Hopefully this slide from the thought leaders at Sg2 makes you laugh? But the reality of it makes me cry… The truth is that the incentives and motivations of healthcare IT vendors are not aligned with their customers, and this particular vendor achieved their objective, getting paid for a shipped system.  It is not the fault of the vendors or their customers, "it is just the way it is."

After reading the book Freakonomics, I was able to understand the problem better. Among other great insights, Freakonomics posits that many systems and economies are inefficient and are built on misaligned incentives. The fact is that the Healthcare IT Vendor economic model is built upon vendors obtaining transactions with customers. However, customers do not need transactions, they need the latest functionality available with optimized workflow, maximized adoption and agile infrastructure. The bigger problem is that vendors create the illusion that they will give customers what they really need by obtaining a transaction and many customers experience years of frustration after signing a contract.

The “system” at vendors is designed and optimized around obtaining a transaction, getting you to sign the contract. Customers see large quantities of “suits” from a vendor prior to signing a contract, but once a customer has signed a contract the vendor is incented to do as little work as necessary to get a customer to accept the system so they can start reaping the benefits of maintenance revenue for years. The suits are swiftly replaced with a project manager that is responsible for many other customers concurrently, a few days of a “workflow specialist” and a “train the trainer” briefing.

I am sure by now that vendors have stopped reading and those of you at healthcare organizations are vigorously shaking your head in agreement. I wish that I could simply be labeled a pessimist and an exaggerator, however, I have participated in hundreds of negotiations and implementations between healthcare organizations and vendors, and what I describe is the norm, not the exception. Even though I have grown used to this, it still disturbs me thoroughly.

So, what is a healthcare organization to do? For years I tried to help my clients change the system, but after reading Freakonomics, my team and I started creating solutions and services that would exploit the current economics and systems, to make it easier for Vendors to get transactions and to make it possible for customer to get optimized, adopted and agile implementations. I will continue to blog about our approaches and how they will revolutionize the healthcare IT industry here on our blog and I hope you will follow along so that we can work together to make the best use of ARRA stimulus dollars toward implementing your EMR/EHR, Imaging and/or HIE systems.

Until next time,

Joe Lavelle  Partner and National Practice Leader, Healthcare Provider Consulting Services

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Slide Credit: Sg2 ©2004