This appeared a few days ago.
HIT's Rising Cost and Dubious ROI
Edward Prewitt, for HealthLeaders Media , February 25, 2013
Our latest monthly Intelligence Report, which draws on the 6,000-plus healthcare executives who are members of the HealthLeaders Media Council, is titled "Healthcare IT: Tackling Regulatory, Clinical, and Business Needs." Why, then, is it mentioned in our weekly finance column?
Because healthcare IT is expensive. And the report reveals that it's becoming an ever bigger drain on hospital and health system bottom lines. And that an ROI from healthcare IT will be hard to find, despite the fervent hopes of healthcare executives.
Today, 40% of the 250 respondents say the operating IT budget takes up 2-3% of their organizations' overall operating revenue. But the respondents—who represent a range of C-suite leaders and VPs, including CEOs, CFOs, COOs, and CIOs—expect an upward shift in the near future. More than half (56%) say the operating IT budget will account for 4% or more of overall operating revenue, and a fifth expect IT spending to take 6% or more.
Because healthcare IT is expensive. And the report reveals that it's becoming an ever bigger drain on hospital and health system bottom lines. And that an ROI from healthcare IT will be hard to find, despite the fervent hopes of healthcare executives.
Today, 40% of the 250 respondents say the operating IT budget takes up 2-3% of their organizations' overall operating revenue. But the respondents—who represent a range of C-suite leaders and VPs, including CEOs, CFOs, COOs, and CIOs—expect an upward shift in the near future. More than half (56%) say the operating IT budget will account for 4% or more of overall operating revenue, and a fifth expect IT spending to take 6% or more.
Those percentages are historically high for healthcare, but not necessarily for other industries. You could argue that healthcare is simply catching up.
But what is that extra spending going toward? The top driver, ticked off by 52% of respondents, was regulatory reporting requirements, most notably ICD-10. The American Health Information Management Association (AHIM) has long argued that ICD-10 codes will lead to better patient care, and it's certainly true that better coding can lead improve reimbursements, but in the end that's a lot of money to pay for more coders.
Still, a majority of survey respondents (58%) say their organizations invest in IT, meaning they expect a financial return, rather than simply spend on IT (indicated by 42%).
But while the survey indicates overall trends and expectations, the comments by individual executives reveal how they view healthcare IT. "IT will always disappoint if you expect a return," says the president of a large physician organization. "Most CFOs will say they haven't seen a ROI on the investments made in IT as an industry compared to industries like banking," says Donna Abney, executive vice president of Methodist Le Bonheur Healthcare, whose organization helped shaped the Intelligence Report.
Still, a majority of survey respondents (58%) say their organizations invest in IT, meaning they expect a financial return, rather than simply spend on IT (indicated by 42%).
But while the survey indicates overall trends and expectations, the comments by individual executives reveal how they view healthcare IT. "IT will always disappoint if you expect a return," says the president of a large physician organization. "Most CFOs will say they haven't seen a ROI on the investments made in IT as an industry compared to industries like banking," says Donna Abney, executive vice president of Methodist Le Bonheur Healthcare, whose organization helped shaped the Intelligence Report.
…..
(Editor's note: Many of the figures cited here draw from the paid Premium version of our February Intelligence Report. A free version, containing HealthLeaders analysis but less data, is also available for download.)
(Editor's note: Many of the figures cited here draw from the paid Premium version of our February Intelligence Report. A free version, containing HealthLeaders analysis but less data, is also available for download.)
Full article here:
Well it is interesting to see just how hard people are finding it to obtain a Return On Investment (ROI) for their Health IT investment.
Support for this view is found here:
The unfulfilled promises of health information technology
February 27, 2013 6:00 AM EST
A 2005 RAND report predicted that widespread use of electronic health records technology would save the US healthcare system at least $81 billion per year. At the time, the vendor-funded report helped drive substantial growth in the electronic health records industry and probably contributed to the federal government making billions of dollars of incentive payments available to physicians and hospitals to adopt and meaningfully use electronic health record (EHR) systems via the Health Information Technology for Economic and Clinical Health (HITECH) Act.
Realizing that the cost savings and improvements in healthcare delivery are nowhere near what was optimistically predicted in 2005, RAND recently commissioned a new study to take a fresh new look at the state of health information technology. The new study paints a very different picture and received broad coverage by mainstream news outlets, including “In Second Look, Few Savings From Digital Health Records” by the New York Times in January.
To put it bluntly, the authors of the new report essentially admit that the original RAND study was dead wrong. Healthcare spending has risen by $800 billion since the first report was published, and while much of that is due to an aging population and the increase in overall medical services, there is scant evidence of cost savings due to electronic health records. In addition, there is increasing concern that electronic records have actually made it easier for providers to over-bill for certain services.
Lots more here:
This story is one that has a long way to go in my view!
David.
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