Healthcare IT: Buy or build?

By Macel Legaspi | Jan 19, 2012

What are the drivers affecting buy and build strategies? What elements must be considered if a hospital is to grow and maintain its own applications, purchase an off-the-shelf product, or work with a team (outsource engineering) to build a product? Making the right choice is a challenge.

Let's look at scenarios in the healthcare market and discuss the answers.

IT team size
 
With smaller IT teams, the propensity to procure or acquire systems is higher.

Managing an engineering team can be very demanding -- and expensive. Challenges include finding and retaining people, establishing a robust development framework, setting up tooling and processes in place, getting the team trained and up-to-date on current technologies, and obviously, guaranteeing that the team delivers on what’s expected.

Despite these challenges, many hospitals and healthcare institutions are still growing their IT teams. Take for example Kaiser Permanente Information Technology (KP-IT) in the US, which has about 6,000 business and technology professionals under its team.

In the recent ComputerWorld CIO chatroom (formerly CIO roundtable) focused on IT Enabling Philippine Hospitals, we found out that IT teams of hospitals in the metro aren't as big as KP-IT's but their “technology-enabled” dispositions are nevertheless clearly distinct.

Type of system

"Front line or core systems are build decisions," said Allen Bacallan, VP & CIO of Cardinal Santos Medical Center. It hasn't come to a point where the core systems have been commoditized as practices and workflows vary from one hospital to another (and from a hospital in the Philippines to that of in the US). An off-the-shelf fully integrated hospital information system that meets the specific needs of the hospital and fits the workflow of the Philippine healthcare setting is non-existent.
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"We've to identify which systems are already commoditized," noted Dr. Mike Muin, CIO of The Medical City. "The assumption most often is that operation and accounting systems are commoditized, so these can be bought. If there are more than 2 vendors selling somewhat similar systems, then maybe it's a commodity. If it's not a new idea, then maybe it's a commodity." Back office systems are (mostly) buy decisions.

However, even commoditized systems can't be readily (and easily) bought.