Trends and Tactics for IT Spending
The cost of health IT ownership is projected to be nearly twice what hospitals and independent health clinics spend on IT technology and software in 2009, according to Mike Davis, vice president, HIMSS Analytics™, Chicago, Illinois. He shared trends from a database that includes 32,000 health care providers in the United States and Canada during a Webcast on June 16, 2009. “Operating expenses, over a period of time, exceed what we see in the capital environments,” Davis notes, underscoring the need for health care providers to calculate support as they progress through the stages of the electronic medical record (EMR) adoption model (see table, page 22). “What we are seeing is that as people move into higher ends of the model, they are having to hire additional staff, especially clinically trained staff (nurses and physicians) to help support those environments. Over the long term, the operating expenses will continue to go up, whereas we think the capital expenses will remain relatively flat over the next couple of years until we start to see the impact of American Recovery and Reinvestment Act (ARRA) funding on this market.” True spending projections for 2007 and 2008, including capital and operating expenses, were calculated at $26.07 billion and $26.1 billion, respectively. Davis is projecting that $25.5 billion will be spent in 2009, with $19.46 billion attributed to operating expenses and $10.95 billion attributed to capital expenditures. HIMSS Analytics also tracks certain applications within the IT environments of hospitals. Applications projected to have a more than 5% compounded annual growth rates over the next five years include all EMR applications (11.76%), financial modeling (6.4%), patient billing (6.4%), and RIS (6.4%), among others. “Most [RIS] buying is being driven by PACS within radiology,” Davis reports. “In many cases, vendors of PACS have RIS, and because hospitals are moving to tighter integration, they are moving to implement the systems that are provided by their PACS vendors.” EMR Adoption, the ARRA, and Radiology Davis reports strong growth (10%) in EMR adoption among hospitals at level 3, which automates the nursing environment and includes PACS availability outside the radiology department. “Right now, the majority of hospitals in the United States are in stage 3, but most critical-access hospitals are still at stage 1 or 0,” Davis says. “We think they are the hospitals that will have the most difficulty in demonstrating meaningful use.”
Table. EMR Adoption Model
Davis also sees interesting growth at the stage 6 level in 2009 Q2 (not reflected in table), but the total percentage of US hospitals in that category now is currently just 1.1%. Stages 4 and 5 are the most difficult to achieve, Davis says. Stage 4 represents computerized physician order entry (CPOE), a politically charged subject in the hospital environment because it requires major workflow adjustments for physicians. Stage 5 represents closed-loop medication administration, with all applications integrated, including bar coding and radiofrequency identification technologies. How RIS, PACS, and radiology CPOE will play into the eventual definition of meaningful use, Davis cannot say. “What we are trying to figure out is which applications will generate the information that we know the government is going to start tracking, because what they are moving toward is a pay-for-performance model,” he says. “As you look at radiology, I think it is going to be very important to have the images available for the payors or government to start looking at some of these performance and outcomes environments that they are going to set up, so we know it is going to be a component of it.” He adds, “We know that diagnostic information is going to be critical for that.” Davis says that the federal government has made it clear that CPOE will be a component of meaningful use, such as e-prescribing in the independent-clinic environment. “In the hospital, there is a move beyond medications,” he notes. “When people ask where, on the EMR adoption model, we think meaningful use is going to be, our answer is stage 4 plus. We think it is going to be at least stage 4, and we think there are going to be some requirements up above relative to physician documentation.” Overall, Davis expresses concern that not enough trained personnel exist to implement $19 billion worth of technology. “If all hospitals and all of the independent clinics start to move forward with these processes, do we have enough implementation resources to actually pull it off?” he asks. “We think that is a very big challenge for this industry.”