IT Governance in Hospitals and Health Systems

Roger Kropf

• Publisher: HIMSS Publishing
• Year: 2018
• Print ISBN: 9780984457786
• eBook ISBN: 9781000396423
• Topic: Business
• Subtopic: Management
• Index: Business

Without a governance structure, IT at many hospitals and healthcare systems is a haphazard endeavor that typically results in late, over-budget projects and, ultimately, disparate systems. IT Governance in Hospitals and Health Systems offers a practical "how to" in creating an information technology governance process that ensures the IT projects supporting a hospital or health systems' strategy are completed on-time and on-budget. The authors define and describe IT governance as it is currently practiced in leading healthcare organizations, providing step-by-step guidance of the process to readers can replicate these best practices at their own hospital or health system. The book provides an overview of what IT governance is and why it is important to healthcare organizations. In addition, the book examines keys to IT governance success, as well as common mistakes to avoid; governance processes, workflows and project management; and the important roles that staff, a board of directors and committees play. Special features in the book include case studies from hospitals and health systems that have successfully developed an effective IT governance structure for their organization.

Chapter 1
What Is IT Governance and Why Is It Important?

Definition of IT Governance

Weill and Ross define IT governance as “specifying the decision rights and accountability framework to encourage desirable behavior in using IT”²:

IT governance is not about making specific IT decisions. That is management. Rather, governance is about systematically determining who makes each type of decision (a decision right), who has input to a decision (an input right) and how these people (or groups) are held accountable for their role. Good IT governance draws on corporate governance principles to manage and use IT to achieve corporate performance goals.³

To do that requires the creation of a formal structure that includes defined roles, responsibilities and accountability for decisions.

IT governance is “putting structure around how organizations align IT strategy with business strategy, ensuring that companies stay on track to achieve their strategies and goals, and implementing good ways to measure IT’s performance. It makes sure that all stakeholders’ interests are taken into account and that processes provide measurable results.”⁴

IT governance includes a set of committees to involve stakeholders and defined processes for approving and managing IT projects.

Why Governance Is Important⁵

The business is changing rapidly. The pace of the change and the significance of the change in the next couple of years is breathtaking. Governance is more important now than ever. You need to have alignment. There needs to be ownership of the IT spending at the orga‑ nizational level. In governance, one size doesn’t fit all. Your governance process will be evolving to stay in front of the changing marketplace. Use governance as one of your levers.

—Eric Yablonka, Vice President and Chief Information Officer, University of Chicago Medical Center, Chicago, IL

Governance is an opportunity to educate the organization and drive more efficient use of resources and better decision making.

—David L. Miller, Vice Chancellor and Chief Information Officer, University of Arkansas for Medical Sciences, Little Rock, AR

The challenge is to control IT decision-making, yet empower different stakeholders to take responsibility for IT decisions.⁶

Governance for information technology is as important for a healthcare provider as it is for any discipline or organization. Without governance, some form of anarchy eventually results. In hospital IT departments, this takes the form of staff moving from crisis to crisis, only capable of responding to the loudest, most powerful voice, the most recent regulatory change, or the most serious emergency. There is no structure that sets priorities and plans workflow to allow the majority of staff to function in a stable and productive manner rather than just respond to emergencies. It becomes impossible to measure and track progress over time. The rest of the organization tends to view IT as out of control.

A governance structure leads IT planning efforts by setting priorities that are aligned with those of the organization. A senior-level IT governance committee whose members represent a broad range of interests within a hospital or group of hospitals becomes the focal point for all major IT requests. That group vets and prioritizes proposals and then sends them to the budget committee for funding. In some cases, the budget committee first gives IT a target capital amount, and the governance committee tries to select proposals whose total costs will not exceed that number.

IT leadership reports back to the governance committee with progress updates and issues lists for all funded projects. For example, the committee works closely with the project management office to address areas that require additional funding, people or senior management attention. Successful organizations have found that through this process, it is possible to maintain more than 90% of projects on time and on budget.

Shaping Expectations, Standardizing Processes and Conferring Legitimacy on Decisions

The governance process shapes expectations so that the clinical or business sponsors of an IT project, as well as IT staff, understand what benefits should be achieved and what responsibilities each has for project completion and achievement of benefits. The governance process confers legitimacy on decisions so that, for example, project selection is viewed as impartial rather than based on personal relationships. Governance standardizes processes that otherwise would vary widely and result in inconsistent performance across projects.

