Healthcare Providers' Capital Spending Growth Expected to Dip in 2014
From the uncertainty surrounding health insurance exchanges and the anticipated influx of newly insured patients to RAC audits and the controversial two-midnight rule, providers are feeling the financial squeeze from all sides right now, so being conservative with resources makes perfect sense.
According to the Premier survey, however, the tight reins on capital investing are largely the result of reimbursement cuts, which were cited by 46.7% of respondents as the trend they expect to have the biggest impact on the healthcare system in 2014—the single biggest reason noted in the survey.
"One of the big things driving the adjustment in capital spending is the reductions going on in the healthcare system in terms of reimbursement models. When less reimbursement goes to the hospital, they certainly need to manage their capital spending in a different way," Gilbert says.
IT is Top Area of Spend
Not surprisingly, the largest area of capital investment continues to be IT and telecommunications, which was identified by 38% of survey respondents as the place where their organization will spend the most next year. This number is trending down, however, compared to six months ago (40%) and a year ago (43.1%).
"We don't see this as a negative trend. We see it as a natural trend," Gilbert explains, saying that spending on IT reached a fever pitch in recent years as health systems tried to take advantage of Meaningful Use incentive dollars.
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