Hospitals Put IT in Second Place

Innovations 2006: Information technology is a priority for hospitals, but with many of them facing a difficult financial environment exacerbated by the ballooning ranks of the uninsured, investing in new IT systems may have to wait. (CIOInsight.

Nearly one-third of American hospitals arent profitable or are just breaking even. Thats consistent with the previous finding of a survey of hospital CEOs conducted two years ago by consulting firm Deloitte & Touche.

And while that may not sound very upbeat, the good news for the industry is that it hasnt gotten any worse lately.

But it does mean that most hospital CEOs are closely focused in on financial issues including addressing the needs of the uninsured, rather than the implementation of new information technology.

Medicare is becoming an increasingly large source of revenue, up to 37 percent from 33 percent in the previous survey.

This trend is expected to continue as the Medicare population grows. Hospital CEOs are concerned that increased dependence on Medicare revenues could create additional financial challenges for hospitals.

Pay-for-performance systems, which are still largely experimental and rely heavily on IT to assess hospitals and doctors via a variety of quality indicators, are not yet fully in place.

Hospital payments continue to be primarily based on discounted charges and fee-for-service payments.

Only one-third of hospital CEOs believe that the potential measures for pay-for-performance—clinical/quality outcome data—should be made available on a mandatory basis. But almost all of them believe quality evaluations should be made available on a voluntary basis.

Its difficult for many hospital CEOs to justify significant budgets for quality measurement and reporting.

Two-thirds feel like they can only spend money to improve quality reporting if it will produce financial benefits like increased efficiencies or higher patient volumes.

But measuring return on investment for IT has actually fallen slightly in importance for CEOs. Its increasingly viewed as an unattainable goal.

"Some of the improvement in quality is going to be really hard to quantify into dollars," said Tom Hochhausler, partner with Deloitte & Touches life sciences and health care practice. "How do you really effectively measure higher quality?"

/zimages/5/28571.gifClick here to read more about hospitals that use RFID in their attempts to save money.

Still, pay-for-performance is gaining traction. Almost all of the nations 4,200 general hospitals are providing Medicare with quality data in exchange for higher reimbursement rates.

And there are almost 50 hospital sites that voluntarily report quality indicators to the public, according to a recent report from PricewaterhouseCoopers.

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