The healthcare industry has not been spared from digital disruption. According to a report by McKinsey and Company, healthcare organisations are digital stragglers.
However, successful transformation presents significant rewards and there are four keys to achieving it, the report says.
The authors of the report, Sastry Chilukuri and Steve Van Kuiken, said that the majority of industry player’s digital transformation efforts had stalled, in contrast to other industries.
“Most pharmaceutical and medical-technology companies are digital laggards compared with companies in travel, retail, telecommunications, and other sectors.”
“The healthcare environment is becoming more distributed and complex. To adapt, companies will need to embrace open systems that allow for sophisticated analysis of multiple streams of data and the development of customer-centric services.”
More informed customers have had their digital expectations driven up by digital leaders in other industries and the customer experience focus has spilled into healthcare as well, the report said. However, some of the sectors unique properties have slowed transformation, with technology being particularly significant.
Often healthcare organisations are lumbered with legacy systems built up in a patchwork fashion, which “become the main sticking point for healthcare companies seeking to go digital,” the authors said. These legacy systems mean incumbents are sluggish in their transformation and are also seeding advantage to more agile digital natives, the report said.
Industry leaders, in contrast, are “reimagining themselves as digital enterprises—adaptive, collaborative organisations that can keep pace with changes in the healthcare marketplace,” the authors said.
The good news for those struggling with their digital transformation is the McKinsey report has identified four important dimensions that increase the odds for successful digital transformation.
“Healthcare companies first need to identify and prioritise their critical sources of value… Second, they must build their service-delivery capabilities… Third, healthcare companies should look for ways to modernise their IT foundations… And fourth, companies must ensure that they build and maintain core management competencies.”
Identify and prioritise critical sources of value
According to the report the first step for healthcare digitisation is clarifying “where the company provides distinctive value to consumers and stakeholders, and determine how the use of digital technologies could enable those activities”.
This process of prioritisation helps steer investment and management attention in the right direction, the report said. While a lot will depend on an organisations position in the value chain, “A clear source of value emerging for most healthcare companies is an ability to get closer to customers to give them targeted products and services, and engage them in value-based relationships,” the authors said.
For some companies an investment in automation, robotics and industry 4.0 tech will help “to break down walls between business units and functions, thereby speeding up processes and decision making and reducing administration costs.”
Build service-delivery capabilities
Once priorities have been established it is necessary to focus on how they will deliver targeted digital products to consumers and stakeholders, the report said.
“In most cases, companies must understand user needs in a detailed way and reimagine their work flow and processes as end-to-end activities that can be automated, virtualised, and personalised employing real-time insights.”
This process is benefited by data sciences, customer experience design and agile operations, the report said.
“Agile development involves short, fast phases of development, prototyping, reassessment, and adaptation. To make a step in the agile direction, companies will need to modify their organizational structures to be more product oriented, find ways to improve interactions between the business users and IT, redefine roles within the business units and the IT organisation, and reconsider their budget and planning models,” the authors said.
Modernise IT Foundations
Once priorities and digital delivery models are identified it is necessary to determine if IT infrastructure is capable supporting the activities, the report said. If not companies must modernise their systems to become “the reliable data backbone to ensure that all data are managed holistically so that users can access data sets quickly and easily”.
“Access should be governed according to a single framework, and data sets should be harmonised according to business use case. In this way, companies can establish a ‘golden source’ of truth for critical information relating to pricing, products, customers, invoices, and contracts.”
This is an area where infrastructure as a service and cloud platforms can provide flexibility and reliability, according to the authors. A market that has seen strong uptake in Australia.
Of course, cyber security should also be a key consideration as companies see data as their “crown jewels”, the report said.
Strengthen Core Management Capabilities
Bolstering core capabilities starts with talent and partnerships, according to the report. “Companies must develop a deep bench of internal staffers with expertise in digital technologies and approaches, while also bolstering their ability to acquire top digital talent from outside the organisation,” the report said.
Financial processes are important too, the authors said. Investment priorities must be “communicated clearly, revisited regularly, and updated as needed, and that sufficient capital is available”.
Finally and critically, culture is critical. “Companies must establish a healthy work environment that is open to new ideas and best practices,” the report said. Indeed, seven out of ten businesses fail in their large transformation efforts because of “poor organisational health,” according to research in the report.