Introduction
Healthcare State
of Data Report
2024
01.
Introduction
Few industries will undergo as dramatic a process of modernization over the next two years as healthcare. As leaders set their budgets and their data strategies, one thing becomes clear: how and when healthcare organizations decide to invest in their data stack will be the difference between rapid growth or perpetual struggle.
A survey of 500 Director to CEO level data leaders, 145 of those hailing from large healthcare organizations, reveals the top challenges, priorities, and opportunities for the healthcare industry through 2027.
Across the board, healthcare leaders indicate ambitious goals for what they intend to achieve with their data in the years ahead. Meanwhile, their data infrastructure lags behind other industries by significant margins.
Healthcare organizations that have dared to invest in data are seeing impressive returns, pointing to data not just as a cost center, but as a critical asset driving financial success for an industry plagued by narrow margins and regulatory challenges.
This report differentiates between organizations based on their alignment with data best practices in order to better understand how companies are currently utilizing their data stack and how they are preparing for the future of data utilization in their respective industries.
Learn how healthcare data leaders are preparing for the market ahead.
02.
Executive Summary
Healthcare leaders have clear and urgent use cases for their data, including Machine Learning and GenAI.
Nearly every organization surveyed (94%) said they will need to modernize their data stack in 2024. Among the most data-mature organizations surveyed, two-thirds said they will need to modernize a “great” deal. The majority (79%) of companies looking to modernize their data stack in 2024 said they will need a “moderate” or“large” amount of external help.
Healthcare leaders recognize the need to modernize, but organizational culture is a major blocker.
Despite their clarity of vision and lofty intentions, healthcare data leaders also know the challenges that lie ahead, with 51% of healthcare orgs reporting they’ll need to modernize their data stack “a great deal” in 2024. They are also cognizant of internal obstacles to modernization, with 46% of healthcare leaders listing “creating a data-driven organizational culture” as their number one challenge.
Tight margins and low data literacy rates are also impediments to data modernization.
Just 11.3% of healthcare organizations surpassed their financial goals in 2023. With razor thin margins, complex regulatory frameworks to navigate, and continued challenges in arenas like staffing, major data initiatives have a hard time getting off the ground. Only 28% of healthcare leaders, meanwhile, believe their organizations have a high rate of data literacy, presenting one more obstacle they must surmount in order to modernize.
Data investments are actually a consistent source of profit for healthcare organizations, when they make them.
Few investments made by healthcare leaders delivered consistent returns, but data proved an exception, with healthcare orgs reporting an average 124% ROI on all data investments. Data delivered a direct source of revenue for 25% the healthcare organizations that are already monetizing their data. Many more (43%) indicated that they plan to follow suit in 2024.
Healthcare organizations will be rushing to centralize on cloud platforms in the next two years.
Healthcare organizations today lag behind industry peers, with just 23% currently utilizing a centralized cloud platform. Fortunately, their data leaders are aware that they’ll need to play catch up, with a whopping 74% of healthcare organizations reporting that they intend to centralize on a cloud platform in the next two years.
Healthcare orgs know external support will be key to achieving their data goals, but they’ll have to find the right talent.
In order to close the gap and modernize their data stacks, healthcare organizations will need to lean on experts who can complement deep knowledge of the complexities of their industry and data use cases with intimate knowledge of cloud platforms and migration practices. 84% of healthcare orgs believed they would need a “moderate” to “large” amount of external support to help modernize their data stack this year. Finding the right external partners will be critical.
03.
Tracking the Data Journey From Chaos to Innovation
Hakkoda uses the Data Innovation Journey model to assess businesses across 5 transformational capabilities and 4 stages of maturity:
Chaos, Order, Insight, and Innovation.
A Chaos Organization is still at the beginning of its data journey and has yet to identify and harness the strategies, tools, and services that will optimize its data stack; meanwhile, an Innovation Organization is well into its data journey and has moved past centralizing and standardizing its data to leverage advanced capabilities like AI automation and data monetization.
The Data Innovation Journey
04.
