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Project Management's role in transforming healthcare through healthcare information technology.

November 2005

A $1.7 Trillion Industry

Healthcare is a $1.7 Trillion industry in the US (California Healthcare Foundation, 2005). It is 16% of the US GDP and has been growing over the rate of inflation for several years. Combined with the demographic realities of an aging US population that is steadily consuming more healthcare services, these trends lead informed observers like General Electric's CEO Jeff Imelt to predict that healthcare expenditure will be 18-20% of US GDP in 3-5 years. Clearly Americans are spending lot of money on health care.

Safety Concerns

What are US citizens getting for their investment in healthcare? Given the size of the industry, that is a complex question. By some measures, Americans enjoy a high level of quality healthcare services. Other measures, including the number of uninsured and under-insured Americans, are not so encouraging. At least 40 million Americans are without health insurance of any type. And now, within the past five years, there are significant concerns about the safety of the healthcare services. The Institute of Medicine, a respected public/private research body, indicates that at least to 48,000 Americans die every year of medical errors (Kohn, Corrigan, and Donaldson, 2000). One significant contributor to this problem is suboptimal healthcare information management.

A Transformational Vision

While banking, insurance and other information intensive industries enjoy very high degree of information automaton, healthcare, by and large, does not. President Bush, in his 2005 state-of-the-union address said "Most industries in America have used information technology to make their businesses more cost effective, more efficient and more productive--and the truth of the matter is health care hasn't..." (McGee, 2005). In order to stem the rise in healthcare costs and improve patient safety, Bush has challenged the healthcare industry to have comprehensive, widely penetrated and highly functional, electronic health records (EHRs) in 10 years. To a certain extent he has put his money where his mouth is, creating the Office of National Health Information Technology and seeding more than $100 million in healthcare information technology (IT) projects and research in 2004 alone. It's a bit hard to estimate, but all this has led to healthcare entities to spend in excess of about $8 billion dollars per year in new healthcare information technology projects starting in 2004. This rate of expenditure is likely to increase annually for 10 years. By any measure this is a lot of money.

PM in Healthcare Compared to Other Industries

IT professionals within healthcare, and healthcare leaders and managers of all sorts, have now embraced the challenge of applying healthcare IT to lead the transformation of healthcare into more effective care that minimizes error and controls cost. Now that healthcare has a clear mission how are they going to achieve it? Many healthcare organizations are counting on program and project management to get them there, but there has been a perception within healthcare IT that project management is less practiced and, when it is, less effective than other industries. Preliminary data analysis of a survey of healthcare IT project managers comparing their project outcomes to non-healthcare IT project managers indicates that this common perception is untrue and that there is no significant difference in project success between the two groups (personal communication, Richard Lang, EdD). Although encouraging, advocates for healthcare IT project management cannot rest on their laurels. Like other industries, there is considerable room for improvement in project management (PM) practices that can affect positive outcomes.

Certainly, as in other industries, there is IT in healthcare, but prior to this large national initiative it was not in the purview of the clinicians, whose processes remain largely not automated. Therefore, the involvement of physicians, nurses, and other clinical professionals must be considered a factor in understanding the potential for PM to contribute to the mission of widely penetrated, highly functional electronic health records within ten years. The push for electronic health records will dramatically change the way clinicians practice and interact with patients. If those practice changes are to be an improvement, fundamental PM principles suggest that active involvement of those clinicians in the transformation of their practices is critical. Therefore, PM practices and principles, which are not generally understood and known to clinicians who are being counted on to successfully complete the electronic health record mission, need to be introduced to physicians, nurses, and other clinicians. Clinical informaticians can help with this challenge.

The relatively new sub-disciplines within healthcare of nursing informatics, medical informatics, pharmacy informatics and dental informatics are sometimes wrapped up into clinical informatics. Clinical informaticians are nurses, doctors, pharmacists and others who have added to their clinical ability and experience, a combination of skill and knowledge in IT, and clinical/ business process reengineering or transformation. Clinical informaticians generally have some degree of formal project management training. Thus two groups in healthcare, healthcare IT personnel and clinical informaticians, have a base level of knowledge in project management.

