Why You Should Insist on A SaaS Plus Shared Savings Model for Investments in Automation

Demand more from your technology partners

Author: Sean Lara, Managing Director of Business Development


Let’s begin with a simple question: are you buying a hammer, or are you buying a house? The former is a means, the latter is an end. The question seems simple enough, but confusing these two concepts happens often, in all walks of life, and even to the best of us. Add in some vendor jargon (there are less charitable words) alongside the inherent complexity of the American healthcare system, and the question goes from deceptively benign to seriously fraught in a hurry. Amidst the backdrop of COVID-19, thoughtful healthcare leaders are looking to technology for solutions, but they would do well to start with a question: do I need tools, or do I need results? Maybe I need both?

You Need More Than SaaS

Have you ever repeated a word or phrase to the point that it degraded into nothing more than meaningless sounds? Don’t be alarmed – you aren’t crazy. There’s a scientific term for this phenomenon: semantic satiation. Say something enough times (or even stare at it for long enough), and you’ll reach a cognitive point of no return.

In healthcare IT, consider the Software as a Service (SaaS) model. To be clear, there isn’t anything wrong with SaaS. But even the dominant pricing and delivery model for technology isn’t perfect. And yet, as new companies bring their shiny innovations to market, SaaS has become the rule. As an industry, we’ve been parroting “SaaS” for so long that it has lost meaning. So let’s slow down, take a breath, and try to restore clarity to the term.

SaaS is simultaneously a purchasing model and a delivery model. It’s a purchasing model in which you pay a recurring subscription fee to use it (you rent it) and it’s a delivery model in that you receive it via the Internet (not on-premises). That’s it. SaaS can be a great model…but it’s often narrowly focused on buying tools, not results. Typical SaaS issues like users, uptime, and support all speak to making sure that the hammer you’re renting is ready for your organization when you need it. From there, it’s up to you to build the house.

“But they sold me the house!”

Yes, they most certainly did. But the burden here is shared. Technology vendors are easy targets for criticism, but buyers often accept without question a SaaS model. Unfortunately, if you are looking to purchase results, a SaaS model alone is ill-suited and unlikely to meet your expectations. More often than not, trying to negotiate a shared savings model into a SaaS contract ends in an impasse. This is largely due to the fact that the seller often has limited (or no) control over what the buyer does with the tool, or the hammer so to speak.

“But what if someone–or something–else swings the hammer?”

Everything Old Is New Again

Let’s give poor SaaS a break. After all, there are plenty of newer entrants to the pantheon of healthcare IT buzzwords for us to pick on. Artificial Intelligence. Automation. Digital Workforce. It’s a heady cocktail of real, promising concepts being eroded by invented jargon and industry hype. So let’s simplify things and call it something else, something less sexy, something more practical.

Outsourcing.

Automation technology isn’t just a tool. It’s output. It’s productivity. It’s a result. It’s outsourcing, but to technology instead of people. As such, it’s a wonderful place to marry what’s great about both SaaS and Shared Savings models.

In an outsourced model, the seller has very real control over the output. They are ultimately responsible for both securing the tools necessary to build the house and for the labor of actually building the house for the buyer. There are any number of pricing and delivery models that apply in this case, but they all revolve around not just the provision of a tool, but also the construction of the house.

Using a SaaS model alone to buy automation is akin to paying a contractor to simply show up at the worksite every day, nothing more. You’re paying for their presence, with no guarantees as to their productivity. Adding a Shared Savings component ensures automation solutions are aligned with both your productivity goals and your bottom line.

In this approach, providers of automation solutions are paid not only to ensure their tool is up and running, but also based on a percentage of the work they automate. The cost they remove from your operation is calculated and the vendor is paid a percentage — the rest goes straight to your bottom line. The more work that is automated, the more your efficiency improves. The more work is automated the more your organization saves.

So, let’s ask again: what are you buying, really?