HIPAA Costs Said to Curtail Health IT Spending

Despite its popularity as a political issue, health IT is taking a back burner to HIPAA compliance efforts, says a market research analyst firm, which predicts a dip in health IT spending this year.

The health IT market in the United States is expected to stagnate this year with a slight decline in spending, according to recently released figures from market research analyst firm Frost & Sullivan.

Oddly enough, the drain of institutional resources away from commercial IT solutions toward training and staff to ensure compliance with HIPAA (the Health Insurance Portability and Accountability Act) is largely to blame, according to Amith Viswanathan, a health care industry analyst at Frost.

He said he expects U.S. health IT spending to shrink from $36.7 billion to $36.2 billion this year. Payer and health care institution spending are each expected to decline a bit to $15.8 billion and $15.6 billion, respectively. Viswanathan said he does expect private physician practice expenditures to expand marginally, from $4.4 billion to $4.7 billion.

Viswanathan attributed this budget expansion to minimal concern on the part of small physician groups about HIPAA compliance. "Private practices tend not to worry about HIPAA compliance so much. Theyre operating under this pseudo-shield of anonymity and rely heavily on their vendors to be compliant," he said, which allows more of their resources to go toward expanded IT spending.

/zimages/3/28571.gifNurses say the bulk of IT efforts ignore their needs. Click here to read more.

All of the federal governments expressed fervor regarding health IT has yet to loosen up much spending, Viswanathan said. He argued that health IT budgets are unlikely to grow dramatically until there is a unified approach to nomenclature, technology standards and product sets.

But he said he also sees the pressure building "to make the health care system as efficient as possible." IT will be key in that effort, and decisive changes are likely to happen within the next five or six years, Viswanathan said.

Financial incentives from the federal government, particularly for smaller organizations, are a must, he said. "No ones doing it for the love of HIS [health information systems]; theyre doing it for the bottom line."

/zimages/3/28571.gifFinancial help from the government is needed to drive health IT, a report from the Department of Health and Human Services finds. Click here to read more.

He suggested that offering tax breaks for small physician practices might provide an incentive for them to install health IT infrastructures. Beyond that, Viswanathan noted that additional tax incentives for improved patient outcomes, or some other metric of success, might push health IT along.

"Everyone thinks of HIS as either clinical workflow or as a management system; I think it has to be both," he said. "Everyone gets paid much faster, and customers get a better experience."

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