Seven Health-Care IT Spending Trends To Know Right Now

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Attendees at Everything Channel's Healthcare IT Summit in San Diego certainly won't go home starving for data, not with the number of panels and analyst sessions on Monday and Tuesday that were devoted to pinpointing where all the precious health-care IT dollars are going.

A straw poll of CIOs and other attendees at the conference indicated some skepticism about what Gartner analyst data revealed. Cut-and-dry clarity is not the easiest thing to find in the health-care vertical, and there are as many opinions as there are data points. But most agreed that Gartner conclusions about certain spending trends were in line with what they, too, were seeing.

Solution providers that play in the space should definitely be aware of the following as they gear up for health-care business in 2009.

1. Sixty-Four Percent Of Health-Care IT Budgets Are Being Used To "Keep the Lights On"

Health-care IT budgets are underfunded and will remain underfunded despite incremental increases, explained Gartner Research Vice President John-David Lovelock. IT departments are continually being asked to do more with the same or slightly increased budgets.

But throwing more dollars at those budgets won't change what Lovelock described as the core problem for Care Delivery Organizations (CDO): Nearly two-thirds of budgets go toward keeping systems running, disaster recovery up-to-speed and the infrastructure well-oiled.

"Unfortunately, most CDOs' internal procedures are stuck in a quagmire of overlapping practices and procedures, built on incremental responses to problems," Lovelock emphasized. "Reducing wasted time, money and intellectual capital requires a top-down, zero-based look at IT and business operations."

It begs the question: As a solution provider, are you helping your health-care clients use what they have better and more efficiently?

The sea change for how health-care perceives itself with regard to adoption of technology happened sometime around 2006, Lovelock said. In 2005, only 8.3 percent of surveyed health-care organizations considered themselves aggressive early adopters of new technology, with 55 percent considering themselves "mid" (adopting maturing technology with manageable risk) and 37 percent considering themselves "late" (adopting only proven technologies) -- results consistent with the preceding years. In 2006, those numbers shifted dramatically, with 33 percent considering themselves "early," 40 percent considering themselves "mid" and 27 percent considering themselves "late."

"No, we're not really early adopters compared to say, finance, or other industries. VoIP, for example, is dominant right now among 'early adopters,'" Lovelock said. "But that doesn't matter nearly as much as taking on the psychological improvement of IT Matters in health care. I mean, you still see Windows 95 and Windows 98 in hospitals. You hear things like, 'My system still works on DOS and I don't want to move!' That's finally shifting."

2. There is Little Consensus Among Health-Care Providers For How Much To Invest In In-House Labor And How Much Should Be Purchased From Outside

Current Gartner numbers put about 70 percent of labor spending on IT employees, 15 percent on IT contractors and 15 percent on external IT service providers. Compared to its decades of use in both the commercial and government sectors, Lovelock said, IT outsourcing is new to health care, with only 30 percent of organizations indicating they use a form of IT outsourcing at all.

Lovelock explained that CDOs are most likely to use IT outsourcing as a cost-saving maneuver rather than an innovative one, and the areas that use it most are often seen in the most commoditized -- networking, help desk, Web design and management, and most of all, desktop support. ("Tier one desktop support? It's going out the door," Lovelock said.)

"As an industry, we don't have a response for how to deal with labor," he added. "We don't have a best practice. The proper mix of consultants, internal labor, external services and providers just hasn't been standardized."

Next: Advanced Disease Management Is The Emerging Hot Health-Care Technology

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