Leading health systems are leveraging a proven IT model to break down siloes and increase IT service efficiency and effectiveness. Adapted from other industries such as big tech, the product operating model is an agile and transformative approach that can drive optimal value as well as constant improvement and innovation. In this article, we discuss why an increasing number of healthcare organizations are restructuring their internal operations and IT services into a product operating model and how other health systems can adopt this approach for success.

A PRODUCT OPERATING MODEL is an approach in which products center around value generation (both qualitative and quantitative value that could be clinically, financially, or otherwise oriented), and work is prioritized based on the expected incremental and measurable value delivery. Business and technical resources realign into dedicated product teams using an accelerated delivery methodology, such as Agile, to increase efficiency and responsiveness.


A Product Operating Model Addresses Challenges Healthcare IT Departments Face Today

To deliver true value amid today’s complex and evolving healthcare environment, IT departments are looking for new ways to better align with enterprise strategy, more efficiently utilize resources, and deliver clear value for their customers (who may be internal business teams or external patients, referring providers, and affiliates). But many organizations are facing significant challenges to meeting those goals. The table below summarizes these challenges and provides examples of how a product operating model can address them and propel IT teams toward innovation and value demonstration.

Current Challenges
How a Product Operating Model Will Help

Governance that fails to deliver IT value most effectively. Lack of stakeholder engagement, ineffective decision-making, and an inability to say “no” all impede the IT department’s effectiveness. 

A product operating model backed by Agile methodology enables a more focused review of roadmaps and backlogs on a scheduled and transparent cadence. Decisions are made by the business owner(s) and informed by the proper stakeholders, circumventing the need for a prolonged governance process. 

Lack of clarity on business priorities. Unclear business goals and objectives coupled with constant new priorities contribute to lower satisfaction with IT services.

Product teams bring clarity by utilizing a business owner, typically referred to as the “product manager,” who translates requests from the business to remove ambiguity. Additionally, Agile work management continuously involves the customer and reduces the chance of outputs straying from the original intent, thanks to regular sprint check-ins.


Case in Point: A nationwide health system with mature governance needed to realign its Epic support teams to better address perpetual resourcing issues for shared groups like Orders and ClinDoc. A product operating model helped the organization reorganize its resources, enabling leaders to channel key assets toward specific product teams. This shift allowed the designated product teams to complete backlogs and significantly increase ongoing productivity compared to the previous centralized approach, in which teams were distracted by multiple conflicting priorities.

Misalignment of IT resources to business priorities. Lack of insight into the capacity of the IT department, siloed decision-making on project requests, and prioritization of production support limit the ability to fully address customer needs. 

The product team becomes central to negotiating priorities and having difficult discussions with the business when demand exceeds capacity. Because the product team is comprised of business representatives, the messaging is more palatable than coming from the IT department alone.

Inability to demonstrate the value the IT department is delivering to the organization. Value capture is rarely made a priority, and standard metrics coming out of the service management system don’t tell the complete story of the impact the IT department has on the organization’s businesses.

With a product operating model, value streams are identified with executive oversight, and portfolios and products are aligned with value stream strategy and governance. Products are defined and refined with business stakeholders against concrete success metrics to measure continuous improvement. Value is delivered iteratively, regularly, and predictably at the end of each Agile development sprint.

What Does a Product Operating Model Look Like?

Today, most health system IT departments operate in a “traditional” health IT services delivery model, in which IT is organized around technology expertise—be it specific applications, devices, or support services. This traditional, reactive IT service approach puts the burden on the business partner to determine what they need from IT and how to obtain it. Often, they must then wait some time for IT to deliver a solution, which may or may not align with their expectations or business needs. In some cases, well-intentioned IT departments may anticipate what the business may need or find valuable and lean into innovation and expertise to deliver. When the IT department gets this right, it is seen as a win, but if the IT department misses the mark, there are impacts to resources and reputation.

A product-driven approach creates ongoing dialogue between the IT department and the business partner. The business takes the lead on developing a product roadmap that supports its goals, and the IT department aligns resources to support the roadmap. The IT department and the business work in concert to address barriers to achieving the roadmap, such as excessive production support incidents and lack of capacity. The IT department utilizes Agile work methodologies to ensure teams are focused on the approved product roadmap and distractions are minimized.


