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Is your health system's chief digital/innovation officer positioned for success?

October 23, 2018

    In a recent Forbes article, Steve Andriole, a professor of business technology at Villanova School of Business, argues that the traditional Chief Information Officer (CIO)—who focused on managing the technology infrastructure and big applications for a single, centralized organization—is necessary but not sufficient for success in the 21st century. These Chief "Infrastructure" Officers, he argues, need to support Digital Business Officers (DBOs) focused on technology-driven business transformation. In contrast to CIOs who sit within the bunker of centralized IT, DBOs lead business-process disruption at the business unit level.

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    A new role: The Chief Digital/Innovation Officer

    Health care organizations (HCOs) have responded to this need for leaders focused on digital-enabled strategy and transformation in different ways. Some have shifted the role of the traditional CIO towards one that is more strategic, and tasked IT with leading digital transformation—others have created a new position called the Chief Digital Officer (CDO)/Chief Innovation Officer (CInO).

    This leader is intentionally separated from daily operational issues and has the advantage of not being tied to a specific department, supporting the idea that innovation is multidisciplinary. Although the exact nature of the role varies, in general, the CDO/CInO catalyzes and aligns digital-enabled business and clinical process transformation across the enterprise in support of the organization's overall strategic goals.

    New research spotlights obstacles to CInO's success

    A survey by Harvard Business School, Duke University School of Medicine, and Russell Reynolds Associates provides further insight into the role of the Chief Innovation Officer in health systems. Of the 40 largest health systems in the United States, the researchers found that 32 had a senior innovation officer; 78% of these individuals participated in the study.

    The results reveal diversity in the structure and function of the role. The majority (52%) of respondents reported having a strategic focus, 24% operational, and 24% financial. Further analysis characterized the roles into one of four patterns: an "internal consulting group" for continuous process improvement, an incubator that works to grow and scale projects, a group that imports and scales established technology, and a venture fund that invests externally and sometimes internally.

    While the researchers found their respondents to generally be "enthusiastic, informed, and satisfied with the progress they have been able to make to date," the study identifies critical barriers to the CInO's success. We see three related themes as most prominent:

    1. Organizational culture and structure

      At 80% of the surveyed organizations, the innovation function resides within the established organizational structure. In most cases, this means that the CInO is sitting within the existing structure rooted in the fee-for-service (FFS) world. Without novel incentive systems, performance metrics, R&D processes, sources of capital, and reporting structures, it is very difficult to innovate in a manner that is truly transformative. Instead, the CInO will be constantly fighting for resources.

      To achieve this organizational transformation, the innovation function must be separate from the day-to-day but also have a strong connection to the CEO, the person who should ultimately own the innovation agenda. At many HCOs, though, this is not happening—only 36% of survey respondents said they report to the CEO.

    2. Metrics of success

      The budget processes at most large HCOs use clear performance metrics to guide investment decisions. But the study reports that only 24% of participating CInOs have long-term metrics of success for the innovation function—something that is necessary for innovation efforts that, by nature, are unpredictable and inherently risky. This low percentage suggests that there may not be a sufficient financial investment behind innovation leaders.

    3. Resource allocation

      The CInO/innovation function requires enough funding to access the tools needed for success and enough staff to execute its agenda. But the survey suggests that this isn't happening due the above barriers around organizational structure and funding processes—among respondents the median budget under the control of the CInO was only $3.5 million, and the median headcount was 9.5 people.

    What this means for health system leaders

    We are starting to see an increasing number of CDOs/CInOs tasked with the job of driving digital innovation across HCOs in close collaboration with the CIO. While some organizations may find their CIO can lead these efforts alone, others find it beneficial to ensure digital transformation does not have to compete with operational responsibilities. As one CInO remarked, the role was created "in recognition that the tyranny of the daily trumps the pursuit of the remarkable."

    However at the moment, many of these individuals are not well-positioned to fulfill this duty. Too often, they do not get sufficient cultural and financial support. Health systems seeking to prioritize digital transformation in this way need to go farther than just breaking off the role from that of the CIO—they must ensure the CDO/CInO is set up for success with the right resources and position within the organizational structure.

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