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Misallocated Digital Health Investments: 80% of Costs for 20% of Benefits

The 80/20 rule, or the Pareto Principle, is a concept that suggests that 80% of outcomes come from 20% of all causes. 

For example, in the business world, this principle is a guide to focusing efforts on the 20% of factors that result in 80% of the results. 

But how does this relate to healthcare?

investment in digital health should be based on value

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The 80/20 rule in healthcare

Interestingly, when we look at digital initiatives in healthcare, it seems like the opposite holds true.

80% of investments are poured into digital projects that often deliver about 20% of the value we hope to see or tackle only 20% of the problems.

Take for instance, the continued large scale investments in legacy EHR technologies. Despite their high cost and extensive implementation process, these systems have not provided the level of value, efficiency, or benefits that were initially expected. 

Reevaluating digital health investments

This mismatch calls for a reassessment of where money and efforts in digital health are going.

There should be more emphasis on the value a solution will bring than just its cost or the hype surrounding it. The aim should be to channel investments towards digital solutions that address the bulk of healthcare challenges to maximise the impact of these initiatives. 

This way, we can make sure that investments provide the best value for money. 

Value over cost

This is not to say that cost should not be a consideration, but rather that it should not be the main consideration. 

A digital health solution may not be the cheapest option available, but if it proves to be more effective in service delivery improvements, builds a resilient infrastructure that can adapt over time, while also proving to save money in the long run, then it is worth the investment.

Healthcare systems and policymakers should lean towards adopting digital solutions that have demonstrated clear value-add, for both the smaller and bigger players. These are the solutions that should take precedence over the more expensive, less effective options that are seen as the safe choice.

Flexibility cannot be forgotten, either. Healthcare needs are constantly evolving, so the digital tools we use should be capable of adapting to these changes. If a solution fails to deliver as expected, healthcare organisations should have the flexibility to tweak or replace it without being locked into rigid contracts.

The bottom line

Ultimately, the real measure of any digital health solution lies in the value it brings to the table. Prioritising this will not only ensure more sensible spending but will also bring long-term benefits to the healthcare sector.


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