Eight Reasons Why Chief Data Officers Will Help Healthcare Organizations Thrive in the Future

chief-data-officerIn the past, the only senior executive position to lead the technology and data strategies within any given healthcare organization has been the CIO. That role has evolved over the years to become operationally oriented, ensuring that data needed to run the business is collected accurately, securely, expeditiously, and to make these processes more efficient over time. The CIO also has responsibility for building the data infrastructure, thus giving him an overall focus of getting data into a system.

But equally, if not more important for guiding business strategy, is what happens with data once it is secured and available. This is where the Chief Data Officer (CDO) comes in. The CDO helps business leaders leverage captured information and use it to make better, more timely business decisions.

Yet, 40 percent of CIOs surveyed by Gartner said their biggest talent gap is coming from the area of information and analytics, the primary domains of the CDO. Fortunately, 90 percent of large companies will have a CDO role by the end of 2019.

Another way to think about it—and I attribute this principle to Ralph Kimball, a thought leader in data warehousing and analytics—is that enlightened CEOs will hire CIOs who allocate as much to their budget in getting data out of systems and using it, as they do getting data into their systems. This allocation includes funding, recruiting, and prioritizing this up-and-coming CDO position.

The Evolution Toward the Chief Data Officer

In considering how the need for a CDO role came about, it’s helpful to look at the metamorphosis of other roles. The CIO role was created because other business leaders in the C-suite were not trained on technology, but they knew they needed access to data. The CIO was in charge of managing all the infrastructure for capturing the data they needed. The data boom created an abundance of work for the CIO to not only make sure data was captured, but to also guarantee that networks were operating efficiently and in a secure way. How was the CIO to stay on top of all the innovations that emerge so quickly in IT? He needed someone targeted on the latest innovations and how to best leverage those innovations within a given enterprise. This became too big for a CIO.

Data is now so ubiquitous and available from so many sources that it’s difficult for a CIO to stay abreast of all the latest and greatest technology and to make sure all data are captured and secure. A new role was needed to not only fulfill these responsibilities, but also to decide what to do with all the data that’s been collected, and how it can become a more strategic asset to support better decision making. Enter the CDO.

How the CDO Fits into the C-Suite Mix

The CIO and CDO share circles of responsibility.

Both are concerned with management, but the CIO is primarily focused on getting data into systems, such as the patient record, so it is complete, stored, backed up, and secure. The CIO makes sure the data center is available and running. In the healthcare world, he is less concerned about secondary uses of the data such as research and analytics. He also makes sure data is secured in a database for auditing purposes.

The CDO, on the other hand, ensures that volumes of data are integrated, optimized, and tuned for analyzing millions of records at once. The CDO is also focused on analyzing data and making it a valuable asset to help business leaders discover insights and make better, data-driven decisions about the market, about their operations, and about opportunities for improvement. CDOs lead the charge to better leverage information in a strategic way to advance the business.

The CDO makes sure data are extracted into new formats and integrated with data from disparate sources to enable a full panoramic view of the information that was captured within the organization’s data ecosystem. The CDO ensures data is organized for analytics, which is different from how it is organized for single transaction processing.

Hiring a CDO is less about having a technology leader—this is the responsibility of the Chief Technology Officer (CTO) and CIO—and more about giving someone with an analytics focus a seat at the corporate strategy table. The CDO is one to whom other leaders in the organization can look for validating strategic decisions. She is more involved in helping define and support a strategy rather than providing back office support or a lights-on role where effectiveness and performance are measured by system up time, as is typically the case with the CIO. The CDO is measured by overall quality and timeliness of business decisions that align with the strategy that she helps define.

The CDO wants access to all the ancillary system data—pharmacy, laboratory, clinical, administrative, patient satisfaction, and patient safety—as well as financial data, so she can begin to look at relationships across systems. The CDO helps in a revenue context by looking across domains and identifying relationships, causality, and correlations. In the process, she may discover new products that should go to market.

In summary, the CDO is concerned with leveraging data as a strategic asset, while the CIO is focused on ensuring data is stored, available, and kept secure.

How to Recruit a Chief Data Officer

The ideal CDO is someone with a good mix of overall business understanding and strategy, with a foundation of technology. She is someone who understands deeply how to manage, analyze, and synthesize data to deliver insights and knowledge to support business decisions. The CDO must be able to mobilize and lead a team of analysts who will raise the overall data literacy of the organization and create a data-driven culture. She has a good balance between an operational and a strategic mindset. She also needs a good balance of an analytical mindset and a high EQ (emotional quotient) to lead people and drive the change that’s required to create this data-driven culture.

The CDOs Role in Business Critical Areas

The CDO contributes to organizational performance in eight business critical areas.

  1. Governance and Standards – Effective data governance includes three key pillars:
    1. Data literacy
    2. Data utilization
    3. Data quality

    The CDO is the senior leader responsible for all three pillars, driving data governance and, by virtue of that, data standards. For example, who should ultimately decide what the standard definition is for a given metric such as length of stay? The CDO builds the processes and governance models to support standard definitions.

