What do ‘digital transformation’ and ‘digital health’ really mean?

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Digital transformation is one of the most talked-about topics in healthcare today. Most hospitals and health systems are in some stage of a fundamental process of reimagining their processes with technology as a core enabler.

But what does a buzzword like digital transformation really mean in the provider context? Are all organizations working toward the same goals?

Rob Bowman is operating partner, technology strategy services, healthcare, at CXOpartners, a consulting firm with no ties to vendors or products that specializes in implementation services. He has done quite a bit of work helping hospitals and health systems with digital transformation. He knows how to get there.

We interviewed Bowman to talk about what the process of digital transformation commonly means in the context of hospitals and health systems, and where he believes this common definition needs tweaking or bigger changes.

And we went deeper on related topics, discussing what digital health commonly means in the context of hospitals and health systems, where provider organizations are on the developing digital health continuum, and opportunities to generate and monetize value from data emerging in the form of digital strategies to enhance revenue and patient engagement, retention and growth.

Q. What does digital transformation commonly mean in the context of hospitals and health systems? Where do you believe this common definition needs tweaking or bigger changes?

A. Digital transformation is a frequent buzzword that does not have a commonly held view or definition across industries, healthcare included. Because digital applications were born out of marketing and social media, many providers correlate the term to an organization’s capabilities to reach an audience for these purposes, but it’s much more.

Another common misperception is that it’s just AI, and the journey to reach AI maturity across the enterprise. These are narrow and incomplete views of the meaning of digital transformation in the broader context for hospitals and health systems.

Underlying market and economic dynamics have driven the evolution toward digital health services models, as consumers are bearing more financial risk in their benefit plans, and value-based care requires more significant provider, payer and patient collaboration.

Consumers now expect a growing sophistication of tech-enabled services to find them through multimedia channels that are baked into everyday life, healthcare notwithstanding, and they make empowered choices based on the efficacy of these digital experiences.

Where the definition can be expanded and clarified, the meaning of digital transformation for providers encapsulates the intentional development and evolution of a collective digital health capability maturity across the organization. This is multilayered, and includes new capabilities, technologies, processes, resources, strategies and culture to drive consumer engagement and enablement in their personal care journey.

These capabilities are core to the agile ideation, design, production and delivery of a broad spectrum of consumer-facing digital tools, from mobile and web apps for care navigation and service conveniences, to remote monitoring for chronic and high-risk patients. Transformation is the change required from the current state, to develop the core competencies to deliver these applications and continuously refine them.

This is a focused enterprise-wide strategy to adapt to long-term projected consumer trends and shifts in the healthcare competitive landscape.

Another misperception is that digital transformation is a one-time project, like a systems implementation or migration. This common misconception discounts the continuous and organic nature of an organizational shift of this magnitude. It is not a single event or project with a defined beginning and end.

It’s an ongoing process, requiring a product life cycle focus. It is iterative, involving principles of design thinking, constant innovation, adaptation and fluidity to solve a broad range of patient-focused problems, pain points and gaps that result in poorer outcomes, both clinically and financially.

Q. What does digital health commonly mean in the context of hospitals and health systems? Where do you believe this common definition needs tweaking or bigger changes?

A. The term digital health also has a very broad and variable meaning for most hospitals and health systems. As hospitals and health systems have shouldered the greatest burden of federal IT mandates, their corresponding technology cultures have primarily been rooted in delivering meaningful use and EHR-driven institutional services and efficiencies, to affect patients through higher performance care teams and coordination from admission to discharge.

This is important; however, digital health takes it beyond the confines of the inpatient and outpatient environment to engage the patient more holistically and interactively, and beyond an encounter or episode of care.

For example, a digital app to direct patients to providers based on geolocation and diagnosis, or services to enable near-real-time messaging about the status of a prior authorization, denial of service or provider appeal. Extending this model, digital health also includes the use of smart devices for remote patient monitoring for 24/7 care management, among other use cases.

Digital health incorporates a range of technologies, many of them emerging, but a clearer, more generally accepted definition should relate more to how these technologies are used – the application, rather than the specific technology itself.

More correctly applied, the term generally refers to applications that are consumer or patient interactive with the provider organization or healthcare enterprise, that typically guides or navigates a user journey to affect an outcome.

Digital health also leverages a mobile or web-based interface that is user-centered in design; therefore, the agile design and development process of these solutions is unique. Patient journeys are mapped from beginning to end, identifying pain points in processes and problems to resolve, which inform digital solution architecture and visualization.

Certainly, other services and personalization drivers that create long-term patient and provider relationships are introduced as value-added features. Resolving the hospital price transparency mandate is another opportunity that can be baked into these patient-centered solutions.

Consumerism and digital ecosystems have created an expectation that services are delivered 24/7, or on demand, via smartphones, tablets, apps or other platforms. The consumer-driven healthcare movement has reshaped patient demand to be more interactive, provider selective and more empowered in care management.

With the pervasiveness of AI in their retail and banking virtual experiences, they expect personalization from healthcare providers as well, with apps that are contextually specific to their individual healthcare identity, history and needs.

Q. Where are provider organizations on the developing digital health continuum? What are barriers to development and adoption?