Healthcare Leaders Profess Urgent Use Cases for Their Data, They’re Blocked by Organizational Culture
Healthcare organizations are no stranger to massive volumes of data, and unlike some industries, the applications of that data have clear and immediate impacts on life-changing outcomes, from a patient’s recovery, to effective staffing, to a claim that allows an individual to receive proper treatment.
Perhaps it’s no surprise then that healthcare leaders were among those most likely to indicate that their team had strong use cases for their data, ranging from GenAI to Machine Learning.
Healthcare Is Full Steam Ahead on GenAI - Or At Least, They Want to Be
Healthcare outpaced other industries in their confidence around GenAI use cases, with 34% of healthcare data leaders reporting they strongly agree that their organization has defined GenAI use cases that they are ready to implement.
Just under half of healthcare data leaders indicated that they were already dabbling with GenAI in small applications, with 43% using GenAI for some data cleaning and 50% using GenAI for automation.
Looking forward, healthcare leaders expect their emphasis on GenAI to continue to rise. While only 7% of healthcare organizations believed GenAI would be “critically important” to their operations by 2027, 59% of healthcare orgs believed that it would be, at a minimum, “very important.”
Healthcare Organizations Lead the
Charge with ML
Beyond GenAI, healthcare organizations were more likely than industry peers to utilize production-level machine learning models to drive decisions, for which the potential applications in healthcare are vast. Healthcare organizations used machine learning models for everything from predicting staffing issues and adjusting accordingly, to effectively allocating beds to the patients that need them most.
Real Examples from
Healthcare Leaders
“As Private Health reinforced our strategy to serve individuals inside of business clients, there was a necessity to define cancer inside of their corporate footprint. Hakkoda was a critical delivery component of that strategy, taking a legacy prototype and ensuring it was built to scale on a platform that Private Health and Hakkoda could grow into. The result of our partnership is a cancer prediction machine learning model that brings the real cancer burden to corporate clients.”
– Jim Robshaw, CTO of Private Health Management
Eagerness Soars, but
Healthcare Orgs See Challenges
While it’s clear that healthcare leaders see urgent and exciting applications for their data, especially in the years ahead, they’re also aware of the very real challenges they face as they strive to adopt innovative practices.
51% of healthcare organizations report they’ll need to modernize their data stack “a great deal” in 2024. Put more plainly, 92% of healthcare organizations expect to modernize their data stack “somewhat” to “a great deal” in the year ahead.
This overwhelming majority also know that they’ll face significant pushback from their co-workers as they attempt to update. When asked about their biggest obstacles around data management and operations, 46% of healthcare leaders reported “creating a data-driven organizational culture” would be their number one challenge. Other notable challenges on that list include modernizing legacy data systems and ensuring data quality and governance – the most important requirements for the GenAI applications that healthcare organizations are so excited to deploy.
No Rose-Colored Glasses Allowed
Healthcare organizations have lofty intentions for the years ahead, but they also have their work cut out for them. As data leaders work to modernize and implement life changing data applications, they’ll need to make tackling organizational culture and getting stakeholder buy-in a huge piece of their initiative.
Improving data literacy, creating strong data governance programs, and shifting the entire organization’s understanding of the importance of data investments will be key to healthcare leaders’ success, through 2024 and beyond.
“I believe the main challenges of data-driven innovation in healthcare lie not in a lack of appreciation for or use of data, but in a misunderstanding of its comprehensive power and holistic applicability. From diagnostic tests to coding profiles, healthcare data is often viewed in a vacuum by the stakeholders it directly applies to, rather than holistically.”
- Kathryn Watson, Head of Customer Success at Coalesce
05.
Despite Limited Data Literacy, Data Investments Consistently Deliver Strong ROI for Healthcare
As healthcare leaders battle organizational cultures that err toward outdated modes of operation and decision making, their overall level of data literacy reflects these struggles. Just 28% of healthcare leaders believe their organization has a high level of data literacy. If healthcare lags behind other industries in technical innovation, this latency can often be traced back to budgetary constraints, with only 11.3% of healthcare organizations surpassing their financial goals in 2023.
