Digital Priorities of the C-Suite
How Vertical Solution Providers Can Support Health System Competitiveness
Since the onset of COVID-19, health system C-Suites’ view of “digital” has rapidly evolved from latest buzzword to cause for concern, then call to action, and ultimately exciting, but existential, imperative. Health system leaders recognize the myriad of new entrants vying to “own” the patient relationship as serious competition. As evaluations continue of the direct-to- consumer, virtual-first options, and omni-channel capabilities offered by big-box stores, leaders are comparing their own internal capabilities and options for next steps. With this emergence of digitally enabled competitive threats, Kx wanted to better understand the prevailing approach(es) of health systems to vendor evaluation and solutioning. We recently conducted in-depth interviews with CIOs, CMIOs, and Digital Strategy executives from some of the nation’s most progressive enterprises. Compilation of our findings revealed a nearly unanimous perception of opportunities and boundaries regarding horizontal vs. vertical options in healthcare digital technology.
Almost overnight, the pandemic shifted consumers’ ideas about digital experience in healthcare. Consumers now expect convenient, personalized, tech enabled care, and providers must adapt their processes, adopt new tools, and transform their mindset to more closely mirror other industries that focus on the consumer. With nearly $30B in U.S. venture capital funding introduced in 20211, upstarts, larger solution providers, and Big Tech (e.g., Microsoft, Google, Amazon, Apple) are all well-capitalized and rapidly mobilizing to introduce consumer-friendly tools and capture market share. The proliferation of both vertical solutions and horizontal (Big Tech) offerings is prompting health system buyers to commit to a vision of their digital transformation end-state and whom they will partner with along the way. There’s broad acknowledgment of the imperative to pursue digital strategies that progress the quality and efficiency of care and strengthen their connection with the patient beyond and in between each episode of care. Nothing less than convenient, consumer-friendly experiences will suffice in our digitally saturated post-pandemic world. Given these requirements – which match so closely to some of Big Tech’s core competencies – Big Tech seems like the obvious answer. However, despite the variety of foundational capabilities that Big Tech brings to the health system enterprise, we uncovered a tech partnership “line in the sand” in the minds of health system leaders.
Necessity of Specificity
Apart from Microsoft (due to the Nuance acquisition), our conversations found that health systems leaders generally preferred vertical vendors over horizontal technology providers for impact areas such as the EHR, clinical workflows and patient engagement. The lack of explicit enterprise strategy from Big Tech in healthcare is a significant detractor, characterized by one health system leader as “[the company] floating around like a rudderless ship, with no commitment, support, or strategy around healthcare.” Other reasons include the overall lack of expertise, the perception of healthcare opportunities as potentially lower-margin than other industries, and likely pushback from EHRs to interact with Big Tech solutions. Even so, horizonal tech players remain a contender in the areas where they lead across industries. The key drivers of health systems considering a Big Tech purchase or co-development partnership include the following:
- Proven and well-regarded cloud infrastructure and data migration capabilities from Amazon and Microsoft that are trusted in regulated industries (Google’s solution in this space is negatively perceived across the provider market)
- Stated interest and initial positive results from Amazon, Microsoft, and Google to create the necessary data ecosystems for developing and running analytics, and deriving actionable insights to support the delivery of efficient, high-quality care
- Broad success in the consumer wearables market (Apple’s Watch, Google’s FitBit) and the acknowledgement that patient-generated data will become more relevant and useful over time
Implications for Vertical Players
This conclusion from health system enterprise decision makers – that vertical solution vendors are better positioned than horizontal tech players to support their digital transformation initiatives – is good news for Digital Health companies but comes with caveats. An academic medical center CMIO stated “there are plenty of interesting startups that offer more intricate solutions, but they may go out of business and leave us without a solution.” Despite the risk factors, digital health solutions are instrumental, highly visible components of health systems’ enterprise strategies and are typically considered on a different plane than Big Tech. To capitalize on the positives and mitigate some of those negative considerations, digital health companies can understand and prepare for expectations that health systems have of them, including:
- Configuration Flexibility: Flexibility and willingness to configure the solution to meet unique health system needs
- Security Commitment: Readily available security documentation and a willingness to meet enterprise-specific security and compliance requirements
- Clear ROI Story: A competitive pricing model and the ability to speak to both near-term and downstream ROI implications of the product (including being able to “sell” this storyline to a variety of health system stakeholders – clinical, IT, Finance, etc.)
- Understanding of Competitive Implications: A thoughtful analysis of the health system’s competitive landscape and perceived advantages gained via user adoption of the solution
- Credible Implementation Plan: A thorough implementation plan that forecasts a reasonable timeline, strategies for end-user change management support, and EHR integration plans
- Team-wide Subject Matter Expertise: Consistent exhibition of deep expertise in the subject matter addressed by the solution – credentialing and reinforcing trust in the solution’s capabilities throughout the sales, implementation, and stabilization cycles
- Ability to Measure Impact: A plan to show impact through easily digestible, configurable, self-service reports accessible upon go-live
Our interviews concluded that as long as vertical vendors continue satisfying the true needs of health systems, health system leaders will continue preferring to partner with vertical solution vendors. Keeping pace with morphing buzzwords and emerging external threats are daily challenges faced by every health system C-Suite. By reliably performing as expected, vertical solution vendors will maintain their preferred status with health systems, simplify aspects of each organization’s digital transformation journey, and support the overall goals of the health system business.
How Kx Can Help You
Kx Advisors’ Digital Health and Health IT team partners with digital health solutions companies so they can outshine the competition, delight their customers and end users, and maximize their growth potential. Ready to start winning against your competition and achieving your growth goals? Contact Rachael at email@example.com to learn more.