Applying Extreme Chaos

The Extreme Chaos Report (Standish Group International, 2001), the latest IT project management success survey available on the Standish Group's web site indicates that there has been considerable improvement over the original 1994 Chaos Report. Project success, defined as project completion on time and within budget was up to 28% from 16%. Failed projects were down from 33% to 23%. The percentage of "challenged" projects changed less, down from 56% to 48%, but the time and cost overruns --which constitute the challenge in challenged IT projects-- improved dramatically with time overruns decreasing from 222% to 63% and cost overruns decreasing from 189% to 45%. It is reasonable to assume that a 2005 survey would show continued improvement but not as dramatic as the difference between 1994 and 2001. This is because all the easy project performance gains have already been achieved. If we apply this data to 'challenged' new IT projects in healthcare, there would be $1.32 Billion in cost overruns alone in 2005 even if we assumed that only 40% of the projects were challenged and the amount of cost challenge was a 33% overage. Similar projected losses from failed projects will add up to $1.8 Billion in 2006. There is clearly room for further improvement.

How PM Can Help

Strengthening the project management function in healthcare can help many healthcare organizations, not only for transformation of practice and the adoption of the electronic health record mission, but also for research projects, facilities projects and many other types of programs and projects in this complex and dynamic industry. A Project Management Office (PMO) approach, true executive support of PM, enhanced PM training, and agile or extreme PM will be discussed as demonstrable ways of strengthening the PM function in healthcare. All this can lead to substantial cost savings.

Like other industries, the PMO approach is starting to gain traction in healthcare. Nonetheless, PMOs remain less than 10% penetrated in healthcare based on anecdotal surveys this author has conducted in healthcare IT project management workshops in the past two years. Whether organized as a PMO or a project management support group, a centralized project function can provide consistent methodologies, training and support to sustain project management practice and principles in an organization. Executive and upper management support of project management has been identified as a critical element of overall organizational project management effectiveness. How this support is operationalized is variable, but the most effective executive support incorporates PM success in the organization's reward and recognitions structure. Once the connection is made by healthcare executive between the power of PM to make the vision of transformed clinical practices through IT and the vision itself, effective leaders will follow through and adequately support PM. Foundational and continuing Project Management training within and beyond the clinical informatics and IT personnel groups is advised in the healthcare industry. If an effective PMO-based training and support mechanism exists, this may be an ideal situation. Equally effective is PM training from an outside vendor or a combination of external and internal instructors. Anote of caution is in order at this point. Over the past 15 years, experience has shown that PM training should be of sufficient depth and breadth and it has been sub-optimally effective if it is not followed up with coaching or some other form of active support. Finally, in an industry where failure of a massive, multi-year, high profile project, --like the EHR initiative-- is not an option, agile or extreme PM principles and practices can apply. Extreme project management approaches should work in a complimentary fashion with more traditional PM approaches (DeCarlo, 2004).

Summary and Conclusion

Americans will soon be spending up to 20% of GDP on healthcare, and we're not getting the healthcare quality and safety we deserve even with all the cost. Information technology, specifically in the form of electronic health records, has been identified as having major potential to reverse these disturbing trends. Contrary to widely held beliefs in the healthcare industry that the industry is lagging in PM, initial evidence suggests that healthcare IT project management is as active and effective in healthcare as in other industries. Two groups in healthcare, IT personnel and clinical informaticians, have at least basic knowledge of, and sometimes very significant experience with, project management. These groups, particularly clinical informaticians, can help doctors, nurses and other clinicians use the principles and practices of PM to transform their clinical practices. Thus project management can help in achieving the 10-year goal of widely adopted, effective electronic health records. Amore widely penetrated Project Management Office (PMO), or a similar approach, in healthcare, true healthcare executive support of PM, enhanced PM training on multiple levels in the healthcare industry, and agile or extreme PM practices when extreme challenges confront the electronic health record mega-project are all recommended to achieve the goal of transforming healthcare through healthcare information technology.


California Healthcare Foundation (2005). Snapshot Health Care Costs 101 2005. Retrieved 11/14/05 from:

DeCarlo, D. (2004). eXtreme Project Management: Using Leadership, Principles, and Tools to Deliver Value in the Face of Volatility. New York: Jossey-Bass.

Kohn, L.T., Corrigan, J.M., and Donaldson, M.S. (2000). To Err is Human: Building a Safer Health System. Washington, D.C.: National Academy Press. McGee, M.K. (2005). Help For Health Care. Information Week: Jan. 31, 2005.

Standish Group International, Inc. (2001). Extreme Chaos. Retrieved 11/14/05 from: sample_research/PDFpages/extreme_chaos.pdf

By Brian Gugerty, MS, DNS, RN
COPYRIGHT 2006 Capital Area Roundtable on Informatics in Nursing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006 Gale, Cengage Learning. All rights reserved.

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Author:Gugerty, Brian
Publication:CARING Newsletter
Geographic Code:1USA
Date:Mar 22, 2006
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