IT to take bigger slice of capital spending
Over the next three years, more healthcare organizations are likely to go up a bracket in spending on health information technology than those planning to cut IT spending enough to drop a bracket, based on the share of capital spending committed to IT, according to readers responding to this year’s survey. The evidence? We asked readers to tell us what percentage of their capital budgets have been spent on IT in the past three years, and also to predict what percentage of their capital budgets will be spent on IT in the next three years.
Respondents had six spending brackets to choose from (See chart, p. 32).
The numbers indicate those who will be getting a somewhat larger slice of the capital spending pie outnumber those who will be getting less.
About 16% of survey respondents indicated they would be increasing their proportion of capital spending devoted to IT enough to jump a spending bracket, compared with 11% who indicated they would be spending enough less on IT as a percentage to drop a bracket. Mean- while, 59% reported their past and future budgets would remain in the same ranges.
Tracking past IT spending, solid majorities— 72% of respondents—reported percentages of their capital budgets going to IT spending in the previous three years were in the lowest two range choices offered in the survey—10% or less and 11% to 20%. In the coming three years, however, 63% of respondents estimated they would see IT spending in the two lowest ranges.
The median range—11% to 20%—also was the most common range, for past and future spending; however, there were more survey respondents selecting each of the four higherspending range choices offered in the survey question on estimated future spending than there were on reported past spending.
John May is chief financial officer of the 41-bed Wetzel County Hospital in New Martinsville, W.Va., an Ohio River town of about 5,800 people. His hospital budget plans are typical of many indicated by survey respondents, including several contacted for this story, whose organizations plan to be dialing up their IT spending a notch over the next three years.
Wetzel County Hospital had an IT budget between 11% and 20% of capital spending in the past three years, but the hospital’s plan calls for spending between 21% and 40% in the next three years, May says.
The local economy has taken a bit of a bite out of immediate IT spending plans, May says, but longer term, meeting the meaningful-use targets under the American Recovery and Reinvestment Act of 2009, also known as the stimulus law, will be a spending driver.
“We were going to go pretty aggressive the next quarter, but we backed that off a little bit, but because like everyone else, we’ve seen our volumes drop a bit,” May says. “We’ve got a lot of people who are newly unemployed who could probably qualify for Medicaid, but won’t apply out of pride, and so that’s written off to charity care.
“The modules we are having to purchase are going to be pretty big ones, pretty pricey modules we’ve resisted buying in the past, but we’re going to have to get to meaningful use,” he says. “We