Many people will remember Rick Skinner from his time as CIO at Providence Health System. One of his Navigant colleagues suggested that I interview him since he’s been in the industry a long time and adding, "I’ve yet to see him get stumped with any healthcare IT question that has come his way." Thanks to Rick for taking the time to chat.
Give me some background about yourself and your job with Navigant.
I am a career healthcare IT type. I’ve been in this business for 25 years. I’ve spent most of my career being a CIO at various places. The last one was the Providence Health System out on the West Coast, a large, Catholic-sponsored system from LA up to Alaska. After having been there for quite some time, I decided to see what the other side of the world was like.
I went to work with Steve Heck, a good friend of mine who was, at the time, the president of First Consulting. He convinced me to come work for him and I did that for a couple of years. I ran First’s outsourcing business, which certainly taught me a lot about the bottom line and the balance between scope, costs, and service.
What attracted me to Navigant is that it’s definitely not an IT services firm. It’s an organization that helps healthcare organizations achieve their business goals and value. IT is a tool, or a means, to do that. I was attracted to come to Navigant to be the second employee in a start-up healthcare IT practice, because of just that philosophy.
After my time as a CIO, after my time running an outsourcing business, I wanted to be part of an organization that really was business- and value-oriented, rather than one that was enamored of technology. I think that’s where I am.
Some folks will remember The Hunter Group, which Navigant acquired.
There are very few people left from The Hunter Group, but we do an increasing amount of work in performance improvement. We don’t do it in quite the same way as The Hunter Group used to do it. Our clients aren’t typically in as dire straits as those that engaged The Hunter Group.
I think the parallel is still there, as the healthcare industry, in particular hospitals, are projected to lose ground financially over the next few years. Many of our clients — most, actually — are looking for ways to preserve and/or improve their financial performance. They want to use all the tools available to them from IT to finance, to supply chain, to you name it.
We have, as a client told me last week, a reputation for being direct, to the point, and providing actionable advice. In the last eight months, we’ve been seeing more and more clients interested in that kind of engagement.
What did you like or not like about consultants when you were a CIO making the decision to engage them?
The thing that I disliked the most about engaging consultants or professional services firms — not all went through this, but many did, and most of the larger ones did — is what I call the get-to-know you dance. It seemed to take forever to get from, "I’ve got a problem and I need some help. Can you help me?" to a signed engagement that put the right skills in the right proportions to work in my organization.
I see it today in some firms. It takes forever to do that. It wastes everybody’s time. So what I ended up doing was finding those few folks who I got to know, or who knew me, and we didn’t have to go through that at the front end of every engagement. That’s what I try and do as a consultant — to cut to the chase instead of a 70-page PowerPoint proposal. A simple three- or four-page letter of engagement that says precisely what our understanding is of the client’s needs and what we commit to doing.
How do you fight the battle of needing to generate new business vs. doing what the customer paid you to do and moving on?
Consulting firms are in the business to make money and that requires new engagements. However, you’ve got to specify the business that you’re in. At Navigant, we have very purposefully stayed out of the outsourcing business. And so far, stayed out of the implementation business, because we did not want to be like everybody else, trying to swim upstream from doing a strategic plan, to doing a systems selection, to doing the implementation for the system, and then to try and run the system for the client.
On the other hand, with that kind of business philosophy, it means that we have to work a lot harder to have a lot more clients than we would if we had a $5 million outsourcing deal on the table all the time. So, it’s just what you’re interested in and the kinds of services that we want to deliver.
I know you are a fan of formal project management office and so am I. For folks who don’t know if they have one or not, which I still believe there are those who think they are doing project management but really aren’t, what would be the bullet list of things you would say, "If I find these things, I’ll know a hospital is doing project management correctly?"
It’s interesting you should ask that question because we just finished working with one client and are in the midst of working with a second client who are in exactly that boat. That is, having something called project management, but at least in my evaluation, they really aren’t doing project management; more managing it with a project management office.
