but require substantial capital investment pose a challenge to hospitals and hospital-based health systems in the United States. Dr. Molly Coye, the former director of the $16 billion budget for the California Department of Health Services, is on a mission to make it easier for healthcare facilities to deal with this challenge. In 2001, she founded a not-for-profit research and educational consortium, called HealthTech. It focuses on stimulating the investments major healthcare facilities make in enabling technologies, and helping them to make well thought out decisions in the process. She says, "We have learned that investments in a combination of imaging devices and information technology have fueled the most important healthcare advances. These technologies have improved the quality of care, reduced the expenditures on care, and improved satisfaction for patients and providers."

HealthTech's 45 members include most of the country's largest, multi-hospital healthcare facilities in the country, such as Kaiser Permanente, Sutter Group Health, and the Veterans Administration. Other members include the Centers for Medicare and Medicaid. She says, "We have more than 25 percent of the bed capacity in the country."

Enterpriseleadership.org recently sat down with Dr. Coye to talk about how HealthTech helps its members make capital investment decisions in technology.

EL. What was the catalyst that prompted you to start HealthTech?

MC. Like many clinicians in the field, I became aware of the quality problems in healthcare that emerged in the early 2000s. In fact, I participated in the Institute of Medicine's Committee on Healthcare in America. We wrote two reports - To Err is Human and Crossing the Quality Chasm - both of which became a catalyst for re-directing the healthcare industry. In summary, the reports said that we needed to overhaul the chassis of a bad healthcare system. We identified several pieces to that change. The most important one was the need for investments in technology.

I founded HealthTech as a not-for-profit organization in order to stimulate and to advance the adoption of technology in healthcare, including biotechnology, information technology, and devices and imaging, and pharmaceuticals. Since 2000, we have been tracking emerging technologies and research to understand their potential and real impact in healthcare. We look at technology in two ways -- what's on the market today and how people are adopting and carrying it out, and what will be on the market in the next three years to five years. Our research falls into 30 categories that cut across four broad areas: biotechnology, information technology, medical devices, and pharmaceutical,

EL. Can you give me examples of how you have helped your members make capital investment decisions about technology?

MC. We work across many different areas. A big win for some of our members included how to make the decision about each generation of a Picture Archiving Computerized Storage system (PACS). We stressed the important of enterprise thinking about a PACS system because it requires a huge investment. Many facilities would buy just a PACS system for their imaging departments. A couple of years later, these facilities realized that they had to extend the system to cardiology and to other parts of the facility. We stressed the need to plan, from the beginning, for this as a platform for storage of images across the organization.

We worked with our members on handling the decision to upgrade from a 16-slice CAT scan to a 64-slice CAT scan moving into coronary CT angiography. We strongly suggested that our members should prepare for the coronary CT angiography. They would at least have the 64-slicer near the emergency room. As a result, they could begin to build a system that routinely processes a certain portion of the potential myocardial infarctions through the coronary CT angiography.

Some times, we might have to caution our members about the timing of a specific investment in technology. In the early 2000s, many clinicians became enthusiastic about the long-term prospects of robotic surgery in urology. Some facilities had this technology because a donor paid for the initial acquisition. These facilities, however, did not have a plan for the continued use of the technology. In fact, some prices of equipment sat around gathering dust. In 2003, we told our members to adopt robotic surgery slowly, and to build a plan for how to extend it beyond urology into cardiology, as well as other areas.

EL. What type of a payoff do healthcare organizations get from systems that generate metrics about care delivery, such as number of patients discharged by 3 p.m.?

MC. These systems really pay off for healthcare organizations. These systems, however, have many pieces, such as computerized physicians order entry and electronic intensive care unit. There are also executive intelligent systems or dashboards that collect information to help the executive team make investment decisions.

EL. Are healthcare organizations deficient when it comes to technology investments?

MC. Healthcare facilities do not invest enough money in technology or invest in the wrong things. This happens for several reasons. The most influential physicians on the medical staff might prefer a technology. Unfortunately, the technology might not be the best for the community, or it does not serve the long-term survival of the facility. Healthcare organizations often get caught in a gridlock where physicians, hospitals, health plans, and even consumers try to maximize their own interests. They ignore initiatives that would reduce costs and improve quality. These things would require everyone to give up a little bit. That's probably the most important reason why health reform has never succeeded.

