Like CIOs in other industries, IT executives in the healthcare field are seeing their roles become increasingly strategic while retaining a focus on technology and operational excellence. Veteran healthcare CIO Patrick Moroney explains some of the changes and challenges facing IT in the healthcare industry.

Healthcare and its intrinsic need for timely, accurate information often puts the CIO in a prime position to be the champion or the goat. Increasingly, healthcare CIOs are being made responsible for more than just managing information. They are called on to be change agents and organizational drivers that make or break the numbers.

Patrick Moroney is a CIO with a knack for being a professional change agent as well as a world-class networker, which is a winning combination by any measure. He is president of the Barnier Group, performing CIO advisory services at New Mountain Capital and advising Houston-based Intermarine. He’s also the driving force behind the 6,000+ members of the Technology Leadership Association, which he founded in 2002. He has been the CIO at National Medical Health Care Services, Health Care Service Corporation (HCSC), ServiceMaster, and the Food & Nutrition division at Monsanto. He has held a variety of roles on six continents and is a member of the Society for Information Management.

Patrick received the 2004 CIO of the Year award from the Executives’ Club of Chicago. While he was the CIO of HCSC, he took the #21 spot in Computerworld‘s top 100 best IT workplaces of 2005. And in 2006, he was was included in Computerworld‘s Top 100 CIOs list.

Here’s my conversation with Patrick about the relationship of IT to healthcare and the changing role of the healthcare executive.

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1. Jeff: How has the CIO role changed over the time you’ve been in the healthcare industry?
Patrick: Looking back over the last six or seven years, the primary changes have been ones that affected CIOs across the board, including healthcare. The main trend has been that the CIO role has become more strategic while not becoming any less focused on technology and operational excellence.

CIOs have become increasingly responsible for driving transformation and process in their organizations, because at a very tangible level, CIOs cannot get their job done without being primary change agents.

There has also been a greater emphasis on the science of what they do in their organizations as demands for predictability in delivery and spending become the norm, where in the past, IT was seen as a black art that was given greater leeway because it was more esoteric. These days, CIOs are inserting best practice models, like ITIL, COBIT, and CMMi into their management processes much more frequently.

There’s also more focus on portfolio and project management. The recession is forcing us to devote some of our energy back to the good old days of cost-cutting initiatives. You’re going to see this reaction carrying even more weight as we drag ourselves through 2009.

2. Jeff: Is there a significant amount of change around the advances in technology or are they primarily systemic?
Patrick: There have been some technology advances that created opportunities for improvement in healthcare, like telemedicine and robotics, but most of the activity in healthcare IT is still around current technologies being applied to the latest systemic and process issues.

Some of the major driving forces are cost reduction, the need for accurate information, enabling patient access to services and information, and the physicians’ access to clinical knowledge.

Of course, another driver has been the increasing amount of government regulation. When you look at the top 15 tech trends in the latest HealthCare Informatics Magazine poll, with only a few exceptions, the trends are similar to manufacturing, insurance, financial, or any other company’s list. I don’t see this as being any different with payers or providers or even in the pharmacy benefits manager space, like Caremark or Allscrips.

With that being said, the systemic issues are certainly challenging. In hospitals, driving clinical transformation is a major challenge this year. For the payers, driving system consolidation and implementing automation, like business rules for better claims performance and efficiencies, continue to be a big deal. For the larger PBMs as well, finding ways to add value in the system with predictive and preventive information and system consolidations are the biggest challenges. On the provider side, hospitals are seeing increasing data management projects. Whether they’re systemic or not, they’re tough work.

3. Jeff: Is there any significant difference in running healthcare as a business versus retail or manufacturing?
Patrick: As I mentioned, it’s generally not that great a difference from the CIO’s perspective. One difference in a hospital is that lives are at stake, and that certainly raises everyone’s attention to quality and excellence in the details. For the CIO in a high-volume, financial-transaction environment, where minutes of downtime can mean millions of dollars, there is certainly pressure to meet the highest level of performance.

The healthcare CIO is even more challenged, though, because the industry has generally not gone through most of the reengineering other industries have. It routinely deals with more inefficiency, brokenness, multiplicity, and lack of cross-industry integration and has to perform at the highest level while it’s herding a bunch of unnecessary cats.

The government is also a far larger influence in healthcare than in other areas, so you have whole industries within healthcare that deal with the government and the ever-changing laws and regulations that can shift everything you do once they are enacted. The fact that the government’s spending accounts for more than half of every dollar in healthcare is the gorilla on the table that dominates the options these CIOs can use to respond to change.

4. Jeff: Does the scope of the information managed by the CIO include things like legal and insurance complications, as well as the ones we normally think of, like records management and confidentiality?
Patrick: It absolutely does. When a hospital, or payer, or third-party administrator, PBM, or other healthcare entity is managing these vast amounts of personal health information, it certainly raises legal and insurance issues regardless of the clinical outcomes involved. HIPAA, for example, drives a tremendous amount of legal and privacy activity and probably accounts for at least one rain forest a year just with the paperwork to notify patients about HIPAA.

These healthcare businesses act just like any other business with regard to needing to understand their business, their risks, their performance data, purchasing activities, and so on. On a basic level, it looks like the same kind of information factory as any other business.

5. Jeff: Could you talk a little bit about the dynamic role of the government in healthcare and the effect in has on your job?
Patrick: I’m not sure I would use the words dynamic and government in the same sentence in talking about healthcare. As I mentioned, 51% of every healthcare dollar is paid with government money; Medicare, Medicaid, the military, or otherwise. So when the government passes any regulation specific to healthcare, like HIPAA, or general regulations like Sarbanes Oxley, CIOs must respond to it. As a healthcare CIO looks at the content of their investment portfolio, there are years when 30% of the budget is spent addressing regulations. And it’s a limited pie. Every dollar spent there is one that is not spent on innovation, or improving efficiency, or other ways to benefit people’s lives.