What I look for is, one, the whole work intake, front-end process. If that’s going on through multiple decision-makers at multiple levels, rather than eventually coming to a single committee or individual that can prioritize for the enterprise, then I don’t think they have effective — in this case, not project management, but commitment management.
Secondly, if I see an organization where the project managers, whatever they happen to be called, come from many different parts of the organization and they each manage projects in their own way, using their own methodology. I don’t see the sharing of expertise and the economies one can get from having full-time project managers, especially for larger projects, who have had the opportunity to develop the kind of skills necessary to manage projects that are tremendously different than the skills necessarily to run a day-to-day operation.
What are your thoughts about the goods and the bads you’ve seen when CIOs, for whatever reason, decide to start roping in little pockets of IT that were actually doing pretty well for their departments and bring them into the central IT fold?
I think it’s a balancing act. I learned most of my lessons from observing IT in other industries. If you look at what everybody always looks at, financial services, it went through this cycle from trying to corral everything that did IT into a corporate IT department and dictate standards, process, and so forth across a far-flung, diverse organization. That worked OK for a while, but pretty soon it was a constraint on the ability of the organization to innovate, change quickly, respond to market pressures, and so on.
And so, in that particular industry, some of that decision-making, some of those resources were apportioned back out into the business units. I think the same thing is going on in healthcare. Actually, has gone on. I think I could point to at least two different iterations of that cycle in my time in healthcare IT. But what I see going on currently is, for those organizations who haven’t consolidated infrastructure in particular, but those parts of IT that really benefit from economies of scale and from discipline management, I would call it — I see those organizations trying to do that and I think it’s a good thing.
On the other hand, I see — especially in larger organizations or organizations with diverse entities — discovering the need to empower their customers, their customers out in the hospitals, in the physician practice, or whatever, in order to get the kind of responsiveness and buy-in and value out of the technology.
The best organizations I see balance both. They’ve got a pretty centralized control, if you want to call it that, for infrastructure and even mainstream applications function, but then they’ve got IT people out with the customers whose job it is to make sure the customers needs are met, to be the account rep for IT. I see them all working fairly well in organizations.
Do healthcare organizations really want IT innovation and is that within the capability of the average hospital CIO?
I think healthcare organizations want some innovation, but you’ve got to remember that the operation of a hospital is, and probably should be, 99% routine. Nurses should be taking care of patients according to some protocol or process, not each one making it up as they go along. And so hospitals, in particular, are really oriented towards getting as good as they can at doing the same thing over and over again.
I understand variation in patients and so forth, but in order to change with the times, they’re required to — if not as quickly as in other industries — start to adjust. For instance, the whole move to ambulatory provision of services. If you’re not thinking about how you can provide it in a lower cost environment at a more convenient point for the patient, then somebody else is going to come in and do it for you.
So having said all of that, with respect to CIOs and innovation, I can tell you when I was a CIO and found myself answering a question with, "Well, its going to take three years to get this system in and then this other system. And then we have to write the interface." And to have given a 10-minute answer someone who says, "I’ve got a business problem. Can you help me?" the light bulb went on in my head that said, "Sure, most of this is very complicated. It’s very large scale. It takes time," etc, but if you don’t develop the little skunk works R & D lab that can respond pretty quickly — not to everything, but at least to some of your customers’ requests — your customers are going to forget about you by the time you get to the big picture solution.
Why do you think it is that CIOs tend to worry a lot about their jobs?
First of all, it’s a high-risk job. There’s no question about it. Other than the chief operating officer, nobody in any organization has a broader scope of responsibilities. Whether it’s in terms of customers, or number of moving parts, complexity, whatever. So that’s the first point. Its just a tough, high-risk job.
Secondly, it’s a job that’s constantly changing, and in particular in healthcare, it’s gone from, "Just keep the billing system running. Do that plus put in these electronic health records" and now, "Oh, by the way, you’re spending too much even though we agreed to it back when you started the projects." So now you’ve also got to cut your costs.
The environment and the job itself changes fairly significantly over a short period of time. I think that there are a lot of CIOs who didn’t manage properly expectations. In some cases, it wasn’t their fault. Or, had trouble meeting expectations, whether that was because of poor management or expectations were wrong to begin with.
