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U.S. report

US healthcare IT spending increasing, AHA says

Citing industry analysts Sheldon I Dorenfest & Associates, the American Hospital Association (AHA) says healthcare IT expenditure is on the increase, with nearly $31 billion spent in 2006 compared with $19 billion in 2000. Furthermore, this growth is set to continue, fueled by purchases of picture archiving and communications systems, as well as computerized provider order entry systems.

The AHA’s report challenges the view that healthcare organizations spend much less on IT than other industries, referencing two studies that both compared healthcare IT expenditures as a percentage of revenue, with a corresponding metric for the banking and financial services industry. In 2001, banking and financial services spent about 5% to 6% of revenues on IT, compared with 3% to 4% for healthcare organizations.

More current data from a Modern Healthcare/PricewaterhouseCoopers annual survey of hospital executives indicate that the typical healthcare organization allocates 2.5% of the operating budget to IT. Senior hospital executives responding to the Modern Healthcare 2005 survey indicated their primary near-term IT priority to be the electronic health record (EHR).

A key impetus in the increased interest in EHR was the 2004 pledge by President Bush to establish an interoperable system of health records within a decade, and the appointment of the first national coordinator of health information technology to oversee the process. The total national cost of introducing this system has been estimated at $276 billion to $320 billion over 10 years.

The cost to a medium-sized hospital has been estimated at $2.7 million initially and then $250,000 per year. Annual savings achievable with a full-operating system have been estimated at $77.8 billion nationally and $1.3 million for a medium-sized hospital.

The AHA claims that advances in technology have transformed patient care, particularly in the shift from inpatient to outpatient settings and in the development of less invasive diagnostic and therapeutic techniques.