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April 26, 2023 | 4 minute

Why should hospitals digitally transform their operations and care delivery?

Table of contents:

Digital Transformation Playbook for Health System Executives – 1 of 3

Over the past 25 years, technological innovation has impacted healthcare in waves at an increasing pace. More recently, strong investments in clinical digitization have promised to improve clinical outcomes across acute departments in hospitals and in the field. AI, trained by millions of annotated radiology scans, helps doctors spot evasive tumors while the US Army is experimenting with trauma diagnosis under fire using machine learning and computer vision. Surgical robots, digestible cameras, and even patient beds have all been mediums for transformation.

In the meantime, very little investment has gone into the operational side of health systems. The care delivery process remains largely disjointed and arcane, resulting in massive inefficiencies, staff fatigue, unsustainable turnover—considering per-diem costs at up to $3,000—and poor patient experience.

But change is on the horizon. There are three powerful forces at play that are not just altering the realities of the past, but doing so with great urgency. See the digital transformation playbook below.

Shortage of nursing staff

The first is the labor crisis that affects the industry. Today, the staff nurse shortage is at a critical point. Some 8% of nurses left the profession during COVID-19. With labor market deficits across multiple industries, there seems to be no solution in sight.

This is not merely a greedy run for better paying jobs. Nurses often see their job as a mission, a calling with a higher purpose. Consider that in 2020, 43% of nurses complained of experiencing physical violence in the workplace. Almost every second, a nurse was attacked. No wonder, the industry sees about 21% annual nurse turnover in acute care facilities.

Health care spending

The second force is rooted in operating margins, or the lack thereof, which is closely tied to the first force at play. Average healthcare spend per capita in the U.S. is twice that of the European Union, where longevity and life quality are similar to or better than ours in America.

This is an uncomfortable and inflexible starting point. Add inflationary pressures, rising labor costs, disturbed supply chains, and fears of a recession which is impacting the lucrative electives market and what you get is a steep drop in operating profits. How steep? Pre-pandemic, health system CFOs were celebrating 10–12 point profit spread. Now, working late into the night, they are trying to balance a business operating too close to the red line, at 1%–2% profit margin, even for some of the nation’s best healthcare providers.

Outdated ways of providing health care

Lastly, the earliest digital generation is now entering its midlife point. Millennials are nearing 40 years old, with two kids, a car, and a mortgage. The point is, today’s customers, who are increasingly from the digital age, are puzzled by the outdated way of care delivery and experience. Consider that 15 years ago, my industry colleagues stated that wait time was the number one customer complaint in healthcare. In 2023, it is still the top complaint. Imagine a patient feeling ill, insecure, and alone in a hospital waiting area with no one to turn to. That is not a great customer experience.

The importance of “experience” has never been greater than today, driven by recent waves of healthcare consumerization that increasingly serve patients as consumers of healthcare technologies and focus on delivering value-based care.

Hospital digital transformation: summary

In summary, labor shortage, high turnover, unsustainably low operating margins, and a new generation of customers with new expectations, have come together to create a momentum that I predict will drive fundamental changes. In the second decade of the 21st century, we are going to digitally transform the operations of health systems and the care delivery process. 

To do that, there is a need for a new technology category that is “enterprise” by nature, consolidating siloed data and point solutions into a comprehensive data architecture, and bringing together the two pillars of healthcare operational transformation: the operating efficiency and the care/experience quality.

Watch the webinar for more

For a deeper dive into this crucial topic in the modern healthcare landscape, watch the full webinar. You’ll get deeper insights into the factors involved in digital transformation, how it’s addressing the issues of the healthcare industry and more.