And then third, the expectations themselves change midstream. I see this particularly with respect clinical systems implementations. What the organization thought they wanted when they approved the project or program and what they really want three years down the road are two completely different things.
Lots of money, energy, and resources are being spent on clinical systems and yet I’m not seeing many results or even hope of results. Hospitals are just glad they can call it done, move on, and not really reap any value.
Again, I look at other industries for lessons. I really liken what we’re seeing now with clinical systems to the ERP craze in the nineties in other industries. That everybody in manufacturing or retail thought, "Wow, if we could just get rid of all these systems we’ve got. Get one system that’s going to control everything from resources to manufacturing, to customer service, we could make a real difference in our operation. "
And you know the story of everybody that bought SAP and Oracle and spent a zillion dollars on consulting firms to help them put it in. Most of those organizations had a disappointing outcome. They spent hundreds of millions of dollars, and in many cases, more than they had expected.
But you look now, ten years later, most of those other industries and the organizations within them could not have made the productivity improvements — In some cases the customer service improvements –- without the IT infrastructure, in particular, the ERP systems that they struggled to put in in the nineties.
So I see a parallel there. I see that eventually IT support to the process of delivering healthcare is going to be a requirement. Otherwise, we’ll never be able to meet the cost and quality demands of the market. On the other hand, these projects are going to be more expensive, take longer, and be riskier than most organizations recognize. It’s only those organizations that do recognize it, manage it well along the way, and then insist on demonstrable results that I think are really going to get the benefit.
What percentage of hospitals would you say fall in that category of doing it right?
I don’t think very many. How many people have actually done it? In my opinion, I think there is maybe 10% who have slammed through this maze and emerged out the other end with a set of operational clinical systems that have been around for a while. So that’s a low number to start with. Then if you look at the number of those who can point to demonstrable business benefits, it’s an even lower number. That’s perhaps, not because the benefits aren’t there, but its because nobody bothered to implement a methodology to document them.
I’m not seeing the clinical system "haves" and "have nots" diverge very much, either in patient care or quality.
I don’t either, although, this is the perennial long-term/short-term kind of question. If you’re an organization that thinks that clinical systems will eventually be required and that you’re not going to be competitive without them; and you know that it’s a five- or ten-year cycle to get them all installed, figure out how to use them, change the way you work in order to take advantage of them, and so on; then can you afford not to start down that path, knowing that if you don’t, you can’t catch up because of the long lead time?
Or do you see the market as what you said — that there’s no real benefit to doing this, that nobody’s shown yet and so why should we go chasing off after this and why don’t we save our money and let it shake out? And then, if there does appear to be benefits — people are realizing it — we’ll be able to quickly get to where we need to be.
I see the first philosophy of, "Gee, everybody else is doing it. If we don’t get started, we’re going be left behind, even though we don’t have a clue what it’s going to do for us in the short term."
So even though the benefits may not be what you expected, taking the leap of faith gets you in the game?
It does, but again, I think there’s some middle ground. And that’s my or our philosophy — that you should plan for benefits. You should measure those benefits and, to the extent you can, you should demand them.
My recommendation — although not many people back me up on, it to be honest — is that you ought to just set the benefits in business metrics. If you think that having electronic documentation is going to make your nurses more productive, then you ought to demand that nursing productivity goes up, as measured by a solution or whoever, over the next three years. Or, if you think that having electronic records in your employed physician practices is going to make patients want to come to your docs, then you ought to set a goal for increasing your market share for physician patients.
But people don’t tend to do that, at least in healthcare. It’s, "Well,if I can’t point to a real cause-and-effect relationship between putting in System A and getting Benefit B, then I’m not going to hold anybody accountable."
You work working with McKesson to establish a usability lab at Providence. Why don’t you think healthcare software vendors have done a better job in designing applications that you don’t have to give a nurse a 100-page manual and pull them off the floor for two days to even get them started?
I think people get overwhelmed by the complexity of healthcare and the variation in practice. I’ve had it happen to me. I’ll tell you a short story.