  2. Managing Risk – As we move to value-based payment models in healthcare, the CDO plays an absolutely essential role in identifying risk, stratifying populations by risk, and helping care managers and patient case managers reach out to higher-risk patients to prevent costly complications or readmissions. The CDO supports the contract negotiation process by providing data to illustrate whether or not the healthcare organization is comfortable assuming risk based on historical performance with the population.
  3. Reducing Costs – The CDO plays a role in reducing costs by identifying waste presented in the form of unnecessary procedures and treatments, inefficient processes, or any number of workflows within an enterprise. For example, the CDO can make labor data available to identify the right staffing ratios by hour of day, by unit, and by the level of caregiver needed (is a physician needed at a particular hour when another ancillary provider will do?).
  4. Driving Innovation – There are great opportunities in the up and coming analytical methods and tools such as using predictive algorithms, machine learning, and data with advanced analytical and statistical models to drive new innovation in terms of care delivery, process improvement, and quality improvement. These fall into the data science realm, which is under the purview of the CDO.
  5. Data Architecture and Technology – The CDO is responsible for data architecture supporting analytics decisions, as well as all the tools and technology surrounding the analytics process and function. Once data is captured in the various source systems, the CDO has responsibility for what to do with them and how to organize and architect them so they are accessible to as many knowledge workers and analysts within an ecosystem as possible. She has to be apprised of all the new business intelligence tools, analytical tools, data science tools, and know-how to structure the data in such a way that those tools can be leveraged in the analytics process. She has to be apprised of new and innovative data storage mechanisms, like unstructured data as well as structured data, and how they can coexist.
  6. Data Analytics – The CDO is the leader in the data analytics process with the core, centralized team of analysts reporting up through her business unit (most likely, there will be other analysts distributed across facilities and/or business units).
  7. Meeting Regulatory Demand – Many healthcare organizations have a regulatory compliance team, but the CDO can help automate these reporting burdens, which often tend to be cumbersome and resource-intensive. The regulatory team often finds themselves hunting, gathering, manipulating, and creating information to get it submitted to regulatory bodies. The CDO can oversee the process of making data available to the regulatory teams so they spend less time manipulating and gathering data, and more time analyzing and submitting data. This frees up the regulatory teams to be knowledge workers as opposed to data manipulators.
  8. Creating Business Value – Finding new ways to market and deliver products is a big part of the CDO job description. She can leverage data to help uncover greater revenue and cost-efficiency opportunities.

Structure of the CDO Office

The CDO needs to drive the three pillars of data governance at the enterprise-wide level. This shouldn’t be done at the business-unit level (that would create redundancies and be counterproductive.) Additionally, the CDO needs absolute decision rights around analytics technology to prevent individual business units from acquiring disparate business tools that can end up being very expensive in the long run.

We advocate that the healthcare organization establish an executive data governance committee to include a COO, CFO, CIO, CQO, CNO, and CDO. The COO should chair this committee with the CDO as the facilitator and their primary purpose is to provide strategic direction and drive the three pillars of data governance.

In terms of reporting structure, it works well for the CDO to report up to the Chief Strategy Officer, Chief Operating Officer, or possibly the CEO given a strong CDO who has created a strategic place for herself to influence decision making. Having her at the table with the senior leadership team is a distinct advantage.

The CDO should have responsibility for the entire analytics function. This includes four primary functions.

  1. Data acquirers (provisioners) – those who get data out of the transaction systems and structure it in such a way that it can be consumed for analytics.
  2. Data managers and analysts – the core group of centralized analysts and data scientists who analyze and interpret data. They transform it into visualizations and consumable analytic artifacts for business leaders. This central cadre of analysts should report to the CDO. We advocate a hybrid model where some departmental analysts are distributed, but with a dotted line reporting relationship to the CDO, so everyone is using standard tools.
  3. Knowledge managers – a small cadre of domain subject matter experts who bridge data expertise and operational expertise. This group acts as consultants who meet with the SMEs and translate the needs of business and clinical folks to the data analysts and data provisioners.
  4. Infrastructure support staff – those who manage the hardware and software to make the analytics infrastructure available.

Barriers to Creating the CDO Role

CDOs have a place in the C-suite for many different healthcare organizations (integrated delivery system, large independent medical group, ACO), it’s just a matter of scaling the position. Regardless, their primary role should always be driving the three pillars of data governance: data literacy, data utilization, and data quality.

For the most part, the barriers to developing the Chief Data Officer role will be political. The CIO loses some budget and FTEs, but he can now focus on the capture and security of data and making sure that the technology and infrastructure are highly available. The CDO can focus on making the data available from an analytics perspective and driving value out of the data. Leadership with the fortitude to realize the importance of this specialization between the CIO and CDO will elevate the overall analytics sophistication and infrastructure within a healthcare ecosystem.

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