Many Projects, Little Money
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As the economic crisis puts the squeeze on hospital budgets, CIOs are facing some difficult financial decisions as they plot their organizations' IT strategy.
Since the economy began its downturn into what many consider the worst financial crisis since the Great Depression, executives in hospitals of all sizes nationwide have had to make difficult decisions about what (and sometimes who) to cut in their efforts to remain financially viable.
There is little question that information technology departments will continue to face some of those cuts as 2009 wears on. Even with $19 billion injected into healthcare IT under the American Recovery and Reinvestment Act, many of those dollars could be years away, so the challenge facing chief information officers is determining where to invest scant IT dollars and how reductions can be made without severely undermining the hospital's current and future capabilities.
"Hospitals don't want to delay or cut out a technology that will help them meet pay-for-performance incentives, but they need to find ways to scale back costs. It's a conundrum," says John Tempesco, vice president of client services and marketing for Nashville, TN-based Informatics Corporation of America. "What they're going to be looking at now is implementing something that brings quick speed to value and isn't going to take years before they see results."
Long-term vision vs. short-term results
A reoccurring theme among CIOs charged with the task of cutting costs is what to do about long-term, big ticket projects like electronic health records and computerized physician order entry implementation. Michael Davis, executive vice president at HIMSS Analytics, says if funding has not already been set aside for such initiatives, chances are they're going to be delayed until hospital leaders have a better idea of where the economy is headed.
"What usually happens in markets like this is people will complete the projects they already have for some of the major applications. So whatever is being done in the clinical environment, with EMR, PACS, and the like, they are probably going to go ahead and complete those," Davis says. "The pull back will happen on projects that haven't started."
At Advocate Health Care in Oak Brook, IL, Davis' prediction has already become reality. Senior leadership at the 11-hospital system made the decision to put some projects on hold until they have a better idea of the organization's financial future. "I've heard from colleagues that their budgets, like ours, have many items put on hold. These are not only clinical or building, but IT included. We are awaiting improvement in the market before freeing funds," says Joel Shoolin, DO, vice president of clinical informatics at Advocate.
Shoolin points out that although his hospital's leaders see the value of IT, that hasn't saved the department from having to shoulder its share of the financial burden. "I think IT is fair game compared to all other financial requests. While leadership may value IT and see it as part of the future; infrastructure improvements, clinical programs, etc., are all important. So administration must decide what gets funded and what doesn't," he says.
What makes the cut? P4P
The first step in deciding which projects get funding and which ones don't is to evaluate your project portfolio, says Davis. "Now is when hospital executives are looking at their IT applications saying, 'OK, I can't do major projects, but what can I do to supplement, enhance, or extend the current environment?'" he says. That may include upgrading disk capacity or CPU power in order to improve networks. Hospitals might also consider expanding wireless networks and adding mobile devices to extend some of the applications that are already in place, Davis says.
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