Paying the technical debt piper in healthcare

Let’s start with one of the key business questions in this new millennium: How do hospitals maintain their competitive edge while staying true to their core missions in an era of technology hyper drive? That’s a difficult question to answer, but the key lies in this notion of “technical debt,” a term coined first by Ward Cunningham. That debt can be thought of as the amount of accumulated software assets that have gone without re-factoring for many years or even decades. A major consequence of this is the cost in time, effort, resources, and expenses required in maintaining it all. The more “technical debt” a company has accumulated, the more difficult it can be for that company to regain its competitive footing. A large amount of technical debt also increases the business risk for a company, by increasing the complexity of their technology layers, and therefore their ability to maintain and keep it all in good working order. The analogy here is organizations make poor short-term tradeoffs without considering the long-term consequences, they keep accumulating technical debt. If this “debt” is not paid off periodically by way of meaningful re-factoring to address the shortcuts, the accumulated “debt” jeopardizes the competitive edge of the organization. 

In healthcare, the accumulation of technical debt can have serious ramifications. As in other industries, many hospitals tend to implement software platforms that are “good enough,” rather than best of breed, or based on cutting-edge technologies, in order to keep the business running smoothly. As time goes by, the incumbent software becomes difficult to enhance or upgrade in place, leading to business scalability issues, software integration problems, and in some cases serious security vulnerabilities. The standard response of many hospitals and healthcare companies when they realize that they have accumulated a lot of technical debt is to embark on large scale transformation or replacement initiatives. However, these are expensive efforts that tent to consume large portions of the IT budget, leaving hospitals and other organizations less money to invest on new and necessary IT projects, like the use of data analytics and customer facing mobile interfaces. Further, these modernization efforts are often fraught with big challenges like complex coordination, mobilizing skilled teams, and proper change management, to name but a few.

And amplifying all of this is that any business technology transformation has to be done while the outside world – policyholders, patients, doctors, and other stakeholders – continue to move forward. It is now practically impossible to be immune to technology and process obsolescence due to the ever shorter cycles of technology turnovers. To illustrate this, the cycle of simple batch oriented systems lasted decades, and that was followed by more decades of monolithic mainframes based platforms. These were replaced by the rapid spread of networks and personal computing, which was followed by public networks and smart devices. All this occurred over just a generation or two. Recently, the desire for instantaneous responses by consumers has resulted in transactional systems being cobbled into self-service systems delivered via the internet. Now, with wearable technologies and the advance of the Internet of Things (IoT), the expectation of systems availability and responsiveness is anywhere/anytime. In turn, these systems have become highly connected and interdependent to satisfy these complex transactions. This trend doesn’t seem to be slowing but accelerating.

What can hospitals do in this type of technology hyper drive? Do they simply ignore these trends at their own peril? What do the experiences of Kodak, Blockbuster, Borders, Blackberry and countless others teach us? One of the clear lessons is that it doesn’t take a long time for entire industries to be disrupted. Nobody can claim to have a crystal ball to predict the next disruption heading their way.

Given all of this, is there a way for hospitals to reduce the risk with this cycle of “debt accumulation” and “risky transformations”? Hospitals, whose core business is not technology, can start by rethinking how their knowledge workers are utilized. A greater emphasis on providing freedom and empowerment for innovation comes to mind, and is often a good place to start. What does this mean exactly? It means that hospitals have to create the kinds of environments – culturally and physically – that allows for freedom of experimentation and that encourages innovation and continuous improvements.

A company well known for creating this culture, after several missteps, is Amazon. It went from selling books, to selling all sorts of goods, to the biggest cloud infrastructure company in the world. The genesis for this is rooted in offering programmatic access to their product catalog to the developer community. According to Amazon CTO Werner Vogels, this success led them to consider offering system software building blocks as a service. The rest is history, and it’s a history that the healthcare industry could learn something from. Amazon’s approach was based upon incremental but continuous improvement of their core software systems. Most hospitals use the opposite model, installing and utilizing software for years without ever making more than maintenance-type improvements to it. That leads to the big bang transformation conundrum that many hospitals often find themselves in. 

Another good example of this is how Canon entered the low-end photo copier market in the 1970s to eventually displace Xerox through continuous mini-transformations and innovation. This concept is not just limited to the technology field. When J.C. Penney’s new CEO tried a big bang overhaul of the business model in its retail stores, the result was a steep decline in sales. Would it have made sense to experiment the concept at select stores before company-wide implementation? This mistake cost the CEO his job – a true “you-bet-your-career” decision.  A strong and sustained commitment is required by hospitals to make the notion of continuous improvement an integral part of their technology portfolio. That commitment has not been present in the healthcare industry to date, but there are some signs that the new sophistication in core systems, data analytics, and personal technologies, is starting to turn some heads toward avoiding big transformations altogether in the future.

For hospitals, along with many other non-technology companies, rethinking the way their technology departments operate to drive continuous mini-transformations with creative and innovative improvements is long overdue. While a big IT systems rewrite or replacement may be unavoidable when it comes to systems that haven’t been re-factored for decades, it is prudent for hospitals to take measures to avoid this situation in the first place, and the implementation of new core system is a good place to start. Going forward, this can be achieved by instituting a culture of periodic mini-transformations of systems to pay down “accumulated debt.” If the systems are too big and monolithic, they can be targeted by partitioning the systems into manageable chunks.

Whatever the approach, hospitals need to seriously and thoughtfully consider this question as they work their way through core systems transformation projects: Will my technology future be burdened with accumulated technical debt, or will it be debt free? The answer to that question will have implications for the future profitability of any hospital, and for the healthcare industry.