June 16, 2024
Healthcare organizations increasing IT investments
Healthcare organizations increasing IT investments

Photo: Joos Mind/Getty Images

Technology and IT has emerged as an important strategic priority for healthcare institutions, with a new Bain and Company report showing that providers are increasingly accelerating their spending on IT and software. Nearly 80% of healthcare executive respondents in the new survey increased spending materially over the past year, spurred by emerging technologies, labor shortages and cost pressures.

More than half (56%) of the respondents cited software and technology as one of their top three strategic priorities, compared with 34% in 2022. Around 75% of respondents expect growth in software and technology spending to continue over the next 12 months.

Across the different provider types, academic medical centers (AMCs) and large hospitals and health systems expect a stronger increase in their own spending than smaller operators due to a greater focus on innovation and financial flexibility.

Respondents cited technological advances and the availability of new solutions, particularly around patient engagement and cybersecurity, as the top drivers for new investments.

WHAT’S THE IMPACT?

Due to financial challenges and shrinking margins, investments in areas with clear, near-term return on investment, such as revenue cycle management (RCM) and clinical workflow optimization software, are now high on the agenda.

Providers cite RCM as a top priority for the next year, anticipating investments across a broad set of sub-segments, including revenue integrity, charge capture and complex claims. This is due to RCM software’s critical role in both enhancing revenue and saving on costs due to the streamlining of labor-intensive processes.

Aside from RCM and workflow optimization, freestanding hospitals and physician groups are catching up on other core systems, namely electronic health records and IT infrastructure, the survey found.

With current IT solutions, healthcare providers cite cost and EHR integration and interoperability as critical pain points. AMCs emphasize interoperability due to generally more complex tech stacks and data use cases, while freestanding hospitals experience more financial pressure and overwhelmingly cite cost as a pain point.

Provider organizations are addressing these issues by streamlining tech stacks and buying from EHR vendors and other suite providers where possible. This trend has intensified since 2022, helping Epic in particular to grow its market share to more than 60% of total U.S. hospital net patient revenue, according to the report.

Meanwhile, the emergence of generative AI has brought the broader technology back into the spotlight: In the survey, around 70% of health system respondents indicate they believe AI will have a greater impact on their organization than last year, moving AI strategies from the IT department to the C-suite. While attitudes toward AI are mixed, providers with more advanced AI strategies, especially AMCs, have slightly more positive sentiments overall due to the potential for greater efficiency, improved patient outcomes and cost savings.

THE LARGER TREND

As providers continue to face a number of structural challenges – including provider shortages, an aging population and financial pressures – they will increasingly prioritize IT solutions that produce a tangible ROI, and will more frequently look to simplify their tech stacks, according to the survey. Vendors will need to offer best-of-breed solutions or compelling suites in order to differentiate themselves.

And while AI has the power to transform many processes and workflows; however, the shift hinges on the technology’s ability to demonstrate productivity gains in real-world applications without increasing clinical risk. The best vendors will offer AI and other technologies that create clear returns to providers, and help to mitigate structural challenges facing the healthcare industry, the authors said.
 

Twitter: @JELagasse
Email the writer: [email protected]

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