Budgets dip, health IT spending grows

Premier survey shows health systems spending on IT, construction
By Bernie Monegain
10:01 AM

Even as hospitals and health systems nationwide are projecting that their upcoming capital expenditure budgets will drop below 2010 levels, a new survey shows spending on health information technology continues to grow.

The Premier fall 2012 Economic Outlook survey of healthcare executives shows spending on construction is also on the rise. Imaging, lab and clinical equipment investments drop sharply, and there is an increased focus on reducing waste through evidence-based decision-making, including comparative effectiveness and value analysis.

[See also: Premier makes big connect with big data.]

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Forty-one percent of 617 survey respondents – primarily hospital C-suite, and materials and practice area managers – are projecting their capital spending to increase compared to last year. However, this is down from 42 percent in fall 2010 and a two-year high of 46 percent in spring 2011.

[See also: IT exception to cutback in hospital capital spending.]

When respondents were asked about the area in which they expect to make the largest capital investment over the next year:

  • 43 percent cited healthcare information technology (HIT) and telecommunications, up from 34 percent in spring 2011.
  • 34 percent cited capital investments in infrastructure and construction, up from 28 percent in fall 2011, an 18 percent increase.

Investments in imaging, lab and surgical and clinical equipment are forecasted to drop by more than 23 percent compared to just six months ago, according to survey results. Product standardization – reducing the number of vendors that supply like products – was cited most often (almost 33 percent) as the top area to which hospitals are dedicating the most resources (financial, labor) to improve their supply chains. Reducing costs for physician preference items was cited by more than 27 percent.

A factor driving the dip in capital spending is reimbursement cuts, cited by 74 percent of respondents as the number one trend impacting their hospital. Another factor could be an anticipated reduction in patient admissions. Twenty-four percent of respondents believe their patient admissions will decrease, more than double what was projected in fall 2011 (12.4 percent).

“Whether due to lower reimbursement or fewer patients, health systems are making tough choices on how to most effectively and efficiently provide care. It is clear they consider the value-analysis process of using integrated data to improve outcomes and reduce costs paramount in the current healthcare environment,” said Premier President of Supply Chain Services Durral Gilbert.

The survey shows reducing waste is weighing heavily on the minds of healthcare providers. When asked what they consider to be the two biggest drivers of healthcare costs, 33.3 percent of respondents cited overutilization of products and services, up 32 percent from six months ago (22.7 percent). Premier’s waste report identified an opportunity for 464 hospitals to save $165 million annually in blood purchasing costs alone by reducing blood usage by 802,716 units, while maintaining positive patient outcomes.

“Inefficient use of products, services and labor is a major issue health systems are facing that requires active engagement from a variety of internal stakeholders,” said Mike Alkire, Premier chief operating officer. “Matching utilization data with outcomes, as our blood product analysis shows, can identify tremendous savings without compromising quality, even when looking at just one product or service.”

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