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Digital Transformation: Progress Pitfalls

by Jody Ranck | December 07, 2021

How Executives Can Foster Change

Key Takeaways

The rapid adoption of virtual care, AI in operations, and chatbots during the COVID-19 pandemic is adding complexity to digital transformation efforts. Healthcare organizations will need deeper, proactive strategies to avoid unnecessary failures. When organizations respond to a crisis, they typically lack the time and resources to develop comprehensive strategies that integrate technologies effectively. This may come with costs downstream – or other unintended consequences – when normalcy returns.

Much more evaluation and attention to organizational culture is required for effective digital transformation. Organizational cultures are one of the most important but overlooked aspects of digital transformation. Academic evaluations and anthropological insights are shedding light on how digital transformation actually happens. Social science expertise can unravel different viewpoints on technology, institutional politics, and practices that can disrupt technology implementations.

Chief Digital Officers (CDOs) are in a position to orchestrate digital transformation and require a different skill set than traditional CIOs. CDOs will need to strike a balance of technological competence with deep insights on behavioral change, change management and institutional evaluation to better coordinate the complexities of data governance, technology implementation, and organizational change.


Digital transformation of healthcare is a trendy topic these days and generally refers to the transition from paper-based data management approaches to the long progression to EHRs, more advanced analytics and AIML. The goal of these transitions is a healthcare system that leverages smart systems for improved outcomes at lower costs. This is particularly important for organizations on the path to value-based care (VBC).

When we move from the abstract concept of digital transformation to practice, there are a number of issues and trends that organizations will need to address. The values and professional identities of stakeholders may not always be in alignment with new ways of practicing medicine, utilizing data for decision-making and the meanings of different types of data. These differences should be surfaced in the initial stages of transformation to avoid problems downstream.

Stages of Digital Transformation and Building Foundations

In the literature on digital transformation, we find a general framework for mapping out the maturity of organizations in terms of their digital transformation. We can find four stages in this progression:

Figure 1: Digital Transformation Maturity Models (Source: Damo Consulting)

Each of these general stages could be broken down into additional layers around different technology implementations along the way. The key point is that the final stage has far more integration of tools across clinical and operational areas to leverage AIML in a manner that moves beyond traditional data analytics dashboards, for example, to predictive and prescriptive analytics.

Socio-Cultural Dimensions of Transformation

Several years ago McKinsey conducted a study across 30 countries on how digital transformation in healthcare was progressing. They identified three primary barriers to transformation that exist in most countries: culture and mindset, organizational structure, and governance. Unpacking these issues, we find a wide number of institutional or social issues that go a long way in explaining why digital transformation is far more than merely adopting/adapting technologies to clinical care and operations.

One insightful research effort I recently discovered utilized institutional theory to evaluate digital transformation in Australian healthcare organizations. Organizations rarely function purely along the logic of economic efficiency. This means we need to examine structures, values, and how habits accrue and become embedded in institutional practices that often impede efficiencies or workflows of personnel, for example.

Many of the issues, such as values and habits, vary across different stakeholders (physicians, nurses, finance and administrative officers, IT department, legal department, etc.) who demonstrate different practices, rationales, and goals. Most health IT evaluations fail to recognize the socio-cultural differences and their complexity because they are often commissioned to fulfill an institutional political imperative, rather than truly understand how the organization actually works in practice. So when it comes to understanding the socio-cultural dimensions of implementations beyond standard change management and process improvement paradigms, many organizations are flying blind.

Institutional theory asks what is going on through perspectives of the various stakeholders, including the Big Four professional services firms that play a major role in operationalizing digital transformation in the largest systems. The researchers also discovered how data on the impact of specific programs is often hidden due to lack of trust of other stakeholders and suspicions that evaluations tend to raise.

Logics of accountability and transparency mean different things to clinicians versus administrators. Different standards of validity and key performance indicators can be fraught with political contestation as well. Research from anthropologists is shedding light on how different stakeholders have different meanings of data and their interpretations and that the burden of digital transformation can fall more heavily on some actors over others.[1] These issues can have a major bearing on success or failure.

A recent HIMSS publication on digital transformation, “Healthcare Digital Transformation. How Consumerism, Technology and the Pandemic are Accelerating the Future”, is a very informative overview of the technological elements of transformation. But only provides five pages of content on the cultural dimensions. In the section on culture and organizations, they offer the example of a 2002 Epic implementation at Cedars-Sinai in Los Angeles that was thwarted by two physicians who rejected the implementation. Kaiser Permanente is currently facing a similar challenge with their Advanced Care at Home program – which utilizes remote patient management tools – coming under fire from the nurses’ union, due to fears that their jobs are under threat and patient care may suffer. These examples highlight the need to engage stakeholders in the transformation strategy from the start.

Conclusion: COVID Impact on Digital Transformation

The rapid adoption of technologies and the cultural shifts that have taken place over the past 1-2 years is making the role of the Chief Digital Officer (or similar titles) as orchestrator of digital transformation both more important and more complex. Chief Digital Officers and CIOs will need several tools and models for stitching together institutional insights with technology issues to build effective digital transformation strategies and implementations.

I suggest that organizations need to clarify the roles of CIOs and CDOs, and how they work together. The CDO role could ideally be suited for orchestrating the change management aspect of digital transformation and aligning the cultural values of the organization around the goals of technology transformation for improving the quality of care and outcomes. Many of the important cultural issues are poorly conceptualized, so drawing upon the social sciences to understand how institutional politics play out can lead to more effective change management.

[1] See Minna Ruckenstein and Natasha Dow Schüll https://www.annualreviews.org/doi/abs/10.1146/annurev-anthro-102116-041244 and See Madeline Clare Elish and Elizabeth Anne Watkins, “Repairing Innovation: A Study of Integrating AI into Clinical Care”. Data & Society, 2020 https://datasociety.net/library/repairing-innovation/

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