While healthcare has been historically among the slowest industries to embrace innovation and change, the last few years have shown a reversal of that trend. In fact, the global medical technology market was valued at $456.9 billion in 2020 and is projected to reach $695.5 billion by 2027. This rapid growth is largely driven by advancements in technology and increased funding centered around the goal of enhancing patient care, streamlining operations, and improving clinician experiences.

However, the integration of innovative solutions into healthcare systems is not without its challenges. Navigating change and adoption is a ubiquitous pain point for health systems, whose operations often involve complex processes, numerous human touchpoints, and outsized infrastructure requirements. Thus, it’s essential for innovation to function as part of not only the technical, but the organizational culture, with a highly strategic approach to prioritization.

No matter the shape or size of an innovation initiative, healthcare organizations are typically faced with a decision with regard to technology solutions – build it in-house or buy it on the market. Below, we’ll explore the advantages and disadvantages of each option as well as the important factors that should be taken into account before a decision is made.

Building Solutions In-House

Academic medical centers (AMCs) and organizations affiliated with schools of medicine or teaching hospitals are often at the forefront of building custom healthcare solutions, as these entities generally have better access to research funding and are equipped to engage in larger innovative undertakings. In such cases, in-house data science and software development teams work closely with clinical leaders, delving into the intricacies of clinical operations to develop and build solutions tailored to specific problems.

While building a solution in-house has advantages, such as less reliance on partners and fostering innovation within the health system, the process does come with its own set of challenges. The talent required for such endeavors, particularly engineers with clinical expertise, is costly and hard to find. Moreover, scaling these solutions across an entire healthcare system can be an expensive and complex task, sometimes leading to the monetization of these solutions through sales to other health systems. And while monetizing self-built solutions may help recoup initial investments, it is common for these AMCs to procure additional technology components to assist with scaling, driving efficiencies, ensuring security, etc., making them both buyers and builders of solutions.

Buying Solutions on the Market

On the other side of the spectrum, healthcare organizations also consider procuring ready-made solutions available on the market. In most cases, this is a more lucrative option for smaller, regional health systems that may have smaller budgets to work with, little to no R&D capabilities, and no ties to academic universities. Thus, these organizations become consumers of what the aforementioned ‘builder’ health systems are putting out on the market. And despite sometimes paying a premium for procurement, buying a solution requires fewer skills and capabilities, provides ongoing support during implementation, and enables the organization to leverage partnerships to ease their resource burden.

Deciding Factors

While the decision to build or buy may vary greatly by organization or circumstance, there are a few crucial considerations that should be made, including:

• Scope of Outcome: Clearly identify what the organization is trying to achieve via the technology. Whether the aim is to improve clinical or patient experiences and outcomes, increase operational efficiency, uncover cost savings, or a combination of all of the above, clearly stating the intended impact will help you gain a better understanding of your eventual reliance on the new technology or solution.
• Skills & Capabilities: Complete an honest assessment of your organization’s current resources to determine whether you have what you need to build in-house. If you find that you will need to hire entire teams of people or engage in significant upskilling to accomplish the project on your own, it might be more time and cost efficient to buy rather than build.
• Business Case for Innovation: Early in the process, it is vital for leadership to decide whether the stated goal of an initiative is to achieve a return on your investment or a return on your objective. Innovation, particularly in healthcare, takes many forms—and it is important to know at the outset whether the technology being built or purchased is being introduced as a financial lever or an operational/experiential one. Doing so will help ensure that the organization as a whole is aligned with the purpose of the initiative, which will ease adoption across the board.

Final Thoughts

The decision to build or buy solutions in healthcare is multifaceted and requires careful consideration of various factors. Healthcare organizations must define and rationalize the right outcomes and the solutions that will lead to those outcomes, ensuring that their approach to innovation is both strategic and effective.

AHEAD works with health systems on both ends of the spectrum, offering the deep technical expertise to identify skills, capabilities, resource gaps, and use cases for those looking to build; and providing the advisory capacity and ecosystem rationalization needed for procurement. By partnering with AHEAD, healthcare leaders can make informed decisions that align with their strategic goals and the needs of their patients and staff.

Get in touch with us today to learn more.

Contributing Author: Andy Sajous, Field Chief Technology Officer