The pros and cons of buy versus build
Photo: Ashish Kachru
Some health IT leaders at provider organizations favor developing software in-house, believing that buying technology from an external vendor is not cost-effective and will only result in longer timelines. Meanwhile, many vendor executives, of course, believe their software products offer robust and refined capabilities that a homegrown build likely can’t.
Research published in Harvard Business Review shows that in a sample of 1,471 IT projects, there was a cost overrun of 200%, as well as a schedule overrun of nearly 70%. These numbers indicate that one in six projects spiral out of control and further contribute to the organization seeing higher risk and less ROI. Additionally, others warn against the “DIY software trap,” arguing that in-house builds often lack longevity.
Ashish Kachru is CEO of DataLink, a technology and services vendor of real-time data aggregation, EHR connectivity, and dynamic dashboards and reporting. We interviewed him to discuss the pros and cons of using external vendors for organizational software, including how vendors are equipped to allow growth and functionality in the rapidly changing healthcare industry.
Q. Buy versus build is an age-old question for CIOs and other health IT leaders at healthcare provider organizations. What are the pros and cons of buying, and what are the pros and cons of the build?
A. There are many pros to buying. To begin with, it allows the organization to stick with its core mission of member/patient care and improving outcomes. A large internal software project will require many internal resources to be involved in the discovery, planning, testing and implementation of the software, time-consuming activities that often divert attention from their core roles and responsibilities.
Increased complexities of technology in today’s market make it more difficult for a stand-alone healthcare organization to build a next-generation solution with the latest technology and tools.
This challenge requires many cross-functional skills and talents that are hard to find and expensive in today’s economy, where all stakeholders are already fighting for resources.
Additionally, these types of talent resources tend to migrate to innovative software vendors that are staying ahead of the curve. They want to work with the latest technology with multiple companies so they can continue to grow and learn, making it harder for in-house teams to recruit this top talent.
Vendors also focus on a wide range of organizations across multiple lines of business and industries, and are positioned to bring forward best practices based upon their experiences outside of an in-house team’s four walls.
The time to market is much quicker with a vendor solution, versus building in-house. While most vendors today have out-of-the-box solutions that can serve a payer or provider’s needs very quickly, these solutions also allow for customization to meet their specific needs. The results: payers and providers get the best of both worlds.
But there are cons as well to buying. A healthcare organization needs to be ready to work within the framework of the solution provider to be able to impact change within the product. This may require a nimble approach from the payer/provider side and flexibility to remain open to a new way of doing things to get the change they want.
If there are some very customized aspects of how the plan/provider manages its members, the solution may not have accommodations for that workflow. This may require the healthcare organization to change and adapt the standard offering of the solution.
If the organization is expecting too many changes at an accelerated pace, the solution may not be able to provide for the changes in the software at the same pace – unless it can be managed with configurability in the software.
As for building in-house, there are pros here. You can create a more customized version that meets your workflow needs to manage your members and operations.
You can make changes more quickly during the build in-house, although this does not mean you will finish the final product more rapidly. You can feel more in control of your destiny than working in a matrixed fashion with a vendor.
And if there are some proprietary workflows or aspects of your plan, it allows you to keep this in-house.
The cons of building in-house include the fact that you can easily get distracted from your core mission by focusing on the build. It will be hard to focus on member outcomes and building a world-class software solution at the same time.
Time: It will usually take longer than you plan to complete. You will not benefit from the best practices of a provider solution and their other clients in the industry. Simply stated: You will be on an island.
Q. What are the reasons supporting your contention that healthcare provider organizations should buy software rather than build it?
A. Healthcare is hard and complex. In-house teams know their organization well, but they are not always up to date on the latest trends and the industry’s intricacies around lines of business, regulation, data, clinical practice, financial dynamics and consumer trends.
It is easy to underestimate the amount of knowledge needed to build a successful tool and stay current with changes that will impact workflows, reporting, etc. Having a service provider who is also your partner in this effort is critical. They do the heavy lifting for you so you can stay focused on running your organization and helping achieve better health outcomes.
Q. You contend that healthcare provider organizations that buy software are equipped to allow growth and functionality in a rapidly changing industry. Please explain how.
A. Too often, homespun programs are nothing more than a mishmash of manual workarounds to accommodate a growing set of deficiencies. As a result, staff members waste valuable time, introduce manual errors into workflows and can eventually destabilize the software program. Unfortunately, this takes a toll on customers and members who eventually bear the brunt of this approach.
In contrast, experts with experience and expertise generate highly configurable solutions that are scalable and flexible for organizational needs. Today’s healthcare software programs are built to scale so organizations can easily add on a new line of business, a new market or thousands of new members.
Features and functionality you may not have needed in the beginning can be turned on or customized as needed, allowing you to grow and scale much more quickly. With a homegrown system, you may be forced to go back to the drawing board and assess what is needed in order to grow.
This requires time and even more money than a tool with a robust roadmap that is always looking ahead and building in new functionality required for the future.
Q. Please discuss an example of one of the healthcare provider organizations you have helped with buying health IT and how they did better, compared with if they had built the same technology themselves.
A. A national payer partnered with DataLink to help them engage their network of providers in a value-based contract environment. To manage hundreds of provider groups, the customer rolled out the Evoke360 Platform to them to improve quality performance and optimize risk accuracy.
The initiative was to promote data-sharing between the payer and its provider network, assist providers with clinical decision-making, and improve patient care and outcomes.
With our roots and expertise in provider organizations, we were able to understand their workflows and how the provider participates in risk-based contracts. We were able to not only deliver software for the payer customer and their providers to use collaboratively, but we were also able to bring our experience and best practices to their business.
The in-house software developers may have been able to build a tool to track some of their internal workflows, but they did not have all of the experience on the provider side needed to ensure the successful adoption of the tool and process.
DataLink worked with an independent consultant, FTI Consulting, to study this customer and the impact made, and it was determined they were receiving an ROI of 5:1, making the investment in an external service provider well worth it.
Twitter: @SiwickiHealthIT
Email the writer: [email protected]
Healthcare IT News is a HIMSS Media publication.
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