Digital Investments In Healthcare Must Be Measurable, Not Just Marketable: Building A Case For RODI

Digital Investments In Healthcare Must Be Measurable, Not Just Marketable: Building A Case For RODI unknown

Sara Vaezy is the EVP, Chief Strategy & Digital Officer at Providence. She architected their digital innovation model.

The past few years have been a roller coaster ride for digital health. With record-breaking investments totaling nearly $30 billion in 2021, an underperformance from digital health companies that have gone public and the general feeling that we’ve barely demonstrated value in digital health in either investment or outcomes, we seem to now have entered in the “trough of disillusionment” within the Gartner hype cycle.

That doesn’t mean digital innovation isn’t “worth it.” But it does make me wonder whether we are yet set up to properly evaluate its worth.

Despite the billions in investment, health systems, one of the primary buyer segments of digital enablement in the industry, have only really dabbled in digital—whether through telehealth solutions, remote patient monitoring or even consumer engagement. As such, many health systems are lacking a solid, data-driven story capable of demonstrating the value of digital to the organization, patients or the broader market.

Similarly, digital health companies have also not had their feet held to the fire when it comes to delivering the impact they can deliver for health systems. In some situations, these solutions were implemented tactically and quickly in response to business imperatives during Covid-19 and without much systemic planning or strategic underpinning. In other situations, organizations were merely dabbling around the edges to see what was possible. Unfortunately, the result of these piecemeal efforts has often been higher costs, not lower. Without a core thesis or strategy behind why we are deploying digital and how we ought best to do so, it’s hard to design the right solution, let alone prove its impact.

We must be able to determine value.

In reality, digital is a significant and hugely strategic undertaking. It’s a fundamental underpinning of future business transformation requiring big investments. Business transformation is designed to net certain outcomes, and as such, leaders in this industry need to evaluate our ability to achieve those outcomes and efficiencies.

But most health systems are not instrumented in a way to quantify the impact of digital in critical terms of growth, cost reduction, quality and outcome improvements and operational efficiencies. And when we do try to quantify, various internal stakeholders all take credit for the same things—which leads to double counting results and skewing our picture of impact.

How can digital health leaders develop a clear thesis?

First, we have to start with a clear articulation of the problem we believe we are solving and where digital is going to have an impact. Too often, we have started by carefully selecting a tool or technology, investing significantly in it, and then trying to retrofit it to a need so that we can show outcomes.

Rather, we must start with the problem—and determine the outcomes we need to see from a solution. Then we deploy significant resources against digital that can help and measure how we’re impacting those outcomes.

We need modern instrumentation that can measure at scale.

As systems, we need a true attribution system that helps us identify the return of various digital investments. Developing return on digital investment (RODI) models are key. In a recent EY study, 41% of organizations said they are measuring RODI today, up from 23% in 2020. And of those who are, they expect to see a 7.6% average return on digital investment this year—which would be significantly higher than the 4.4% RODI they reported achieving in 2021.

Where do we start?

We must consider the areas of growth for a health system and the measurements required to track its effectiveness. Customer acquisition is critical to the future of health systems. That means up-leveling our acquisition programs through martech solutions and e-commerce-type approaches.

Those programs then need to be evaluated based on the number of digital transactions they’re yielding and the digitally registered users they’re creating. The more transactions, the greater the potential efficiencies. The more registered users, the less we need to leverage paid channels for outreach.

But that growth can’t just “fall through the funnel,” either. As health systems, we need to retain those customers and build relationships that capture and cultivate long-term value through personalization as well as new product and service enablement. Those types of programs require different types of measurement that aren’t always as immediate. Understanding monthly active users (MAU) helps us understand the rate at which we’re keeping people engaged. And then, we build models to understand our return on both marketing and digital investments.

We are currently working on a new identity-driven engagement platform designed to strengthen and deepen our customer relationships and drive greater long-term value. Through this platform, we can understand how many users we have, how they are interacting and how they are engaging in services. Working with finance and operations, we can connect those services to EBITDA and attribute value to those actions. This is just one example of how we can evaluate digital’s impact through a clear thesis and a cross-functional commitment around how to determine its impact.

It’s critical that healthcare adopt a more strategic and measurable approach to digital.

Our days of dabbling are over. Our current business model is undergoing significant transformation, and as such, we need to find new ways of operating and evaluating new metrics of success. That means having a clear picture of success, a clear thesis on how digital can help and close collaboration between strategy, digital, finance, IT and operations.

Our return on digital investment can be significant, but our investment in measurement must be as well.

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