The regulations are well intended, but they are addressing an industry that is probably the most inefficient in history, so ensuring compliance can become an “all hands on deck” response. And the causes of the inefficiencies are not something healthcare is going to be able to fix itself. There are too many entities out there; four thousand payers and a million providers. The one-doc shop has entirely different priorities from a hospital system, and universal “solutions” across that kind of gamut just don’t work.

Government has tried to empower regional health information organizations (RHIOs) to foster solutions, but there doesn’t seem to be much critical mass coming from this model either. Healthcare has to address societal “rights” issues, such as “the right to the best healthcare possible” and also invest against potential legal suits around every corner.

In the United States, we don’t want to wait for our healthcare, either. There are different expectations in healthcare for Canada, or the UK, or any other country. The Canadian system is free, but you can wait months for the same heart operation you’ll get tomorrow in the United States.

Throw all that in the pot and at the end of the day, the government is going to have to be the driver of real change. What government has done so far is to try point measures to fix things that have ended up costing a lot of money and time without solving the issues — like managed care, for example. These measures eventually prove unprofitable for healthcare businesses and undesirable for patients. There are also the legal suits that drive a ton of healthcare activity in the United States. Doctors come under a great deal of pressure to do a procedure just to protect themselves anytime a new technology comes out.

6. Jeff: We tend to think of a hospital as a hospital, but is a facility’s size a big factor in the role of the healthcare CIO, in the same way it is among small and medium businesses compared to larger enterprise businesses?
Patrick: Sure it is. A single hospital certainly has to do all the same things that a hospital in a larger system must do, but the volume economics are multiplied and drive the technology differently as a result.

You see that with the adoption of electronic medical records and computerized physician order entry (CPOE) systems right now. By comparison, these are like large integrated ERP implementations. They have the same profile as ERP implementations: high costs, implementation issues, change and transformational issues, needs for documentation and training, and so on. Larger providers have the cost base and the budget to undertake these kinds of solutions, but smaller hospitals and the charity hospitals don’t. A basic Cerner- or Epic-level EMR starts at about four million dollars and goes far higher for larger systems. A small hospital CIO is not likely to get to do that kind of project. Hopefully, we will start to see some Web-based and smaller SaaS offerings develop that allow the smaller hospitals to achieve the same kinds of benefits.

7. Jeff: When someone asks you how they can pursue an executive career in healthcare and what kind of resume and experiences they should they be building, what do you tell them?
Patrick: My first role as a CIO in healthcare was at Health Care Service Corporation, which is the parent of Blue Cross Blue Shield of Illinois, New Mexico, Oklahoma, and Texas. I brought a lot of large system implementation and transformation experience, which was needed because as HCSC was looking at its aging systems and workforce — and a growing membership — a significant service disconnect was developing. Having the experience to take the organization through a significant transformation was more important than specific healthcare or insurance claims experience.

My resume also included a lot of experiences from other industries, like manufacturing, distribution, services, consumer products and pharmaceuticals. I was able to see the success models from these industries that could be applied in the healthcare environment. There certainly is a deep complexity in healthcare that needs to be learned for a CIO to really succeed. But even without specific experience, your general business skills, people skills, transformation skills, technology skills, and general leadership skills can leverage and sell over your lack of healthcare experience. Know what’s needed for the business and be sure you sell that if you have it. That being said, I’m aware that many hospitals are shy about bringing on a CIO who hasn’t worked in a hospital environment before.

8. Jeff: It’s an understatement to say you’re a tremendous networker — when you talk to other CIOs outside the healthcare industry, what kinds of things do you find you have in common?
Patrick: I think at a very basic level, we all love our jobs. There is very little we do that we feel is repetitive. Every day is a new challenge and there are lots of opportunities to grow. Assuming we have the right relationships at the senior levels of a company, we enjoy sharing success with other smart people. To do the job well, we need to understand the full breadth of a business, so a CIO has to be able to speak in the language of the business and the different functions to generate the trust necessary to get things done. I’d say there’s less understanding of what the CIO does than most of the functional leaders at the top of the company. We perform the full-time job of ensuring that the technology machine runs perfectly and the second job of being a critical business leader in the company. In conversations with other CIOs, there’s a lot of empathy because we all know it’s a challenging role and the moniker of CIO meaning “career is over” is still out there. The reality is that tenure of about three years is still typical for the marketplace.
9. Jeff: What are your top three priorities when you get to work in the morning?
Patrick: First, making sure my IT team knows I’m there for them and that the priorities they need to be nailing are crystal clear. Next, making sure I know the priorities of the business and touching base with my key business stakeholders to ensure I never get out of step with what I need to be focused on. Then, finding a great cup of coffee.
10. Jeff: Just to wind things up: It seems like healthcare may be one industry that is more insulated than others by sheer necessity during tough economic times. Is that true?
Patrick: Yes, I think in general the industry is insulated because of what it does. By insulated, I mean the percentage of the national GDP that healthcare continues to represent is secure and likely to grow with changing demographics. But in spite of that, there’s still a lot of competition and struggle among businesses in this industry, so I doubt that any healthcare CIOs out there feel like they can coast, especially in these challenged economic times. The inefficiency of the industry will keep the CIO’s platter full for a long time to come. I would guess that most healthcare CIOs, like doctors and nurses, are in their jobs because they see that when they do their jobs well they can make a difference in people’s lives. There is no insulation in that, just a driving need to keep getting better every day.