These data literacy and cultural roadblocks, however, don’t happen in a vacuum. Put simply, many healthcare providers are operating within extremely narrow margins, which, combined with a host of more immediate operational challenges like staff attrition, changing patient demographics, and strict regulatory requirements, makes funding major data initiatives an onerous task.
Healthcare Organizations Should Be Raising Their Data Budgets, Not Fighting Them
While data leaders struggle to fund their initiatives, data projects are actually one of the most profitable avenues for investment. Healthcare organizations on average report consistent returns on their data technology investments, with an average ROI of 124% in 2023.
The full State of Data report, meanwhile, indicates that returns on investment are even greater for organizations at the highest level of data maturity, with Innovation stage organizations across all industries reporting an average ROI of 164% on data technology investments.
Over time, the ROI healthcare organizations are able to gain from their data is only expected to increase, as more and more healthcare organizations prepare to monetize.
Direct data monetization offers an additional source of revenue for healthcare organizations hoping to grow their margins in the next two years. In fact, 25% of healthcare organizations report that they are already monetizing their data in 2023.
This number is expected to skyrocket in 2024, with another 43% of organizations indicating their intention to begin monetizing this year as data-derived revenue streams become more and more of a norm for the industry.
For healthcare organizations worried about their bottom line, modernizing their data stack will require a significant upfront investment, but the numbers indicate that the long term value such investments bring to an organization more than pay for themselves in the long run.
“In the next couple of years, we will not only see this percentage of healthcare organizations monetizing or collaborating with their data go up significantly, but we will witness the rise of healthcare organizations leveraging their proprietary algorithms and pushing those to consumer's data. Thanks to technologies like data sharing and native applications, this area will quickly get disrupted and organizations embracing these new technologies will win over a disproportionate share of this opportunity.”
- Murali Gandhirajan, Snowflake Global Healthcare and Life Sciences Field CTO
06.
The Next Two Years Will Be a Rush to Centralize on Cloud Platforms, Healthcare Orgs Know External Support Will Be Key
The next two years will be pivotal for health data modernization, with 74% of healthcare organizations reporting their intention to centralize on a primary cloud platform by 2025.
Unfortunately, healthcare organizations have some catching up to do if they hope to achieve that lofty number. As of 2023, healthcare orgs were less likely to have centralized in the cloud than any other industry, with only 23% of healthcare organizations reporting that they currently utilize a centralized cloud platform.
Data Cleanup Will Be Important, Not Easy
The path to centralizating in the cloud is uniquely challenging for healthcare organizations, which must manage the ingestion of data from multiple on-premise systems and proprietary electronic health record software, like Epic, during data migration. This high level of complexity is further compounded as many healthcare organizations consolidate into larger, more sprawling payor/provider systems, absorbing still more legacy platforms and sidestepping additional red tape in the process.
Much of the patient’s journey is never going to exist inside the medical records systems, but this data needs to be used to drive key decision-making that drives the organization forward. Breaking down data silos and bringing high volumes of data together from multiple sources on a centralized cloud platform is a huge challenge for many healthcare organizations, but this kind of modernization is what ultimately enables Patient 360 and sets them up for predictive and prescriptive analytics.”
- Chris Puuri, Global Head of Healthcare and Life Sciences at Hakkoda
With organizational culture and low data literacy rates already identified as serious obstacles faced by many healthcare organizations, it’s not altogether surprising to find that only 1% of these organizations reported that they had the internal resources they need to modernize their data stack this year. Of the remaining 99%, 84% reported the need for a moderate to large amount of external help.
While the outsourcing of data management will clearly be instrumental to modernization for the vast majority of healthcare organizations in 2024, it is important to note that the need for external help from Managed Service
Providers, Systems Integrators, and IT consultants is not a direct indicator of an org’s data maturity. To the contrary, findings from the full State of Data 2024 report showed that 42% of the most data-mature organizations identified the need for a large amount of external help while just 6% of the least mature reported the same. The highly complex and closely regulated nature of healthcare data, meanwhile, requires specialized tooling and expertise that make outsourcing data management that much more attractive for organizations at every stage of data maturity.
