Your health care system urgently needs a new tool for bedside care—do you recommend building a custom solution or shopping for a proven product other hospitals already use? 

This is a critical decision that health care leaders face regularly as they navigate rapidly evolving technologies, a challenging economy, and the need to enhance care delivery. Advancements in AI, data analytics, and the demand for improved interoperability across systems have made choosing between building custom solutions and purchasing off-the-shelf tools only more fraught.

In their recent case report, LDI Senior Fellows Kevin Mahoney and Raina Merchant offer valuable insights for policymakers and health leaders making this complex choice. The report draws from their experiences at Penn Medicine, where Mahoney serves as CEO and both lead transformative initiatives. It explores strategic considerations using real-world examples that include Penn’s COVID Watch, designed to monitor patients at home during the pandemic, and the Virtual Results Clinic, which assists clinicians with automated follow-up scheduling for incidental findings, like pulmonary nodules detected on CT scans. They chose to develop both projects in-house, allowing smooth integration with existing systems used at Penn Medicine, including their Epic electronic health record system.

The authors describe how these bespoke tools significantly improved patient outcomes and operational efficiency, and show that while about 90% of Penn Medicine’s technology is purchased from outside vendors, sometimes building a custom solution is the optimal choice. Here are five strategic considerations they suggest health leaders keep in mind when navigating the build-versus-buy decision.

1) Consider Scale, Speed, and Capacity to Meet Growing Demands

When it comes to scale and speed, off-the-shelf technology provides a clear advantage. It allows health systems to rapidly implement solutions across various sites and departments, providing a uniform experience. However, this scalability often means that external vendors develop products with a broader, less customized focus that may not align with the unique needs of every organization. Building in-house may take longer to deploy but allows for greater customization tailored to specific institutional goals.

2) Weigh the Need for Agility and the Value of Fostering Innovation

In-house development fosters a culture of innovation, giving health care systems the agility to adapt quickly to emergent needs. During the COVID-19 pandemic, Penn Medicine illustrated this flexibility by rapidly adapting an in-house platform initially developed for clinical trials into COVID Watch—a tool for monitoring patients in their homes. Although building custom solutions introduces unique risks, especially in untested scenarios, the opportunity for rapid innovation can meet needs in ways that off-the-shelf products do not.

3) Assess How to Best Integrate and Align Within Existing Systems

Alignment with organizational goals and structures is essential when adopting new technology. Off-the-shelf products may shorten implementation timelines but may lack the necessary adaptability to align with specific internal workflows, reporting systems, or institutional values. Solutions that are developed internally can be designed to fit precisely within a system’s operational model, enhancing efficiency and consistency across departments.

4) The Importance of Interoperability to Ensure Seamless System Integration

Interoperability remains a critical factor in technology decisions, especially as health systems grow more data-driven. Off-the-shelf solutions typically support standardized data integration, facilitating smooth data transfer across existing systems. However, custom solutions may offer greater flexibility in working within a health care system’s established infrastructure. Either way, technology decisions should prioritize seamless integration to support clinical workflows and data security, ensuring that clinicians can efficiently access and use data in patient care.

5) Balancing Long-Term Investment with Flexibility and Sustainability

For technology investments, sustainability is key. Custom solutions that require ongoing support and updates demand significant resource investment but allow systems to respond flexibly to future needs. Off-the-shelf solutions, on the other hand, often come with built-in maintenance and support, reducing the burden on internal teams. Leaders must assess their organization’s capacity for long-term investment to ensure that technology remains a sustainable, strategic asset in patient care.

Ultimately, decisions about whether to build or buy technology are not just technical. Health systems must consider how these decisions impact the equity and accessibility of care. Building custom solutions may better address specific local needs, but they require both substantial investment and critical deliberation to most effectively and equitably enhance care delivery. The build-versus-buy decision goes beyond cost and convenience—it’s about making thoughtful choices that serve both the present and future needs of patients, clinicians, and hospital staff alike.

See the full case report here.

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The study, “Build or Buy? Managing the New Technology Decision Tree,” was published in Frontiers of Health Services Management on August 28, 2024. Authors include Kevin B. Mahoney, Raina M. Merchant, and Mitchell D. Schnall.

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