Build vs. Buy a Healthcare Enterprise Data Warehouse: Which is Best for You? (Executive Report)

robust analytic resource is now a reality. However, there are some important things to consider before choosing this option:

Pros of Buying an EDW:

  • Shortest time to greatest value – with the right technology, including adapters and accelerators for common source systems, the implementation of a healthcare data warehouse can now be accomplished in as little as 90 days.
  • The right vendor will have seen many different design approaches in practice, and they will know what works and what doesn’t. Savvy health systems realize that they benefit from a top-notch vendor’s real-world experience and prior investments in product development.
  • An infusion of help – most IT departments today work hard to deliver on existing project commitments. New software development projects have to compete with prior commitments, such as ICD-10 or Meaningful Use, and may struggle to even get launched. Starting a project with an experienced vendor brings with it an infusion of resources to help get the work done when you can’t spare anyone else.
  • As some of the best health systems in the country have found, working with a vendor helps to mitigate a lot of the risks associated with custom development and deliver success early.
  • Lower total cost of ownership – Even though the initial cost of any vended software solution may seem high, the three- to five-year total cost of ownership can be much less.

Cons of Buying an EDW:

  • Knowledge transfer – in a truly “hands off” data warehouse implementation, there is a risk that when the vendors leaves, insufficient knowledge has been transferred to the team providing operational support.
  • As with any enterprise software purchase, expect to encounter some tradeoffs between the perfect solution for your environment, and one that is very good. Health systems are already making these types of tradeoffs, choosing to configure off-the-shelf EMRs and adapt their processes, rather than build an EMR outright from scratch to their exact specifications.
  • If your organization is fortunate enough to have some innovative in-house software developers, and you or your vendor doesn’t engage them in the data warehouse implementation, their talents could go under-utilized. Combined with the right knowledge transfer, these developers could be the ones who help deliver unexpected future successes with your EDW.
  • There is some risk associated with engaging any new vendor, or with engaging a new division or group within an existing vendor relationship. You are counting on the vendor to help your organization achieve its goals, but the fact that you haven’t seen that company succeed within your environment requires trust. Make sure you know what to ask your potential partner to ensure success.

Your Third Option: The Case for Buying AND Building a Healthcare Data Warehouse

More and more, organizations that have historically looked to internal IT resources to help them ascend the rungs of the Healthcare Analytics Adoption Model are looking for help from an experienced commercial partner:

  1. This healthcare analytics market is at the same point as the market was for EMRs about 10 years ago, when viable commercial EMRs emerged and organizations no longer had to build their own.
  2. Healthcare providers now have several commercial options for various types of healthcare analytics. For example, a 2013 report from Chilmark Research profiles several of these vendors, including Health Catalyst which received the highest overall rating.
  3. Organizations that have been able to nurture one or more teams of effective, internal software developers want to preserve this precious resource, and deploy them strategically for a competitive advantage. Where possible, they are looking to vendors to accelerate their implementation of analytics, not completely outsource or own that capability altogether.

These organizations recognize that they can get 80 to 100 percent of the analytic capability they need, quickly, and affordably. They are looking to deploy their internal developers to help them achieve even more, faster. An example of the key driver behind this strategy is epitomized in a quote Dale Sanders recently heard:

“We are 15 years behind Intermountain. We need to close that in 2 years.”

CEO, Leading Academic Medical Center

Here are some key points to consider when thinking about the Buy AND Build option:

Pros of Buying AND Building an EDW:

  • All the pros of each buying and building – for example:
    • Rapid implementation time – the right vendor can help get a huge chunk of the data warehouse implemented quickly, allowing your IT leads to demonstrate early successes and keep project momentum high.
    • A tailored fit – your internal software developers know your systems inside and out. A savvy vendor knows this and will include and empower your top IT performers, ensuring a smooth implementation, and honing in on ways to meet immediate analytic needs.
    • Lower overall project risk – by choosing to leverage aspects of both the “buy” and the “build” strategies, you are positioning yourself for a successful project in the following ways:
      • You are engaging some of your most valuable IT employees early on.
      • Your vendor is contractually obligated to deliver on the agreed-upon terms and statement(s) of work.
      • Additional opportunity to innovate – a great EDW vendor will partner with you to empower your internal developers through access to integrated data and easily accessible metadata. With the “plumbing” taken care of by your vendor, your in-house engineers can focus on extracting even more value from your investment. Health Catalyst customers, for example, have begun developing their own predictive models, connecting to operational systems, and building bi-directional interfaces with other third party systems.

Many EMRs are now providing interfaces to consume relevant external data, such as patient-level risk scores, to drive best practice alerts at the point of care. With access to the data in an enterprise data warehouse, a talented internal software developer could deliver a prototype solution to a use case like that in days, rather than months or years.

Cons of Building and Buying an EDW:

  • Some of the same “cons” as both building and buying, but they tend to cancel each other out. For example: you will still need to be comfortable with your selection of vendor partner, but that is balanced by the internal developers you bring to the project team.
  • This approach is best suited to a data-driven culture that values analytics as a business differentiator. Organizations with a commitment to a higher degree of data literacy and data management skills are very successful with a data warehouse.
  • Slightly higher total cost of ownership than the purely “buy” option. However, this again is offset by the higher return on investment (ROI) which can be achieved through the optimal utilization of your EDW.

Selecting Your Healthcare Data Warehouse Approach: You Have Options

As you can see, you have options when it comes to selecting your approach to a healthcare data warehouse. If you choose to develop an enterprise data warehouse purely from scratch, you face many of the same hurdles organizations overcame through the last decade of expensive, in-house software development. There are now vendors who can leverage their experience to help you achieve a similar level of analytic maturity in a much shorter time and at a lower total cost. Thanks to the early pioneers of our industry, we now know enough about the characteristics of a high-value EDW to make informed decisions when choosing a vendor. This blog, “How to Evaluate a Clinical Analytics Vendor” outlines the issues to consider, and criteria for evaluation.

When choosing either of the “buy” options described above, it’s important to consider not only total cost, but also how you want to engage your internal resources. Think about not only how fast you want to realize value in the short term, but also how you envision developing your own analytic applications in the future.

The early adopters of EMRs mentioned above were also some of the first to build their own EDWs. Several of those early pioneers are now applying their experience with home-grown EDWs to the purchase and installation of hybrid solutions—commercial vendor EDWs that come pre-configured for rapid deployment and quick value, but that can also be evolved and maintained by local IT organizations if they choose to do so.

For many organizations, the “hybrid” option of buy AND build provides a way to achieve the most value, while also mitigating many of the risks associated with large in-house software development efforts. This hybrid strategy is the best of both worlds. You get the flexibility and empowerment of building a system on your own, but without the risks, and you get the benefits of a commercially supportable solution. No one would think of developing their own EMR now. Likewise, we are at a point in the evolution of the EDW where building your own simply doesn’t make sense from the perspective of risk, time to value, and long-term evolution of organizations’ analytics strategies.

To learn more about the decision build or buy (or both), watch this free webinar: Build vs. Buy a Healthcare Enterprise Data Warehouse: Which is Best for You?


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