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Capital Spending Reflects New Era in Healthcare

Rene Letourneau, for HealthLeaders Media, February 13, 2014
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Barto says CHI will spend 28% of its $1 billion to $1.3 billion fiscal year 2014 capital budget on IT projects, up from 10% in 2010.

"IT is a much larger portion of our capital spend in 2014 than it has been in past years," he says. "We are building out the data analytics needed to analyze patient populations and take on risk as we evolve as a healthcare system. The majority of the IT investments we are making is really to be sure we have the data in the system to do the analytics we need to thrive in a pay-for-value culture and in a risk-sharing world."

Barto says that it is not enough merely to capture the data in an EHR; CHI has made it a priority to use the information to improve quality and lower costs, which he says is essential in a risk-based payment environment.

"I think it is about making investments in the IT system and also working on how we make those into better tools to deliver better care in our markets," Barto says. "It's about using the data to get better outcomes and to focus on our high-cost areas and to reduce high utilization. We are using the data to drive cost out of the system."

Richard W. Jones, CPA, senior vice president, CFO, and treasurer at Reading (Pa.) Health System, which had $913 million in total operating revenue in fiscal year 2013 and includes the 735-bed Reading Hospital, says his organization is spending $130 million over a three-year period on an EHR installation, in large part to position itself for better population health management.

"We are in the middle of upgrading our information technology. We have recently implemented Epic and rolled that throughout our system both in the hospital and physician practices," he says.

Jones says the IT spend is part of Reading Health's long-term plan to improve care delivery but has been made more urgent by health reform legislation.

"We were originally embarking on this IT investment before we really understood what the Affordable Care Act was going to bring to the industry, but we now believe we need the IT in place in order to respond to the market and respond to the clinical and quality needs of our patients and communities," Jones says.

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