Organizations of every size and industry experience challenges associated with technical debt, which refers to future costs and inefficiencies resulting from not retiring outmoded IT applications.
The challenges are particularly acute for hospitals and health systems, especially in the wake of increased activity related to mergers and acquisitions (M&A). According to healthcare consultants Kaufman Hall, hospital and health system M&A activity increased 23% in 2023 to 65 announced transactions. If operating margins remain negative, expect more mergers for hospitals experiencing the most financial stress.
A global survey of 1,000 tech executives shows that organizations spend more than 30% of their IT budgets and more than 20% of their IT personnel resources on addressing technical debt. Further, nearly 70% believe that dealing with technical debt hampers the ability to innovate.
Hospitals use hundreds, if not thousands, of IT applications to care for patients, track finances, manage infrastructure, and plan for future growth, which makes reducing technical debt through retiring outmoded systems an ongoing activity. But when a hospital acquires a physician practice, an ambulatory care facility, or another hospital, that technical debt compounds considerably.
A robust archiving strategy can help hospitals and health systems manage their technical debt during M&A endeavors while retiring legacy software and freeing organizational data for continued use.
Understand the Software Landscape
Every organization has software that has seen better days. In many cases, a newer system has been implemented, but the old one is needed for historical reasons and/or incompatibility with the new system. The first step in any archival strategy is to fully understand the software landscape — current and historic. That can be difficult in a hospital environment due to the sheer number of systems and their disparate uses. For instance, diagnostic imaging software is only used by radiologists, and historic PACS may get overlooked during the software survey.
Although this step may be time-consuming, IT leaders must recognize its importance and take the necessary actions to get a full and accurate view of their software inventory.
It’s also critical during M&A transactions to understand what IT applications are being acquired, where software overlaps exist, and how systems are going to be migrated or retired.
Define Data Retention Requirements
Data retention requirements can vary widely, depending on the type of data and the state(s) where a health system operates.
As a general rule, medical records should be kept for 10 years after the last encounter or a patient’s death. In some states, childhood medical records are required to be retained for 10 years beyond the age of majority, which means nearly 30 years. Through the increasing use of artificial intelligence, health systems are rediscovering the value of patient data for research and to uncover treatment trends and their effect on outcomes. Medical records also need to be retained for medical release of information requests.
Financial and operational data is finding new life beyond the usual seven- to 10-year retention policies the IRS, Joint Commission, and other entities often impose.
Health system executives should carefully examine their organizational needs and objectives for medical, financial, and operational data and set firm retention policies, which will help guide thoughtful software retirement.
Build a Core Competency on Archiving
Many organizations mistakenly focus on archiving high-value IT applications such as EHRs and patient financial systems while delaying the archival of smaller systems that may be older and more prone to security issues. While high-value systems definitely have importance, a comprehensive archive strategy recognizes the value of each piece of software. The vendor may not support that smaller system, leaving it vulnerable to cybercriminals through lack of security upgrades.
Building that archiving core competency does not mean the organization has to hire a bunch of archive specialists. An archive partner that has deep and varied expertise in the types of systems a health system needs to retire can help develop priorities and handle much of the heavy lifting that archiving requires.
Set Realistic Data Transfer Deadlines During M&A Transactions
Once the acquisition is complete, a clock starts ticking on how soon the acquired organization’s software systems will be migrated to the new owner. For-profit companies, especially, want the assets transferred quickly. Failure to do so after the agreed-upon amount of time may result in financial penalties until the transfers are complete.
Depending on the number of IT applications and their complexity, moving everything could take a year or more. Moving EHRs is particularly time-consuming. Any negotiations should include a comprehensive listing of all IT assets that will be part of the sale, including the interdependencies between particular systems.
A competent archive partner can help with this process, too. The company should have experience migrating similar software and can help set transition guidelines that work for both parties.
Tackle Technical Debt One Project at a Time
More than half (56%) of respondents to a global tech survey said outdated technology and technical debt contribute significantly to wasted IT budgets, with another 43% pointing to redundant IT applications. A majority note that up to 20% of their current IT budget is wasted, and 25% say the waste tops 20%.
Hospitals face unique challenges with technical debt — even without mergers and acquisitions complicating matters. The information must be available 24/7/365 to effectively care for patients. By understanding the software landscape thoroughly, adopting data retention standards, building a core competency in archiving, and setting realistic timelines for data migration following a merger, hospitals and health systems can tackle technical debt. That will create a more secure computing environment, free up data for new uses, and save the organization money by retiring legacy maintenance contracts.
About Dave Lamar
Dave Lamar is Chief Growth Officer of MediQuant, a leading provider of enterprise data archive technology for the healthcare industry.
