Buy vs. Build, or the Best of Both for Healthcare IT Systems?

When it comes to healthcare IT systems decisions, healthcare organizations often ask a key question: Should we buy it or should we build it ourselves?  

Open source offers a new option to this traditionally binary decision. This option becomes more compelling when the open source solution is the most broadly deployed EHR in the world—the VistA system from the U.S. Department of Veterans Affairs (VA). Instead of Buy vs. Build, it’s the Best of Both.

Traditionally, organizations look at their new system requirements and weigh pros and cons as described below.

Buy

Pros Cons
Covers most of the requirements Less flexibility and control
Vendor does enhancements/upgrades Dependence on vendor delivery
Lower total cost of ownership Locked in on cost and interoperability

 

Build

Pros Cons
Addresses your requirements best Dependent on internal expertise/effort
Full control and flexibility Run an internal software company
Control over costs No economies of scale, higher costs

 

In a Buy vs. Build decision, the key drivers are control and cost.  Do you have control over your system at a cost you can afford?  The decision calculus then shifts to ownership on two levels:  First, can we have true ownership of our solution and make it work ourselves?  Second, is the total cost of ownership economically sustainable?

Yes + Yes = “Best of Both”

Red Hat, the company that fundamentally changed the buy-versus-build mentality when it came to UNIX systems, provides a proof point outside of healthcare. Red Hat clients were looking to move away from legacy UNIX operating systems, which were tied to costly, difficult-to-maintain proprietary hardware.  Open-source Linux offered prospective customers a choice they could download and build on, but such a transition seemed too risky for most mainstream companies. Red Hat’s Enterprise Linux subscription minimized the perceived risk and affordably provided infrastructure management capabilities, toolsets and a proven implementation process.  Many organizations could have done it themselves, but at a higher total cost of ownership and with greater risk.  With Red Hat, they can still build on Linux but without the ongoing code maintenance.  There is a single point of accountability that knows their unique environment and facilitates integration and collaboration with other systems and vendors.  They don’t have to create their own software company internally—they don’t have to choose between Buy or Build.

In the electronic health record (EHR) market, even though an enterprise solution is not an operating system, the parallels are clear. Healthcare organizations use expensive and complex proprietary systems that are difficult to maintain.  The leading systems have prohibitive total costs of ownership. Ownership is undermined by vendor lock. The most important and valuable enhancements are held back for the next chargeable upgrade.  Lack of interoperability is a business model.

Just as Linux was to UNIX, so open-source VistA is an alternative to proprietary EHRs. The difference is that VistA is a proven enterprise solution—the most widely deployed and fully adopted EHR in the world with an open source solution stack that includes toolsets and configuration capabilities enabling an organization to truly own the solution and solve problems themselves.

A hospital can download VistA and build their own VistA-based system, as was recently described at Forbes.com.

Oroville Hospital (153 beds in California) is completing implementation of its EHR, a process that took three years and cost an estimated $10 million (including hardware)—probably half the price of a commercial EHR.

Oroville wanted total control, successful adoption and meaningful use, so they used an open source version of VistA to build their own system. They became their own software company, which means they retain absolute control over the incorporation of their own enhancements and those from the VA. But they also shoulder all the associated costs, with no opportunity to maximize economies of scale. What will their system cost over the next three years?

Because most organizations can’t or don’t want do it all themselves, but still want control, predictability and economic sustainability, OpenVista provides a “Best of Both” alternative to “Buy or Build”. For a hospital similar to Oroville, a subscription for the complete OpenVista solution and hardware would total approximately $4 million over 5 years.

An OpenVista subscription keeps the hospital up to date with enhancements from the VA, the Indian Health Service and other OpenVista facilities. It provides all the code management to keep the system in sync, with testing and certified quality of the client’s production environment. Based on knowledge transfer and true ownership, the OpenVista subscription model facilitates autonomy through “Superusers” capable of driving system change themselves. Designated 24×7 customer care provides backstop support, but hospitals are in control and remain independent.

The “Best of Both” means a hospital can truly own and control its system, and predict and manage costs.

Dr. Edmund Billings blogs regularly at Medsphere’s official blog where this article was first posted. 

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