Actually Achieving Benefits and ROI ⁷

A governance process that requires project sponsors to report on actual benefits received can greatly increase those benefits. Even if projects are completed, they may not deliver value unless the sponsors and IT staff are supported and held accountable. For example, when adequate training does not occur or applications are down repeatedly, value is not received. Such risks need to be managed through monitoring and a defined risk-mitigation process. Resources need to be allocated and their availability ensured. IT governance must be interfaced to the project and portfolio management process.

ROI is very difficult to structure so that it is measurable. Business leaders from all depart‑ ments own the projects and the results and may have changing priorities other than your ROI.

—Lynn H. Vogel, PhD, Vice President and Chief Information Officer, The University of Texas MD Anderson Cancer Center, Houston, TX

It is not typical for projects to come back to the governance committee to review whether the benefits of the project have been achieved. An exception is an organization where the CEO chairs the governance committee or, as in the case of Saint Luke’s Health System (see the case study in Chapter 8), where the senior management committee also functions as the IT governance committee. The principal role of the governance committee is to determine if a project was implemented and whether it was on time and on budget. For example, a healthcare system may put in one central lab system with the expectation of capturing more referrals that are now going out to reference labs: “We’re doing 50,000 tests now, but with the new central lab system, the number is going to increase to 70,000.” Typically, the lab reports to a vice president of ancillary services, and that person keeps track of results and benefits: “Why are we doing 60,000 tests and not 70,000 after the project is finished?” It is not the role of IT to question whether benefits were received. The business sponsors and the executives to which they report have that role.

Aligning with Strategy

IT governance can be used to align IT spending with the strategies of the organization. Alignment can be achieved by formal processes, such as requiring that business plans submitted to the governance committee specify how the project will support one or more of the strategies of the organization. This is a requirement of the governance processes at both Saint Luke’s Health System in Kansas City, MO (see Chapter 8) and Eastern Maine Healthcare Systems (EMHS) in Brewer (see Chapter 7).

Providing Input to the Capital Budgeting Process

IT governance can suggest the priorities for capital spending on IT and help the board and senior executives decide how much to allocate to IT in relation to other needs.

Managing Demand for IT

IT governance is needed because there is an almost infinite need for IT and finite resources available to the organization. Without governance, projects are accepted and many are never started. Those that are started may not be the most important for achieving the organization’s strategies.

What IT Governance Covers

Effective IT governance addresses three questions:

1. What decisions must be made to ensure effective management and use of IT?
2. Who should make those decisions?
3. How will these decisions be made and monitored?⁸
   Fundamentally, IT governance is concerned about two things: IT’s delivery of value to the business and mitigation of IT risks. The first is driven by strategic alignment of IT with the business. The second is driven by embedding accountability into the enterprise. Both need to be supported by adequate resources and measured to ensure that the results are obtained.
   This leads to the five main focus areas for IT governance, all driven by stakeholder value. Two of them are outcomes: value delivery and risk management. Three of them are drivers: strategic alignment, resource management (which overlays them all) and performance measurement.⁹

What Decisions Need to Be Made?

Weill and Ross believe that five interrelated decision types need to be addressed in governance:¹⁰

• IT Principles—Clarifying the business role of IT
• IT Architecture—Defining integration and standardization requirements
• IT Infrastructure—Determining shared and enabling services
• Business Application Needs—Specifying the business need for purchased or internally developed IT applications
• IT Investment and Prioritization—Choosing which initiatives to fund and how much to spend

Who provides input to these decisions and who makes them are important to identify in establishing a governance process.

Examples of IT principles that a hospital or health system might adopt are as follows:

1. Move from a department focus to an enterprise focus.
2. Create a balance between focusing on care delivery and research and education.
3. Become an IT early adopter to innovate in very high-value areas.
4. Utilize a cluster of core vendors with specialized applications.
5. Consider soft benefits with some return on investment (ROI) calculations.
6. Centralize planning, change control and system administration.

Strategic Alignment

IT projects are undertaken for many reasons, not all of them related to pursuing the strategy of an organization. Some are undertaken to meet the demands of influential stakeholders or ...

Table of contents

• Cover
• Title Page
• Copyright Page
• About the Authors
• Dedication
• Acknowledgments
• Table of Contents
• Foreword
• Preface
• Introduction
• Chapter 1 What Is IT Governance and Why Is It Important?
• Chapter 2 Keys to Successful IT Governance
• Chapter 3 Committee Structure
• Chapter 4 Governance Processes and Workflows
• Chapter 5 IT Governance and Project Management
• Chapter 6 Case Study: IT Governance at East Jefferson General Hospital, Metairie, LA
• Chapter 7 Case Study: Governance at Eastern Maine Healthcare Systems, Brewer, ME
• Chapter 8 Case Study: Governance at Saint Luke’s Health System, Kansas City, MO
• References
• Index