Healthcare’s Big Data, Big Spending Problem

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.

The healthcare industry has a data problem -- a big one. Compliance requirements, in addition to the sheer volume of patient, clinical and research data, has made healthcare a hotbed for Big Data. But just what is Big Data? Wikipedia defines it as the following:

Big data are datasets that grow so large that they become awkward to work with using on-hand database management tools. Difficulties include capture, storage, search, sharing, analytics, and visualizing. This trend continues because of the benefits of working with larger and larger datasets allowing analysts to "spot business trends, prevent diseases, combat crime."

Perhaps more than any other industry, healthcare has a special relationship with the reams of data it produces. The proper management, storage, sharing and analysis of this data is vital to saving lives, improving the way healthcare is delivered, and making healthcare affordable and accessible. But, with healthcare's unique connection to saving lives, Big Data presents a unique opportunity for IT vendors to plague the market with pricing and terms that are out of line with fair market value.

In short, IT overspending is rampant in healthcare -- and vendors couldn't be happier. If you are a healthcare IT professional evaluating a technology purchase, consider the following:

  • Is your solution over-engineered? Companies routinely overpay for functionality and services they'll never use. This is especially true when it comes to data management and BI solutions. While it's okay to want the "best of the best," do you really need everything on the menu to tackle your Big Data challenges?
  • Is a healthcare-specific vendor really in your best interest? Companies like McKesson have a specialized understanding of the healthcare industry -- and that can be seen in their pricing. For certain critical systems, this knowledge is crucial. But, do you need specialized experience (at a premium) for ALL of your IT investments? For less critical systems, healthcare organizations should broaden the range of vendors they consider during the evaluation process. It may pay off.
  • So, you're happy with the solution. How about the professional service fees? Today's IT companies make their money on maintenance and services -- not on the initial purchase. Therefore, close analysis, benchmarking and negotiation of the maintenance and professional service fees associated with your project are just as important (if not more!) as bargaining down the initial purchase price.

-- Jeff Muscarella, EVP of IT, NPI

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