Wednesday, May 19, 2010

Healthcare ... big spending on technology ... what impact?

Dear Colleagues

In August 2009 a study by a consulting group talked about the big surge in healthcare informatics that was being predicted. My immediate reaction to the article was as follows:
Dear Colleagues

The article talks about a very large spend ... but there is nothing about what benefit will be realized. Will there be an improvement in health outcomes that justify the cost? Will there be a reduction in cost of service delivery?

In general terms it can be said that the "for sure" beneficiaries are the manufacturers and vendors/consultants associated with selling and installing the equipment and systems. The impact end of the investment is more than a little "tentative"!

I am an enthusiast for technology ... but only when it is used to deliver impact. The big spend is problematic and explains something of the health care crisis!

Peter Burgess
The performance of the global healthcare sector needs to be much better understood. Clearly there are bits of the medical profession where some amazing work is being done ... but there are also a lot of examples where healthcare is being used as a very powerful profit making opportunity with little or no concern, it would appear, for the social implications. Clearly the metrics are part of the problem, because there are well established metrics for profit and corporate performance, but essentially none about the efficiency and effectiveness of the medical service being delivered for the society.

This is a slightly different matter. I am not sure whether this impression is valid or not ... but the major pharmaceutical companies in the USA seem to be advertising their products on TV more than any time in the past. Given the complexity of drug therapy, I would argue that this is a very anti-social behavior. The fact that they are advertising like this suggests that customers are responding ... but is this really the way medicine should be promoted? There is something wrong here ... but I guess from the pharmaceutical company's perspective, if it is profitable, that is all that matters.

The following is the URL for the brief article about healthcare technology spending.
Below is the text of the article.

Peter Burgess
Hospital I.T. Spending Surge Predicted by HIMSS analytics
Howard Anderson
Health Data Management Magazine, August 1, 2009

U.S. hospital spending on information technology will hit $4.7 billion this year and grow to $6.8 billion by 2014, according to a new report from HIMSS Analytics, Chicago. Spending will grow at a compounded annual growth rate of 7.5%, the report says.

This healthy growth will be fueled, in part, by incentive payments for electronic health records under the federal economic stimulus. In addition to increases in spending on clinical automation, other factors contributing to I.T. spending growth will be the new ICD-10-CM codes for claims as well as the new 5010 standards for electronic claims formats, according to a summary of the report.

The economic recession led to lower spending in 2008 than HIMSS Analytics originally anticipated, according to the summary. But a HIMSS Analytics spokesman declined to reveal its final estimate of I.T. spending in 2008 or how much it declined vs. 2007.

"Bond markets collapsed and many hospitals with variable bond rates experienced much higher bond servicing expenses in 2008," the summary states. "Then their endowment funds took a hit with the collapsing stock market. This resulted in what we believe was a $3 billion to $6 billion shortfall for the spending forecast we published in 2008."

The research arm of the Healthcare Information and Management Systems Society prepared the report, "Essentials of the U.S. Hospital Market, 4th Edition," based on its annual survey of 5,100 hospitals. The report predicts that hospitals will spend 43% to 48% of their total capital budgets on I.T. this year, down from 2007 levels. But these percentages will increase over the long haul because of the federal stimulus incentives.

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