Healthcare News & Insights

Health IT spending rises as hospital budgets decrease

Planning to make significant health IT investments in 2013? Your organization isn’t alone. 

Hospitals expect their technology budgets will increase in the coming new year, despite the fact that their overall budgets are decreasing, according to a new report from Premier.

Among the 617 hospital executives and managers surveyed, just 41% expect to increase their capital spending in 2013 compared to 2012 levels. That’s down from 46% who said their budgets would increase when asked in 2011, and 42% who said yes in 2010.

The main reason for the drop in healthcare organizations’ budgets is decreasing reimbursements, which was cited by most respondents (74%) as the top factor impacting their hospital. In addition, 24% of respondents said they expect patient admissions to decrease over the next year. That’s more double the amount who projected the same thing last year.

However, hospitals plan to spend a significant portion on their available budgets on health IT, according to the survey. When asked for the area in which they planned to make the largest investment over the next year, 43% said technology and telecommunications, up from 34% in 2011.

That was top answer given, ahead of infrastructure and construction (34%), though that area is also expected to see an increase in funding (up from 18% in 2011).

How hospitals are cutting costs

In light of lower decreased reimbursements and admissions, hospitals are taking some steps to cut costs where they can so there is room in the budget for increased health IT spending.

Some of the steps organizations are taking include:

  • Standardizing products and reducing the number of vendors the hospital buys from (cited by 33% of respondents to Premier’s survey)
  • Using products more efficiently (33% of respondents said overutilization of products and services was one of the biggest drivers of healthcare costs)
  • Tightening controls for physician preference items (cited by 27% of hospitals), and
  • Forgoing imaging, lab, surgical and clinical equipment purchases (spending in those areas is expected to decrease by 23%).

 

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