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Drive Innovation December 06, 2017

Here’s What Healthcare’s New ‘Utility Enabler CIO’ Looks Like

Partner, Health & Life Sciences, Oliver Wyman
Key Takeaway
On #OWHealth: The Utility Enabler #CIO drives the best technology solutions across both the multi-line or multi-brand company.

As part of a series on what it really takes for today’s CIO to succeed, here, we define yet another archetype – the role of ‘Utility Enabler CIO’ – and discuss top strategies this kind of healthcare leader can immediately implement to ensure he or she keeps up with healthcare’s ongoing evolution and successfully adapts seamlessly to new innovations along the way.

The Traditional Healthcare Core Is Not Enough

The healthcare marketplace has become more modular, as profits in healthcare once made solely by the traditional core healthcare payer or provider are now migrating to point solution vendors. Incumbent healthcare companies have responded to the shifting marketplace by seeking opportunities outside their traditional core to gain profits by either moving toward the point solution space or by providing services to other healthcare companies. Some are nonetheless forced by regulatory limits on the profit they can make, some fear their core business is stagnating, while others seek to capture more consumer interactions with healthcare. In all scenarios, however, the core and historical product lines are not the only focus. Four new market opportunities are being studied and entered:

  • Separate or loosely affiliated business – healthcare companies are developing new products that focus on new market segments and offer different features to the end-consumer. The individual market is the most notable in recent history.
  • Enablement capabilities / monetization – companies are packaging their technology and processes as “while label” offerings for other healthcare companies. Medicare Advantage enablement back-end servicing companies like Visiant, Lumeris, and Healthegen, are companies like this.
  • Geographic expansion – traditional players are partnering with other companies to expand their presence beyond the traditional geographic boundaries, both nationally and internationally.
  • Loosely coupled M&A – companies are taking a more buy-and-hold approach to enter new market opportunities – Anthem’s purchase of Amerigroup is one such example.

By taking advantage of these new opportunities, different corporate structures that can support core and new growth are being created to result in multi-line or multi-brand organizations.

To support these different approaches to structure, the organization business leaders are looking for a new type of technology leader. They are looking for CIOs who can be utility enablers. This Utility Enabler CIO drives the best technology solutions across both the multi-line or multi-brand healthcare company, all while balancing the needs of both the collective organization and the needs of each internal, independent business.

Most Traditional Healthcare CIOs Are Worried About One Organizational Unit

Historically, the traditional healthcare company had a singular focus, so the CIO that supported this organization could respond in kind. The CIO provided all services to a single company and focused on administrative platforms. But today’s traditional healthcare company is becoming more complex and diverse. Different Lines of Businesses (LOBs), each with unique marketplace focuses, demand different approaches.

Meet the Utility Enabling CIO. This is a new CIO for many healthcare organizations and focuses the IT organization on how it coordinates IT across all LOBs while providing degrees of freedom to customize within the LOBs.

One classic example of this response is J&J. The corporate holding entity coordinated basic technology services for all subsidiary companies, like telecommunications, and left the remaining decisions up to the individual LOB This allowed the leaders of each LOB to make the best local decisions while having the backing of a larger entity.

How to Think About The Journey

The Utility Enabling CIO leads the IT organization to balance the general needs of the entire organization and the specific needs of each LOB. This CIO orchestrates three primary competing forces across the entire organization:

  • Enterprise strategy and services – the CIO answers and owns the IT organization’s strategy across the entire enterprise and how IT will manage: the business / IT alignment, the people and skills necessary for the organization, the processes and governances of IT across the enterprise, and the overarching technology and architecture direction of the enterprise.
  • Enterprise connective glue – the CIO spends the majority of time in this layer. He or she balances the need to create consistency across the enterprise with specialization within each LOB and focuses in four primary areas:
    • What infrastructure is required across the enterprise, like telecom and compute power?
    • How will information be connected and shared across the enterprise for the benefit of all LOBs?
    • What skills should be centralized into Centers of Excellence across the enterprise, and what skills need to remain specialized within each LOB?
    • What applications are required for the entire enterprise and what needs to be included within each LOB?

The balance required to answer these questions changes as the needs of the enterprise and the LOBs change. Therefore, ongoing adaptability is key for success.

  • LOB appropriate customizations – the CIO governs the types customizations and specialized technology each LOB is allowed to develop and to manage as it seeks to win in the marketplace. 

Are you a Utility Enabler CIO? How are you balancing the needs of the enterprise vs. the needs of the LOBs?

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