Black Book Market Research

TAMPA, Fla., November 26, 2018 (Newswire.com) - A year ago, the buzz swirled on how the role of the incumbent executive-in-charge of healthcare IT systems was quickly evolving from a position focused on providing infrastructure, applications and analytics support to the organization, into an overall strategic business leader. However, as enterprise-wide determinations slowed down, and smaller, departmental-specific technology was getting reviewed, the Line of Business (LOB) management teams promptly acquired power over the IT purchase decision making and influence.

88% of non-IT hospital leaders in Q4 2018 see the demand for their technology expertise radically intensifying. And the strategic role of CIOs is markedly decreasing as the shift toward decentralized tech management moves to department heads and LOB executives from the CIO.

In 2015, CIOs held the balance of power over IT purchasing decisions, controlling 71% of decisions. But this year that figure fell to just 8%.

“Traditionally, CIOs called the shots in IT purchasing after aligning with the department on its need, but digitalization is making a permanent change to the health systems IT purchase process,” says Doug Brown, managing partner of Black Book. “As healthcare organizations transform work processes through digitalization the department leaders involved must logically uphold the authority of those processes.”

Given the warning signs, it is easy to speculate that the CIO’s sovereign technology power is slipping away. Following the money, 45% of all respondents expect that more than a third of all dollars spent on IT will originate from outside the IT department in 2019.

“Some say the CIO title and role might just end up losing the ‘C’ over the next few years. In 2018, only 21% of CIOs felt they were meaningfully involved in the creation of market-facing innovations and strategic departmental software selections,” says Brown.

Of CEOs surveyed, 29% think of their CIOs as tactical -- but not strategic enough to navigate the complex healthcare business systems to drive financial success.

According to 88% of colleagues in the C Suite, CIOs are seen as developers and deployers of technology, and not usually as a source of innovation and transformation to deliver business value. In other words, they leverage technology -- they don’t deliver it. Conversely, 81% of CIOs identify themselves in a transformational CIO role (albeit underutilized), as opposed to a functional role, despite what their colleagues perceive.

The likelihood that hospital CIOs are left out of the IT purchasing loop increased significantly since 2016. 90% of CIOs surveyed report they were bypassed by LOB management when making technology investments in 2018, as compared to 17% in 2016 when last surveyed.

“Lately, CIOs have been running IT more as a supply function -- as order takers and implementation coordinators -- than micromanaging IT costs,” says Brown. “As more and more healthcare providers are buying cloud-based services and turning to self-service models, IT decision making is spreading across the health system.”

With the rise in urgency to engage patients and improve consumers’ technical experience with health systems, still only 24% of hospital executives said that the IT department facilitates their entry into new markets and initiatives. This is down from 80% in 2014.

For 84% of hospitals surveyed, the role of traditional CIO as it exists today -- internally focused on project delivery, service and support of the organization -- is declining. The digital ecosystem is exploding and strategic decisions are being made by others than the CIO.

Among the health system CIO hires in 2018, hospital CEOs and board members surveyed are seeking more consultative-type executives who can orchestrate integrations, strategies, business goals, digitalization opportunities, evaluate innovations, and consult to LOB managers. That doesn’t suggest that the CIO is headed for extinction, but the role of the CIO in hospitals is changing dramatically towards information management.

More than half of the IT projects underway in Q4 2018 are collaborative ventures handled at all stages across the healthcare continuum. The days of silo decision making, where the CIO or IT department has control of a purchase, are nearly gone. Collaborative purchasing means to bring together LOB leaders with the CIO as the go-to person for help integrating health system technologies, meeting corporate policies and spending within budgets.

Other findings

35% of hospital CIOs worked on an organizational digital health strategy in 2018, while 52% have a clear digital strategy established.

33% of all respondents noted their hospital organizations are implementing or investing in cloud computing infrastructures -- such as storage, data centers and services -- and dealing with concerns of data loss, privacy, and the need for systems optimization and integration with the existing infrastructure.

64% of surveyed CIOs reported that they communicated directly with boards on enterprise-wide and high-dollar purchases in 2017. In 2018, just 39% of CIOs report having board-level communications on technology strategies, a major decrease in interactions.

IT investments are being directed toward business initiatives such as improving patient experience, transforming RCM and financial processes, increasing hospital operational efficiency, and growing the health system’s revenue and the loyalty of healthcare consumers.

LOB leaders are more likely to lead these initiatives in 2019, according to 55% of all C-suite respondents. LOB leaders will likely be calling more on CIOs as strategic consultants or advisors for evaluating business needs, risk assessments and commentary on technology choices -- not as owners of purchasing decisions.

34% of CIOs’ C-suite colleagues are less sure of the importance of the CIO to business and strategic non-IT goals in 2019. Although there is greater involvement in security and implementation functions, LOBs see the role of CIOs lessening in complexity as compared to the technology-expertise requirements of LOB leaders.