6 Benefits of Adopting a Product Operating Model

Organizations that have adopted a product operating model within their IT services are realizing 6 key benefits:

1. Clear product ownership and transparency. A product operating model promotes clear ownership and accountability for each product, assisted by tools key stakeholders commonly access (e.g., a comprehensive service management platform). Having dedicated operational product managers with a deep understanding of the business for which the product is delivering value fosters responsibility, grants decision-making authority, and brings the product’s vision, goals, and roadmap to life.

2. Customer-centric approach. By aligning product management with customer needs, preferences, and feedback, the IT department can deliver solutions that directly address user pain points. This customer-centric mindset results in improved user experiences and satisfaction.

3. Agile and iterative development. This approach often adopts Agile methodology, enabling the IT teams to work in iterative cycles, embrace change, and respond quickly to evolving requirements. Using cross-functional teams reduces inefficient handoffs of work, improving efficiency, collaboration, and the ability to deliver value incrementally.

4. Faster time to deliver value-creating enhancements. IT teams can streamline development processes, reduce time wasted on unnecessary tasks, remove ad-hoc or unapproved requests, and prioritize work based on product objectives. This leads to shorter development cycles and faster time to complete new features, enhancements, or solutions.

5. Data-driven decision-making. Data and metrics to inform decision-making are essential in this model. By leveraging analytics, user feedback, and key performance indicators, the IT department partners with the business to make informed decisions, prioritize product initiatives, and track progress toward business goals.

6. Scalability and adaptability. By organizing around products rather than projects, the IT department can better manage scalability and adaptability. This approach enables teams to focus on evolving products over time, ensuring that they remain aligned with business goals and can adapt to changing market conditions.

Sample Key Metrics of Product Operating Model Success and Value

Outcomes of the product operating model can vary widely across organizations and among adopting teams. Establishing baselines for each team’s performance before and after adopting the product operating model allows the team to set relevant and achievable metrics. The following chart illustrates a sample of metrics that organizations can work toward achieving with a product operating model.

Improve User Satisfaction and Engagement

  • Example metric: Increase user satisfaction by 20% through improved processing of requests and communication of request statuses.    

Improve Development Efficiency and Speed

  • Example metric: Reduce overall project duration by 25% through the adoption of Agile methodology, automation, and streamlined development processes.

Ensure Product Performance and Reliability

  • Example metric: Reduce mean time to resolve incidents by 30% through improved incident management processes, faster response times, and product expertise.

Drive Financial Performance

  • Example metric: Achieve a 15% increase in the internal business revenue through improved use of the product.



Is a Product Operating Model Right for Your Organization?

While a product operating model may not be the solution for every organization, the benefits of this new approach are tremendous. You should consider a product operating model if your organization is willing to align with the following factors:

  • You are seeking new ways to innovate and organize your IT operations. Traditional solutions are no longer meeting expectations, and your organization would benefit from a less fragmented approach.
  • You have direct engagement and buy-in from your customers/business stakeholders. Business owners should recognize the potential value of changing to a product operating model through active and embedded partnership with IT operations and be willing to actively collaborate in the process. 
  • You have a desire to refine and elevate value definition and measurement. Products must have a financial, quality, or performance output that can be measured.
  • You have established, stable organizational governance, but it is lacking in efficient decision-making and execution of IT priorities. If your organization does not have a defined or functional governance, you should prioritize governance improvements over the significant effort to establish a product operating model.
  • Your products and services are definable. A well-defined scope of products and services will ensure clear boundaries. The product areas should be consistently enhanced, subject to change requests, and accountable to consistent delivery expectations.

While this transformational design requires bandwidth and dedication to execute, it can be revolutionary if applied properly. Following a proven roadmap for design and implementation will be key to ensuring adoption and unlocking value within your organization.

Additional Contributors: 
Stephanie Crabb, Associate Principal, Jon Freedman, Principal; and Paul Murphy, Principal


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