An Investment Decision-Making Process for Investments in Clinical ICT Systems in Public Health Care Organizations

Aspects such as population aging and the ability of governments and municipalities to finance health services have challenged current ways of producing public health care services. Information and Communication Technology (ICT) has the potential to enable a significant transformation in the delivery of health care. Health care organizations lack a framework to assist in investment decisions when investing in clinical ICT systems. This thesis explores the clinical ICT investment decision-making process in a public health care organization. The aim of this study is to systematize the investment decision-making process in order to ensure the financial performance of the investment is in line with the organization’s existing operating environment. This is approached by answering the following two questions: 1) Which contingency factors will, with reasonable accuracy, contribute to the investment decision-making process when selecting a clinical ICT system in public health care? 2) Which contextual variables will, with sufficient accuracy, enhance the performance of clinical ICT system investments in public health care?
The results show that investment decision-making in a public health care organization should begin with an analysis of the alternative technologies and their operational potential (technology variable). Decision-making should particularly emphasize three factors: standards, the integration potential of the system and the strategic fit with the health care organization’s strategy. These should form the basis of the financial analysis of the investment, which is then made using a modified capital budgeting method. The decision-making process should continue with ensuring that other important variables are taken into account. Legislation and the organization’s culture are variables, which should be considered before making the final decision to invest in a clinical ICT system. Since these variables might also affect the technology variable, the financial analysis might need to be re-visited during the decision-making process.
This dissertation identifies the use of the contingency theory in clinical IT investment decisions in a public health care organization from a management accounting perspective. It also analyzes the contingency variables which may contribute to the investment analysis when investing in clinical IT in a public health care organization. Future research will be needed in order to identify the relationship between health care organizations’ management accounting systems and investment decision-making process. In addition, the contingency theory should be future tested to provide more insight into how the independent variables interact with each other.