Healthcare IT Spending Update

By Rich Staas

Director of Client Services, NPI

July 17, 2015

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Where are healthcare IT budgets going today? Aside from the costs of “keeping the lights on” (ongoing subscriptions, maintenance and support that consume an average of 72 percent of the budget), there are several areas where NPI is seeing an uptick in transaction activity across our healthcare client constituency. These reflect the numerous demands on IT operations within the healthcare organization – from regulatory requirements to patient experience improvement.

Security. Healthcare organizations continue to spend significant capital to ensure their patient records are protected. More than half of healthcare organizations have experienced between one to five cyberattacks in recent years – with a significant number of those attacks successful. Security will continue to be a top priority moving into 2016 and beyond.

Integration services. From electronic health records (EHRs) to clinical measures and decision support tools, providers are inundated with new technologies that automate processes and capture new types of data. Yet, much of this data is locked in proprietary systems that don’t communicate with each other. Providers continue to undergo major IT integration initiatives in order to fully realize the value of the data being captured and to meet demands from patients and regulators.

Cloud. The cloud has transformed IT in virtually every industry – including (and especially) healthcare. Over the next five years, it is estimated that 80 percent of health data will pass through the cloud as providers increasingly leverage hosted infrastructure for data collection, aggregation and analysis. In a recent report from Accenture on top healthcare IT trends, they define the “platform revolution” – a move to a cloud-enabled (and mobile) IT ecosystem "that captures the data from disparate sources such as wearables, phones and glucometers, and pulls it all together to give a patient and caregiver a holistic and real-time view of the patient's health." The cloud is the primary enabler of this vision and investments in IaaS, PaaS and SaaS will continue to spiral upwards as a result.

Patient/consumer experience. Mobility is shaping healthcare in powerful ways. Patients and consumers are pressuring healthcare providers to deliver mobile experiences that give them easier access to health-related information. Providers are looking into helping patients with chronic conditions by investing in consumer-facing mobile apps, wearable technologies, remote monitoring tools, and virtual care. This has precipitated a need for more mobile application development services, infrastructure improvements, and big data and analytics. (HealthcareITNews.com reports that big data has gotten so big that 41 percent of healthcare executives say the data volume their organization manages has increased by 50 percent over the last year.)

While these areas of spend have their own unique sourcing risks, they also have some in common. Mobility, cloud, security, integration are all witnessing a sea change in pricing, licensing/subscription, and contract terms and conditions. What’s a fair price? What’s a fair discount? How much contractual flexibility should be expected from vendors given increased regulatory oversight of the healthcare industry? How can providers leverage their existing on-premise investments while still extending into the cloud?

The answers to these questions depend entirely on the transaction – but they must be asked and validated each and every time in order to assure best-in-class purchases.