Hospitals should invest in technologies based on quality, not ROI

Have you ever experienced the frustration of working with a new technology that just doesn’t fit the way your team works? If so, you’re in good company. This is a dilemma that many managers face, as IT managers might purchase software that just isn't right for supply chain processes.

A recent study, “Where Does Insensitivity Lie? How IT Investment Decision Practices Shape Supply Chain Efficiency,” by Randy V. Bradley, Bogdan C. Bichescu, Junwoo Cha, John E. Bell, Terry Esper and Ben Hazen, dives deep into the healthcare sector to uncover why these misalignments happen. As the authors note, in hospitals, IT decisions are often made by leaders outside the supply chain team, typically CIOs, raising important questions about how and why these decisions are made, and how they influence downstream outcomes like supply chain performance.

Drawing on surveys from 191 hospitals alongside cost data, the researchers explored how the reasoning behind IT investments influences supply chain efficiency. Their key finding? The rationale for adopting technology—the ‘why’—is just as critical as the technology itself. When hospitals justify their technology purchases solely on anticipated financial returns, the actual effectiveness of those tools tends to lag far behind expectations. In contrast, when technology is seen as a vehicle to improve operations and workflows, hospitals realize bigger gains: better information flow, fewer delays, streamlined processes, and ultimately, lower costs and improved patient care.

What’s more, the study finds that the effectiveness of IT in the supply chain is linked to the number of supply chain tools already in place. In hospitals with a more comprehensive supply chain technology stack, justifying purchases on expected quality improvements supercharges positive outcomes. But when new IT investments are justified with a narrow focus on ROI in these environments, they can actually create new challenges. Bradley and colleagues showed that hospitals using only ROI to justify IT purchases had poorer system integration—and as a result, their supply costs rose relative to total expenses.

Importantly, supply chain inefficiencies in healthcare are not just costly. They impact care quality, patient safety, and outcomes. The study finds that indirect effects of IT investment logic impact the entire supply chain, affecting areas such as inventory visibility, supplier coordination, and clinical service delivery. So what can managers do to ensure that technology purchases place quality outcomes over projected ROI gains?

First, hospital CIOs and technology leaders should prioritize quality-based justifications when making IT decisions. This means asking whether a new system will cut waste, reduce delays, or improve satisfaction—not just whether it will directly save money. Quality-centric thinking is especially important in environments with layered IT systems, where a new “solution” can unintentionally create fragmentation.

Second, IT leaders must align software purchases with on-the-ground supply chain goals. This means including supply chain managers in decision-making and maintaining ongoing collaboration with them to ensure technology continues to deliver real value after implementation.

Third, CIOs should consider the full landscape of existing technology. Particularly in hospitals with sophisticated IT portfolios, each new investment must add synergistic value—not duplicate or disrupt. Bradley et al. emphasize that decisions that ignore the broader IT environment risk “eroding integration” and diminishing returns.

In conclusion, health systems can’t afford to treat quality improvement as a secondary goal. The path forward lies in prioritizing technologies that support safe, timely, and effective patient care—even if the financial returns aren’t instant or obvious. This approach is more likely to improve supply chain efficiency, both lowering supply chain costs and improving quality-related outcomes.

About the author

Mahek Abdel-Khalik is a recent graduate of the University of Tennessee Knoxville’s Supply Chain Management program.  This article appears in collaboration with the University of Tennessee Knoxville’s SCM program.

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