A. I believe provider organizations are quickly catching on to the long-term strategic importance of digital health investments, to create the deep “stickiness” and level of engagement in patients and even physicians that can not only secure market share retention when the nature of consumer demand is dynamic and changing, but also attract and enable new revenue growth.

In general, provider organizations are lagging, as compared to payers and other entities on the digital health maturity and adoption curve, except for a select group of notable, highly integrated health systems nationally. This is notable because providers are the gatekeepers of clinically sourced data, which is paramount in the further evolution of payer/provider collaborative value-based care, and in the broader digital ecosystem to positively influence physician and patient behaviors based on data-driven predictive capabilities.

The barriers that have contributed to slow provider development and adoption are multifaceted. The paradigm shift to digital health for provider organizations requires an expanded view outside of traditional HIT to a cross-functional consumer-focused model owned and governed across the enterprise.

There is certainly a gap in new capabilities required, how to digitally innovate and operationalize, how to build business cases around digital platforms to assess downstream risks, cultivating a product mindset, and how to scale a broad range of systems. This is additional to the already exhaustive complexity of requirements that provider technology organizations must maintain, security included, and we still have the disruptive impacts of post-pandemic effects lingering.

Provider technology investments and budgets are already constrained, and there is provider and institutional pressures to centralize control within their own boundaries and resist change. According to a June 2024 McKinsey publication, 75% of health system executives surveyed this year say their investments in digital transformation may be falling short.

Some may also see it as another fad, or another scenario where providers are hung with the technology costs that will only benefit other competing interests downstream, much like the EHR effect that led to slower adoption. For these reasons, the cultural shift required for acceptance and adoption is bigger for provider organizations.

Digital health is not an insignificant lift, and where hospitals and health systems already have captive markets, they may not see the benefits outweighing the costs of transformation, particularly for IT-driven systems that will see it as a competition for resources and redistribution of power to the enterprise.

It is uncommon to find the right leadership with a vision to plan, develop and grow digital health within traditional provider organizations. The ability to work with a CIO or CTO to leverage infrastructure and data modernization, cloud architectures and AI are foundational, but hospitals and health systems that try to develop and manage it as another IT function, or cost center, will not be effective.

These issues may create an outsourcing sentiment or a digital health spin-off to operate as a business independently given the unique hurdles and barriers to provider adoption. The hard question to answer is whether this will create the internal transformational change needed to drive sustainability.

Digital health strategies must be CEO and medical staff sponsored. When you separate it from the health system, there are challenges. Also, digital health leadership that comes with only an entrepreneurial background cannot assimilate the challenges unique to a health system environment and a physician-driven culture.

Q. You say there are opportunities to generate and monetize value from data emerging in the form of digital strategies to enhance revenue and patient engagement, retention, and growth, relieving cost and margin pressures while also enabling transitions to consumer-focused and value-based care. Please elaborate.

A. Providers have experienced exponential volume in data growth, to a point that managing and extracting value from volume, velocity and variety of data is a differentiating core competency. Total global healthcare data is expected to grow about 36% annually through 2025, according to a 2023 LEK Consulting research study.

The capabilities of data management and the extraction of value from large volumes of data is foundational to digital health and AI strategies. How this growing variety of data, whether clinical, nonclinical, or social determinants, etc., is assimilated into information, personalized insights, and predictive intelligence to service a broad range of patients via digital platforms is critically important to the future bottom line.

The care journey across the spectrum from primary to specialty care, or through a complex diagnosis, and post-acute care, is complex and frustrating for many patients, and without guidance to optimize outcomes often results in significant revenue leakage for many providers. Digital health applications often drive 3-times to 4-times higher levels of patient engagement, with care enablement to avoid adverse events and readmissions, and higher retention rates, which are significant forms of data monetization.

Hospital and health system value-based care bases payment on clinical care delivery (quality), efficiency and cost reductions, safety, and patient and provider experience measures.

Digital health applications have an additive impact, especially to quality, cost of care and experience scoring. For value-based provider and health plan risk-sharing arrangements, digital applications leveraging AI identify care gaps and provider documentation opportunities to maximize risk-adjusted payments and revenues.

Digital health is the front door for patients who seek value in actively managing their growing healthcare financial exposure, and consumers are seeking to align with provider organizations who can best deliver these capabilities.

In addition, providers have an opportunity to monetize data in the form of digital strategies in a variety of other ways, assuming they have leveraged the necessary investments in interoperability and data quality. Health systems are aggregators in the healthcare data value chain, with unrealized opportunities to package and commoditize data for additional revenue.

De-identified data has value for third-party stakeholders that can create insights at the industry level, for metrics related to patient care, reimbursement, operational and supply chain benchmarking as examples, or for large clinical studies identifying biomarkers in early disease detection, among other clinical research uses. The opportunities to realize market value from provider data will continue to increase with growing demand.

For many reasons, significant revenue potential is left on the table regarding digital health and data monetization for hospitals and health systems, except for those who embrace the business model beyond a narrow framework of digital marketing and social media.

Unfortunately, many providers are missing opportunities, while also losing out to the competition, by believing that digital health and digital transformation aren’t for them. With continued cost and margin pressures coming, it is wise for all providers to evaluate, or in some cases reevaluate, the long-term value proposition.

Follow Bill’s HIT coverage on LinkedIn: Bill Siwicki
Email him: [email protected]
Healthcare IT News is a HIMSS Media publication.

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