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Business Intelligence: Build or Buy – Considerations for Healthcare Organizations

Originally published September 1, 2009

Healthcare companies find themselves in some very new territory. The investment in IT that is currently being discussed at a federal level could leave many of them with a challenge. The requirements to store and report data will be many; and small health plans, as well as the many different peripheral industries that support them, will be forced to answer the question of how they intend to meet the regulation. But, for every problem there is a solution, and it would seem that there are many solutions available – for the right price.

Many of us in the business intelligence (BI) industry have been asking ourselves this question for years: Should we buy or should we build? There are a couple of different variations for the build vs. buy discussion. The good news is that there are tools that are available in business intelligence today that are very good, and many of them are starting to build into their products industry-specific data models and standard reports. For the purpose of this article, we will review the pros and cons for whether or not you should manage your own data warehouse or contract with another organization to do that for you. I have personally had the experience of both, from a number of different angles.

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BUY

When I refer to buying in this context, I mean buying from a “full service” vendor. Full service organizations will provide you with everything from the data model, physical data warehouse and metadata to the standard reports. Some even provide dashboards. All you have to do is send them your data and sit back and wait for your reports. Many of them have very good products, and the reports are well researched and visually impactful. Seem too good to be true? The answer to that is “it depends.” If you are a small organization that has no real IT budget but you need to have some good insight into data, this scenario works well. If you have to provide reports to the healthcare customers that you serve, these organizations are your saviors. They will come in and do exactly as they promise. You will lose some control; and just as in buying software, if you need something changed, you had better either be prepared to wait or pay. But that is a small price to pay for reports that are consistent and insightful without the IT overhead.

However, it is important to know what you are getting in to before you get into it. There are some considerations that should be fully thought through before committing to a full service BI vendor in the healthcare space.

Seven things to consider when you buy are:
  1. Understand the contract verbiage around usage of the data model.

  2. What are their standards for the storing of historical data and does it meet your business requirements?

  3. What procedures and guarantees do they provide if the contract is ever canceled?

  4. Understand support structures – what if you have a question about the data/reports?

  5. What if you are unable to access the system? What guarantees do you have that they will address the issue in a timely manner?

  6. Understand your ability to request updates and changes to the system. Negotiate the contract so you are able to participate in their product development/management cycles. It will cost more, but it’s worth it.

  7. Understand what they do with the data. Don’t let it become a black box.
The products and services offered by these organizations can be a lifesaver for many healthcare companies. Just be a wise consumer. Consider how you would like to use the data in the future, and try not to lock yourself into a long-term contract.

BUILD

If you consider your data a corporate asset, then the last thing you want to do is pay for your asset to be managed by someone else. If nothing else, you will lose your market differentiation. If you are in this situation, you should be prepared to invest some money in managing your data asset. You can still plan to purchase a business intelligence tool, but you should be prepared to manage and own the data model, data warehouse, metadata and report construction. Investments for this type of program vary a great deal based on the size of the organization, amount of data and the requirements associated with data usage (how many reports, how much data analysis will there be). You should be prepared to spend millions over a three-year period. The investment should level off after the first 18 months as you move more into a maintenance phase.

Just as with buying, there are some things to consider before you take the next step:
  1. You have to be prepared to take on a new team of FTEs to support the ongoing demands of a data warehouse.

  2. Do you have enough people that know your data today? Take stock of your current talent. If there is one person that everyone goes to for their answers, be prepared to reassign that person (or persons) to the data warehouse project.

  3. Hire some good project managers.

  4. Remember that business intelligence tools are just tools. You wouldn’t expect a hammer to do the job of a saw, so don’t expect that purchasing a BI tool will solve your data quality issues.

  5. Prepare to invest in data governance. If data is a corporate asset, then you should govern it.

  6. Plan the work and work the plan. Begin with a road map for your data warehouse work based on business priority. Check back with  the business often to validate next steps.

  7. Most data warehouse projects will require some support from a partner. Find one that has healthcare experience.
Building your own data warehouse and business intelligence program is a journey, not a destination. Be prepared for the long haul. Remember that in the end, the value you receive from the data will be worth it.

The new regulations for healthcare IT will likely impact many healthcare organizations. Fortunately, regardless of your size, there are good tools and good vendors available to solve your business needs.

  • Laura MadsenLaura Madsen
    Laura leads the healthcare practice for Lancet, where she brings more than a decade of experience in business intelligence (BI) and data warehousing for healthcare, and a passion for engaging and educating the BI community. At Lancet, she spearheads strategy and product development for the healthcare sector. She also works with key accounts across the country in the provider, payer, and healthcare manufacturing markets. Laura is the founder of the Healthcare Business Intelligence Summit, an annual event that brings together top hospitals, insurers, and suppliers in the healthcare business intelligence space. Laura is also the author of the popular book, Healthcare Business Intelligence: A Guide to Empowering Successful Data Reporting and Analytics (Wiley, 2012). You may reach her at lmadsen@lancetsoftware.com.

    Editor's note: More healthcare articles, resources, news and events are available in the BeyeNETWORK's Healthcare Channel featuring Laura Madsen and Scott Wanless. Be sure to visit today!

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Posted September 4, 2009 by Ed Gillespie

Healthcare companies have to deal with compliance on so many fronts -- agree that data quality and data governance are important starting points.   There seems to be a middle ground between the build and buy alternatives -- and that is to control your own data assets while leveraging solutions from a provider with expertise in regulatory compliance.  Was just reading how Pitney Bowes Business Insight has a whole suite of tools in this space, probably others too.

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