When I was a CIO at Providence in the early nineties, we we’re going to take a system that was in one hospital on one side of Portland, Oregon and replicate it in a second hospital on the other side of Portland, Oregon. Ten miles apart — separated by a river, granted — but still part of the same organization.
Well, in order to be able to have a "standard system," we put together a team of people who came up with a million dollars’ worth of customizations for that system in order for both hospitals to be able to use the same system. Like a fool, I paid for that million dollars’ worth of customizations and, five years later, I’ll bet you there was not more than ten cents’ worth of those customizations that were still in use.
And I tell that story, and I remember it vividly, because I think that’s the holy grail that we all go chasing down. There doesn’t seem to be any such thing as "good enough" in healthcare. It’s got to be perfect.
It seems like we’re also terrible at standardization. A nurse on the pediatric wing does it differently and a nurse in the ED doesn’t believe that’s vaguely sensible. Even within a department, you can’t get consensus. Is that ever going to end, or is that unique to healthcare?
I think it’s unique to healthcare in that we’ve tolerated it. I think what will make it end is kind of the same thing that made it end in other industries, where making a car went from doing it in your back yard the way you wanted to do it, to doing it in on an assembly line. It’s the pressure of the marketplace.
Granted, I’ve been saying this for 20 years and it hasn’t happened, so you can take it with a grain of salt, but I still believe that at some point, the marketplace is going to demand higher quality and lower cost than healthcare in the United States is currently delivering. When that happens, we won’t have any choice but to re-engineer the way we deliver care to make it more standard and to make it sufficient rather than perfect.
I see a little of that starting. When we get called in to do performance improvement kinds of engagements, it used to be that, "Well, we want to improve our performance, but don’t touch the clinical stuff. Tell us how to cut money in HR or supply chain or whatever, but don’t mess with the clinical stuff." And now, many organizations are saying, "You know what? We have to change the way we work or we’re never going to lower our costs or increase our quality to what the market demands."
Some of the medical tourism hospitals have taken a different approach, with ISO certification and a guest experience emphasis. Are there lessons to be learned from outside our borders?
I think there are. Certainly the insurance companies are learning those lessons. They’re learning that they can please their customers, the member, and still save money by utilizing hospitals that have standardized on process. Granted, now they’re operating on a lower cost area, which helps. But who have also focused on, to use the Starbucks term, "the customer experience."
In particular, hospitals are going to have to get that message, because with technology the way it is today and moving this way for the last 20 years, there’s not many things that you need a hospital for any more.
The HIMSS leadership survey indicated concern by IT leaders about declining reimbursement and resources. What are you seeing?
I think that the concern that the leadership study showed is right on. As I mentioned before, we get involved in performance improvement engagement, not just from an IT perspective. And everything we see, the clients we talk to, all think that we’ve hit the high-water mark in terms of reimbursement and things will get worse from here.
Hospital margins will go down. Certainly you can’t depend upon investment income at the moment. So that’s played out for the IT leader. Most CIOs are somewhere in the midst of the most expensive, most risky, and potentially most disruptive IT projects their organization has ever taken on — clinical systems. And in those engagements — not in all, but in many health systems — they tend to run too long and cost more than anybody thought they would to start with.
And then the piece that we really see people starting to pay attention to is the impact on operating budget. Conventional wisdom is that, whatever your operating budget is today, if you’re not running clinical systems, that’s going to go up and go up dramatically once you implement all these clinical systems. Many people believe, me included, that you can probably add a full percentage point to the size of the IT operating budget as a percentage of overall spending. That percentage point comes right off the hospital’s bottom line. So there’s an inherent conflict there for CIOs.
And if you’re a consultant, is that good or bad news for you?
I think for us at Navigant, it’s good news, because we’re not an IT consulting firm. We’re trying to help our clients mange their business and accomplish objectives.
