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4. Organizational Challenges to the Adoption of the Internet
Pages 178-201

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From page 178...
... The Internet's capability to empower consumers, support dynamic information exchanges among organizations, and "flatten" organizational hierarchies promises to result in new operational strategies, business models, service delivery modes, and management mechanisms. The changes will have such far-reaching implications that health care organizations need to start preparing now to adopt the advanced Internet applications that are expected to appear in the near future.
From page 179...
... LESSONS FROM OTHER INDUSTRIES Internet technologies offer a range of potentially useful applications to organizations in many different industries. Simple Internet applications such as electronic mail (e-mail)
From page 180...
... Online retailers such as Amazon.com and Barnes and Noble have changed the nature of the book industry by creating direct relationships between book buyers and book suppliers that have significantly reduced inventory costs and eliminated many middle layers in the distribution chain a process called disintermediation.3 Manufacturers of personal computers, such as Dell and Compaq, increasingly use the Internet to market their wares directly to consumers, enabling the consumers to customize their orders and enabling the firms to control inventory at the lowest possible levels. Online auction sites, such as eBay, have pioneered new ways to link buyers and sellers in a virtual marketplace, with some companies expanding on the auction concept to exploit spot markets for last-minute airline tickets, car rentals, hotel rooms, and other services.
From page 181...
... The health care industry is and will continue to be diverse, with individual organizations facing different environmental pressures, pursuing different missions, and cultivating different cultures, but the Internet appears capable of supporting at least a handful of common strategic interests. It could, for example, help organizations to do the following: · Improve the efficiency and effectiveness of processes that customers use to judge organizational performance (e.g., scheduling an
From page 182...
... ; · Develop partnerships with related organizations in an effort to leverage respective strengths (e.g., MCOs partnering with pharmaceutical companies to develop disease management programs or regional alliances of providers partnering to form a continuum of care) ; · Reach consumers directly to solidify brand names and eliminate intermediaries (disintermediation)
From page 183...
... Still other firms focus on the administrative side of health care, using secure communications channels to deliver a broad array of services required in a managed care environment, with an emphasis on linking different types of health care organizations. Offerings include products for enrolling in and managing personal health care plans; information services and portals designed for consumers, providers, and physicians; systems for viewing
From page 184...
... More study is required to fully evaluate the benefits of Internet-based applications in health care, but the evidence cited above offers hope for improvements in customer satisfaction and reductions in cost. Given the potential of the Internet and the economic and other pressures facing the health care industry, it would be reasonable to expect significant investment in Internet technologies and applications by more health care organizations.
From page 185...
... Other market forces also affect the ability of health care organizations to adopt Internet technologies. Many health care organizations have seen shrinking operating margins over the last several years, along with a marked increase in regulatory compliance requirements (such as those related to the Health Insurance Portability and Accountability Act of 1996 see Chapter 5)
From page 186...
... For example, policies on professional licensure can impede attempts to deliver health services across state lines using the Internet; regulations on data security and patient privacy can create disincentives for the transmission of information across public communication networks such as the Internet (these issues are addressed in greater detail in Chapter 5~. Policies of third-party payers and health insurance companies on payment for medical services can also affect a care provider organization's incentives to develop new Internet applications.
From page 187...
... Some barriers, such as demographic trends and the complex and politicized decision-making processes in health care, are often out of the control of organizations, although they can take steps to anticipate and mitigate the effects. Policy barriers, in general, cannot be addressed effectively by individual organizations but require a coordinated and concerted effort by multiple players.
From page 188...
... They may face barriers to full Internet implementation as a result of reimbursement policies that prohibit cost recovery. Additionally, they may lack the organizational resilience to deliberate and manage the uncertainty inherent in investing in technologies such as electronic medical records or distributed information systems.
From page 189...
... Health care organizations face uncertainty in four areas: organizational and industry structures for Internet-based care, internal policies and procedures to guide Internet use, technological capabilities of Internet-based systems, and human resource issues. For each type of uncertainty, examples of related issues and questions are presented below.
From page 190...
... The intent of these investments and start-ups is to significantly alter and improve the mechanisms by which health care is distributed, in some cases simplifying administrative transfers of information and in others creating new channels for the provision of health care and health information. It is not clear whether extensive use of the Internet will dramatically change the health care industry's structure, altering the relationships among consumers, care providers, managed care organizations, and insurers.
From page 191...
... The Internet supports consumers seeking to make spot market purchases of books, airline tickets, and automobiles by providing information on sources, cost, availability, and quality for the item or service to be purchased. This trend has yet to become important in health care, but one can imagine consumers engaging in spot market purchases of medications, vitamins, and durable medical equipment.
From page 192...
... These models include sample forms for consent and release of information, confidentiality policies, and chief security officer job descriptions. Other reference models have been developed to guide the use of e-mail between patients and care providers (Kane and Sands, 1998~.
From page 193...
... Furthermore, as consumers are offered the opportunity to create and maintain their own health and medical records online, new issues arise regarding data availability and integrity. Data for these records will come from claims, electronic medical record systems, and provider questionnaires, and from the patients themselves.
From page 194...
... As they assess Internet-enabled applications particularly those retaining the same labels as non-Internet applications (e.g., electronic medical records) health care organizations will have limited resources with which to understand the value added by the Internet.
From page 195...
... Similarly, not much is known about the training requirements that Internet technologies will impose on provider organizations. Substantial innovation and development will be needed to train and prepare care providers.
From page 196...
... However, it is not clear to what degree the technology can overcome difficulties such as the lack of data syntax and semantic standards, technology incompatibilities, and vendor unwillingness to participate actively in projects that integrate their systems with those of competitors. Human Resource Needs A significant organizational commitment to Internet-based applications requires information technology workers who are skilled in new technical areas such as HTML development, Internet security, and digital commerce.
From page 197...
... Some experience has accumulated during early demonstrations and evaluations of electronic medical records. In addition, real-life experiences or lessons learned, in the form of case studies or conference presentations on new or more complex situations, would assist many organizations in planning for Internet use.
From page 198...
... Limited, narrowly focused applications may be implemented at a grassroots level in an organization and successfully applied, but when applications require complex interactions across and potentially beyond the organization, the skills and talents of individual participants must be augmented by strong institutional leadership and a shared vision of what the organization is trying to accomplish. Until the 1980s, information systems managers for major corporations typically played a technical, service-oriented role.
From page 199...
... Certainly there are important educational issues: health care leaders must be familiarized with the fundamental role that IT needs to play in their organizations, and an expanded cadre of future CIOs must be produced who have a combination of technical and management skills as well as knowledge of the medical environment and its complex cultural constraints. The effective mobilization of the Internet for health care, and its use for highly leveraged applications and demonstration projects, will require an investment and commitment from medical organizations and visionary leadership from CEOs and other key managers who understand the strategic role of the technology and the return on investment that can be expected.
From page 200...
... First, research on Internet-induced changes in health care economics, organizational form, and interorganizational processes would provide guidance for organizations and patients, helping to ensure that the changes are effective and that they do not materially damage the health care system or harm the health of patients and consumers. Second, model policies and procedures for the effective management of Internet-related clinical, administrative, and fiscal processes and activities would help organizations address these issues before they become problems.
From page 201...
... 3. Similarly, online travel service companies, such as Travelocity and Expedia, have adapted airline reservation systems in ways that allow consumers to make purchases directly from airlines, eliminating the travel agency as an intermediary.


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