While Healthcare organizations are particularly bullish in their desire to use their data for applications like GenAI and Machine Learning (ML), their ability to do so will actually diminish over the coming years if they don’t begin to centralize their data.
Data sprawl will continue to grow, making widespread GenAI and ML adoption increasingly unwieldy for those without modernized and well maintained data systems.
The healthcare industry in particular is especially vulnerable to data silos, a problem directly solved by centralization on a cloud platform, when done right. 42% of healthcare leaders reported that integrating data across multiple silos was a major challenge for data management and operations at their organization. Another 44% struggled with data quality and governance.
For healthcare organizations worried about their bottom line, modernizing their data stack will require a significant upfront investment, but the numbers indicate that the long term value such investments bring to an organization more than pay for themselves in the long run.
Organizations Will Need Partners
with Deep Healthcare Expertise
to Execute Their Plans
With a majority of healthcare organizations looking to centralize their complex mix of multi-cloud, legacy systems, and highly regulated healthcare data over the next two years, and 84% of organizations looking for a large to moderate amount of outside help, the race for great vendor talent is on. Healthcare organizations will not be able to settle for run of the mill services or technology providers. Instead, they’ll seek partners with deep expertise in their industry and proven track records accomplishing the complex migrations that lie ahead of them.
The good news is, the quality of healthcare services is poised to make great leaps forward, with healthcare leaders eager to modernize and begin using anonymized patient data for all of the exciting use cases that are possible with their data centralized on cloud platforms.
“By working with partners with industry-specific expertise, organizations can drive innovation to transform healthcare more efficiently and at a greater scale. Internal organizational resources can focus on improving outcomes rather than translating to their technology partners when their partners understand industry-specific challenges, such as regulatory requirements and complexity with healthcare data.”
- Holly Hallman, Associate Vice President, Enterprise Data and Advanced Analytics at a Large Academic Medical Center
07.
Conclusion: The Scramble for Healthcare Data Modernization Has Begun. Organizations Who Outsource Will Lead in ROI and Innovation.
The other chief obstacle healthcare organizations will need to surmount is the relative scarcity of funding. With only 11.3% of healthcare organizations surpassing their financial goals in 2023, the vast majority of budgets are currently allocated to keeping the lights on.
The good news is that modernizing your organization’s data stack has huge ramifications for your bottom line, with data technology demonstrating reliably strong returns on investment among healthcare organizations polled. Direct data monetization, meanwhile, presents these organizations with even more untapped revenue opportunities, with as many as 68% of healthcare organizations either already monetizing their data or intending to do so by the end of 2024.
For healthcare organizations that have yet to put a data modernization strategy in place, the State of Data is a clarion call to join the ranks of innovators in their field. It is also a firm reminder that orgs don’t have to carve a path to data maturity alone, and that Managed Service Providers, Systems Integrators, and IT consultants can help them find the right combination of industry experience and technical expertise.
Healthcare organizations have both big plans and urgent use cases slated for the next two years, but the chasm between where they are today and where they hope to be in 2025 will not be easy to traverse.
With a significant majority (74%) of healthcare organizations recognizing the importance of modernizing their data stack and indicating their intention to join the 23% that have already centralized in the cloud, finding and securing the right data talent will be a critical piece of the data modernization puzzle.
Unfortunately, low rates of data literacy and a pervasive lack of a data-driven culture within many of these organizations, coupled with industry-specific stumbling blocks like proprietary EHR systems and strict regulatory frameworks around patient recordkeeping, make scalable and sustainable in-house talent retention at the scale it is needed nearly impossible.
To combat this talent gap, many healthcare data leaders are already aware of the vital role Managed Service Providers, Systems Integrators, and IT consultants will play in their success, with 84% openly acknowledging the need for a moderate to large amount of external help with their data modernization initiatives.