So if I see, and I’ve had a couple of incidents of this recently, that a health system is saying on the one hand to us, "Look, we’ve really got to get a handle on expenses. Reimbursements are going down. We don’t think we can grow market share. Our only prayer is to reduce our costs so we can maintain a reasonable operating margin" and then, in the next breath they say, "Oh yeah, by the way, we’re going to spend $100 million on electronic health records, but we’re not sure what the benefit is. I guess that will raise our costs, won’t it?"
So there you’ve got a dilemma for the organization. Its not a dilemma for us, because we advise them, if that’s where they are, that they should either document the benefits that they’re going to get and make sure they get them or they shouldn’t be doing it.
Should the boat show atmosphere of the HIMSS conference change?
I’ve been going to HIMSS for a long time. I walk onto the show floor whatever the day is it opens. I walk from one end to the other and it’s like, "I’m done". I’m overwhelmed. I just don’t know where to start. Then I go back to something else.
Having said that, I think it’s that way in any industry. A vendor fair/show is all about visibility for the vendors’ products and I don’t think this is going to change. As vendor margins go down, they’ll put less money into it, if that happens. But I think its serves a purpose, so I don’t get too worried about it one way or another, to tell you the truth.
If you look ahead three to five years out, give me a handful of trends that you think we’ll see in healthcare IT.
First and foremost, simply a continuation of investment in, and trying to optimize to use of, clinical information systems. I know that’s pretty broad.
Secondly, I think we’re going to see a whole lot more emphasis to the outpatient or ambulatory environment. I’m not just talking about physician EMRs, but ambulatory surgery centers, all kinds of out-of-the-hospital provision of care that we’re just staring to see now.
Third, I think we’re going to experience a bunch of horror stories around simple operations. Actually, that’s an understatement. They’re not simple — complex operations. What I mean by that is, all of a sudden, we’re going from having an IT or customer environment that’s not exactly happy, but tolerant of six-hour downtimes, a day and a half outage, slow speed — to one that just can’t afford any of that. I don’t think that we’ve paid enough attention or invested enough in the infrastructure to keep up with it. So I think we’ll see a number of stories about bad things happening when you don’t have the operational efficiency to really run these mission-critical systems.
Last, I don’t know how to quantify this, but I think we’re going to see a whole sea change in leadership within healthcare IT on the vendor side and on the CIO side. We’ve had people like me around for the last 10 or 20 years in some capacity or another. Many of those people won’t be here five years from now. We’ve got a whole new set of leaders that are just now starting to fulfill their promise and that will be very exciting to watch.
You took me right into my next question which was, during that next 3-5 years, who do you think the most influential people will be in healthcare IT?
This isn’t really answering your question, but I think the most influential people in healthcare IT are going to be non-IT people. The business people. Whether it’s the CFO or the CEO — in the next few years, they are going to be engaged in IT things to a far greater extent than they ever were before, just because they have to be.
IT is one of their biggest capital investments; it’s one of their most mission-critical functions. So all of a sudden, like it or not, they’ve got to pay attention to IT. And because they’re paying attention in a way they haven’t in the past, I think we’re going to see their influence a lot more than it has been. I think that’s good because, after all, they’re running the business.
If you look at the vendors and consulting services firms that are out there, what advice would you give them to be prepared for what you think is coming?
I think that the old school of vendors and consultants — the typical large, global, partnership-oriented consulting firm, on the one hand, and the large, complex, multiple-business unit healthcare IT vendor — both of those are at risk. We see it today with the emergence of Epic, Meditech, and, before it was purchased by IBM, Healthlink. Those with a simpler, more direct, more customer-focused business model, I think, are going to make some headway in the market.
Is there anything else that you want to talk about?
I suppose only one other point, and that is for those of us that have made a career out of healthcare IT — I’m struggling with this personally — how to help make this transition from IT being a separate black box, so to speak, disconnected from the organization in a lot of ways, managed in a different form that the rest of the organization, etc. — how to transition IT into the mainstream of healthcare, the same way that IT is in the mainstream of retail or financial services or what have you.
I believe that’s where its going. I believe that’s our philosophy at Navigant. But I also think that those of us who have been in this business for a while have some obligation to try and help it get there in the least bloody manner possible.