I have been researching the evolving relationship between the health system and technology vendor sectors for the last few months.
I conducted 20+ interviews with both health system and vendor executives, and a few choice words came up routinely when I asked interviewees to describe the current state of these partnerships: "chaotic," "bureaucratic," "burdensome," "friction-filled," and my personal favorite, "Oh boy, where do I begin?"
These sentiments reflect a disappointing reality: despite the rapidly growing number of partnerships that health systems and tech vendors are entering into, it remains rare for a vendor-provider partnership to be pain-free, on either side.
Interviewees qualified this—of course there are "unicorn" partners who firmly grasp their future goals and their value in the market and are experts at the change management necessary to achieve return on investment (ROI) and meet expectations. But these partners are rarely found in the wild. More often than not, vendor-health system partnerships are at difficult for both sides. And that's true even when ROI and expected outcomes are realized.
These partnerships can be disorganized and slow. They can be overly bureaucratic and reliant on navigating middle management hurdles. They can fall prey to unmet promises in the sales process. They can fizzle out when an executive champion leaves the organization. They can waste time or political capital or energy. And, at worst, they can completely fail and cause financial or existential consequences for each party.
The 3 things that interviewees told us NOT to research
My research began with a broad hypothesis: "both vendors and providers can improve their partnerships with one another." This rang true in interviews without contention. But tech vendors and health systems alike had more nuanced opinions on how to shape the research and what specific questions to explore—and which ones to avoid. Here are three lines of inquiry they had no interest in:
- High-level commentary on partnership types or theory. There are scenarios where a quick transactional sale is right, scenarios where a long-term risk-sharing partnership is right, and everything in between. These differences will depend on the vendor, the system, what the product is, and what the goals are. Interviewees said two things here. First, they understand their own context and needs enough to know what partnership type makes sense based on each new opportunity's unique aspects. And second, whatever you call the partnership and regardless of the partners' levels of risk-sharing or independence, working with the other side is almost always painful for other reasons.
- How to navigate partnerships with giant vendors, like those selling EMRs or MedTech. This commentary specifically came from health systems. Most have years of experience in dealing with enterprise or EMR vendors. It's really the tens of thousands of digital health companies and startups, mostly SaaS or EMR plug ins, that are driving consternation now as they are quickly scaling up and crowding the market.
- Cultural compatibility. When I asked interviewees to list some non-negotiable steps they include in their own partnership processes, every single one said they knew to focus on cultural alignment. Cultural compatibility between partners, while critical, is common wisdom at this point.
The 2 things they told us to focus on instead
- Capturing and educating both sides on one another's preferences, 'wish lists,' and dynamics. The line I heard more than any other when talking to interviewees was "if I could tell my system/vendor partners ONE THING that would make my life better, it would be X." Interviewees made it clear that they don't often have honest discussions with the opposite sector to improve partnership habits, so all of these difficult conversations go unspoken. Interviewees asked for a rundown of the other side's market conditions, incentives, 'under the hood' dynamics, and future operating paths—effectively, all of the interdependencies that exist and are driving decisions and behaviors on each side.
- Specific red flags to avoid. Health system leaders specifically asked for a better way of vetting potential suitors, outlining what red flags to look for in vendor sales pitches. The goal here is both to appropriately account for risk of failure and to educate all of the stakeholders on your internal team at how to do so effectively.
Research coming soon
Over the next few months, I'll be publishing three research reports and tools on these the topic areas. First, an argument on why the onus to improve partnership habits and selection will largely fall on health systems in the coming years.
Second, a vetting tool for health systems to use to identify and avoid red flags from vendors during the sales process. And lastly, a larger report that explains the tensions and "under the hood" dynamics driving each side's behavior—their incentives, internal tensions and tradeoffs they are forced to make, market conditions, and interdependencies that exist between the two sectors.
If you would like to be interviewed for this work, please email me at TrigonoP@advisory.com and we can set up some time.