EL. What methodology do large healthcare facilities use to measure the effectiveness of their technology investment decisions?

MC. There is no single methodology. We have seen a very wide range of opinion about whether you can use a classical ROI at all. If you do, how do you structure for multi-year investments, especially if the parts of the return include improvement, safety, quality, and financial performance. We believe that most administrators of large hospitals and multi-hospital systems have installed electronic health record systems primarily for quality and safety reasons. They have tried to do a competent job of comparison-shopping in order to understand, not just the initial cost of the system, but the on-going operating cost, and the ease of acceptance by the clinical providers. They want to make an intelligent decision about what is the best timing, what is the best product, and what are the best rollout strategies.

EL. How do you guide your members to carry out their governance process?

MC. We help our members with how to present complex technology issues to the board. Usually, board-level decisions focus on where to allocate investment dollars. Do you put a large chunk of money into an electronic health record system, a new imaging system, or a chronic disease program? We help our members to sort through those kinds of issues. For example, we show them how to rank the different strengths of risk and the positive income values of different technologies. Using an array, they can see, for example, which technologies have a relatively lower risk and a higher yield for the things the board would find important. To this end, they might want the portfolio for the next year to have a risky, but high-potential-yield investment and several lower-risk investments that will payoff.

EL. How do clinicians influence investment decisions in technology?

MC. They play an indirect role because often their decisions about technology will either accelerate or slow the adoption of the technology.  For example, an administrator of a multi-hospital facility can clearly understand that the computerized ordering entry system will save money over a two- to three year period. This system will also improve patient safety. On the other hand, clinicians might resist adopting a new process, especially if it requires them to use a computer to enter an order for a medication.

To this end, the decision-making process for investments in technology should include clinicians in some way. If the process does not include physicians, then they might threaten and might frustrate the attempt to implement technology. Some clinicians, especially, physicians, have little experience thinking about systems -- why it might be worth investing the extra time, labor, and money in put in an electronic health record system.

Many clinicians see a direct disincentive in investing in some technologies. For example, often pulmanologists view the electronic intensive care unit with much skepticism. Because they think it will decrease their income, they resist it strenuously. In some cases, they have essentially agreed to carry out a portion of the electronic intensive care unit, usually about half way. The nurses use it, but the doctors say, 'I won't let it handle any orders for me. I have to do each order or approve each order.'

EL. Do you think this physician resistance has to do with the person's age?

MC. Not really! We see across that country that it is not a one-to-one correlation. It has also to do with whether or not the physicians are organized into groups. Often in groups, physicians get a chance to start thinking about systems. We also see a very bimodal distribution where the very young physicians and the relatively older ones are interested in technology. We find that physicians in their late 30s and in their 40s tend to resist technology. Because the older physicians are within 10 years of retirement, they feel more economically comfortable, and thus they can afford to be interested and curious about technology. This isn't the case with physicians in their late 30s and in their 40s. They see technology as a lessening of their usefulness.

EL. Should technology leaders in healthcare facilities have a medical background?

MC. Not necessarily! It's great if a CIO or a CTO has a healthcare background in either nursing or pharmacy. On the other hand, many CIOs and CTOs who do not have a medical background have made important contributions to their healthcare facilities. They can bolster their knowledge of healthcare by taking continuing education sources. The most effective approach includes teaming a CIO or CTO with a chief of medical informatics or chief nursing officer. In some cases, these individuals might report directly to a CIO or a CTO. An organization should not isolate a CIO or a CTO. In fact, many healthcare organizations still do not include the CIO on the leadership team. We have seen a decrease in this trend among the large healthcare facilities.

EL. What information are you giving to your members about what to expect from the Obama administration?

MC. During the past few years, the government has become more aggressive about Medicare/Medicaid not paying for serious efficiency and serious quality problems, such as a physician cutting off a wrong limb. As a result, healthcare organizations have to file more paperwork about efficiency and quality problems. We are telling our members that they are going to see a combination of bad economic times, and the intent to make the healthcare system more rational, despite contradictory incentives. They need to think about investing in technology differently.  They need to leverage technology to improve service delivery and to increase efficiency. Efficieny also includes, not only making errors, but also not spending as much to get the outcome.

EL. What things is your organization working on now?

MC. Because we want to help seniors stay independent in their homes, we have a new initiative to disseminate information about accelerating the adoption of again technologies.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.