Hospitals ration spending on health IT in the downturn
By Jane Sarasohn-Kahn on 13 July 2009 in Uncategorized
Notwithstanding the promise of nearly $20 billion in stimulus funding to support the adoption of electronic health records, hospitals are between a rock and a hard place when it comes to laying out capital for HIT investments.
Based on the latest Most Wired Hospitals survey, even the Most Wired among American hospitals have had to suspend and/or cut back planned HIT projects. Where they can calculate an ROI, hospitals are focusing on projects with higher rates of return.
As I opined in my write-up for iHealthBeat on the 2009 HIMSS conference, Connectedness, Communities, Capital: Putting HITECH in Context, this year, hospitals have to focus on getting more out of the HIT investments they already have.
The president of McKesson, Sunny Sanyal, points out in a survey discussion that IT spending as a percent of hospital budgets is increasing, albeit over smaller budget bases.
Several hospitals have been on the list for all 11 years the survey has been conducted, including Avera Health (Sioux Falls, SD), MeritCare (Fargo, ND), Partners (Boston), Sharp (San Diego), and U-Pittsburgh Medical Center. Clearly, both small and large academic institutions can be “Wired.”
“Most Wired” takes into account five key aspects of HIT: safety and quality, customer service, business processes, workforce, and public health.
This marks the 11th annual survey of the Most Wired Hospitals conducted by Hospitals & Health Networks, with collaboration from the AHA, McKesson, and CHIME (the College of Healthcare Information Management Executives). 565 health systems participated representing 1,314 hospitals.
Health Populi’s Hot Points: As the chart illustrates, the AHA found that hospitals’ operating margins were falling earlier this year based on survey data from March 2009. Based on the economic outlook for the next few months, U.S. hospital operating margins will continue to decline in this third quarter of 2009.
This will be exacerbated by the proportion of patients unable to pay for care, which is growing for many hospitals: uncompensated care as a percent of total gross revenues was increasing for 70% of hospitals surveyed by AHA in March.
HIT is not immune from being negatively impacted by the general economy. This is happening at the very time when U.S. hospitals are being called upon to further invest in digitizing health data, as well as migrate to ICD-10 code sets. Whatever “meaningful use” definition reigns, it had best focus on what is truly most meaningful — and cost-effective — in this era of ever-tightening hospital finance.