IT to take big­ger slice of cap­i­tal spending

Modern Healthcare - - Special Feature -

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

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