Health Care Industry Plans Tech, Data Security Investments

Survey participants cited three key areas of capital spending for 2016: technology, existing facilities and data security.

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Health care organizations are planning robust spending on technology and data security, according to a TD Bank survey of 300 senior finance executives, including chief financial officers (CFOs), comptrollers, treasurers and directors of finance.

More than three out of five (61 percent) respondents expect to increase capital expenditures next year, reflecting a marked and steady climb since 2010, when TD’s inaugural CFO Survey found that 39 percent of executives planned to increase spending.

Participants cited three key areas of capital spending for 2016: technology (58 percent), existing facilities (44 percent) and data security (41 percent).

Executives noted a variety of challenges in the cash flow cycle, including timeliness in collecting payments (29 percent), outdated systems creating inefficiencies in operations (21 percent) and manual processes associated with payment initiation (17 percent).

The survey found that 54 percent of respondents expressed increased optimism regarding U.S. economic growth in the year ahead.

Similar sentiment was noted regarding their companies’ performance for 2016, with 57 percent citing increased optimism, lower than their counterparts in industries such as professional services (62 percent) and manufacturing (61 percent).

Despite speculation that the Federal Reserve may soon raise interest rates for the first time in more than a decade, the majority of executives reported this would not alter their plans to make business investments in the year ahead.

Nearly three-quarters (74 percent) of executives noted that the rate increase would have no impact on their borrowing, and 6 percent said a rate hike would make them more likely to borrow.

Government policy continues to be a chief concern for executives, though the importance of economic issues appears to have shifted. Health care reform and government efficiency rank as the top priorities for executives and resonate as key areas respondents would like 2016 presidential candidates to address in their campaigns.

In previous years, TD’s survey found that job creation, federal regulation and monetary policy were among the leading political concerns, indicating a change in executives’ attitudes toward government over the past five years.

Across the East Coast, executives are largely aligned on the outlook for the economy and business performance, although Florida respondents reported stronger optimism in their companies’ performance and the national economic outlook compared with those in other regions.

Respondents also reported similar appetites for increasing expenditures. Differences in opinion were largely tied to the prioritization of concerns and expenditures, showing some regional trends.

In New England, Philadelphia and Washington, D.C., CFOs indicated that they find resource planning to be the top stressor, while executives in New York City, Florida, and North and South Carolina named liability for risk as their greatest concern.

In Washington, D.C., and Florida, CFOs reported a higher anticipated increase in capital expenditures than in other regions—on a directional basis—and significantly more respondents in D.C. are much less likely to borrow if the Federal Reserve increases interest rates compared with their counterparts in New England and New York City.