2019 challenges for CIOs

CIOs ranked artificial intelligence and cybersecurity (94%), internet of things (IoT) (90%), and interoperability (82%) as the most problematic technologies to implement in 2019, while 24% of current healthcare CIOs admit having little to no expertise managing the demand for new skills.

Healthcare CIOs are rapidly scaling their digital operations, making 2019 a defining moment for CIOs who don’t want to miss their seat on the fast-moving train of innovation. CIOs are on the road from digital experimentation to digital scaling, which is a major organizational challenge for traditional, functional hospital IT managers. The new job of the CIO is to build the required bench strength to scale healthcare’s myriad of digital businesses.

Results show that 91% of CIOs expect their roles to shift or be remixed due to digitalization. “While traditional IT delivery management across the organization will remain part of the job, greater importance on the role of the CIO is being placed on attaining a far broader set of business objectives, innovation seeking, and talent development,” Brown says. “Not all of today’s CIOs are going to make the shift successfully, but the role of the hospital CIO will remain absolutely essential for the foreseeable future. While the title of CIO isn’t going to disappear, the role is quickly transforming. One thing is clear, all CIOs across health systems have been challenged with this fast pace of change.”

Skills most highly sought in 2019’s new healthcare CIO include: (1) Innovation as a critical element of success, according to 83% of all executives polled; (2) Connectivity to engage as a leader in the flow of all organizational information, state 81%; and (3) Communication leaders in an era of medical and financial data driven cultures, say 77%.

“Clearly the success of the 2019 CIO will be measured not on what they have built in infrastructure, but what they orchestrate between services, IT systems and what business goals have been integrated.”

In this time of the healthcare consumer, hospitals need to serve increasingly tech-savvy, connected patients, and that requires top-notch technology systems and processes to win, serve and retain consumers. In 2019, 92% of C-suite executives surveyed agree this will be a primary role of the CIO.

Turnover

Hospital CIO turnover is at the highest point in 13 years, with average tenure of respondents is at 3.2 years compared to a national average across all industries of 4.5 years. Recruitment of CIOs from outside healthcare is now a preferred practice, according to 75% of CEOs surveyed. There are not enough of these transformational healthcare CIOs to achieve major change, according to 88% of hospital CEOs polled, as the industry seeks talented leaders from other industries.

22% of CEOs do not believe their current CEO cannot embrace a role outside of traditional, functional IT.

Enter Chief Digitalization Officers

“The CIO job isn’t going away as an infrastructure executive, but the most exciting positions in healthcare business technology will be in creating value outside of IT, where new technology will transform operations,” says Brown. 

Just as some CIOs are finally proving their worth to a hospital organization, a new job title enters in the boardroom and is taking credit for all digital initiatives (Chief Digital Officers, or CDOs), whose chief duty is to be questioning how every technology investment benefits the hospital business. The goal is to help the organization implement new business models and processes that blur the digital and physical worlds.

CIOs have plenty on their plate coping with changes required to technical infrastructure. Separating CDO functions out into an innovation role ensures that innovation gets the executive or corporate priority it deserves is trending according to 59% of hospital executives.

CDOs are concentrating on how to use the latest technologies to improve healthcare consumer experience, while the CIO looks over daily operations, and can obsess over data governance and managed budgets.

Cybersecurity

One of the top priorities for CEOs in 2019 is cybersecurity; yet instead of adding to the CIO’s plate of functional duties, security has morphed a standalone set of practices into a strategic initiative. As a result of hiring CISOs in health systems, CIOs will be spending less time on security management activities.

Outsourcing IT

82% of CIOs say they cringe at the thought of outsourcing their IT operations to a managed services provider; however, operations and financial executives feel differently. 90% of CFOs and 84% of CEOs recommend outsourcing be considered if service levels can be maintained or improved at the same or less cost to the organization. 81% of LOB and departmental leaders say they are often frustrated with the autocratic IT divisions and believe outsourcing would resolve these issues.

“With more responsibility moving out from the CIO role to business unit and department (line of business) management, including marketing, and the new Chief Digital Officer role, old school hospital and IDN CIOs are facing the likely possibility of dislocation in 2019,” says Brown.

247 CIOs & 1,305 Non-IT C-Level and Senior Management Leaders participated in the 6-month polling sweep from June to November 2018.

About Black Book

Black Book™, its founders, management, and staff do not own or hold any financial interest in any of the vendors covered and encompassed in the surveys it conducts. Black Book reports the results of the collected satisfaction and client experience rankings in publication and to media prior to vendor notification of rating results and does not solicit vendor participation fees, review fees, inclusion or briefing charges and/or vendor collaboration as Black Book polls vendors’ clients.

Since 2000, Black Book™ has polled the vendor satisfaction across over 30 industries in the software and services sectors around the globe to identify industry and sector trends and conditions. Black Book’s mission is to improve healthcare delivery by expanding the stakeholder's voice from the front-line employee, IT and financial managers, clinical and nursing staff through the C-suite and board, as well as healthcare consumers.

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Source: Black Book Research