HIMSS Analytics: After dip, hospital IT budgets rise again

“The economic recession has significantly affected a normally recession-resistant medical industry,” stated a report from HIMSS Analytics. However, results from the first quarter of 2011 indicate that IT budgets might be adjusting back to pre-recession levels.

In the report, titled “The Essentials of the U.S. Hospital IT Market—6th Edition," the proportion of the market that said its IT budget is increasing took a significant dip from the typical 50 percent range into the low 40 percent range for most of 2010, the Chicago-based organization stated. That returned to the 50 percent range in the first quarter of 2011.

“We believe that the prospect of receiving American Recovery & Reinvestment Act (ARRA) funding re-stimulated IT budgets to overcome the recession’s lag effects on hospital cash availability,” the report stated.

The report was based on health IT market data captured from the HIMSS Analytics Database of more than 5,200 hospitals and 32,000 medical facilities in the U.S.

“2010 proved to be the year hospitals ramped up their approach to meet the first stage of the meaningful use criteria. The data show significant adoption levels of key EMR-related applications increased from 2009 to 2010. The number of hospitals reaching Stage 6 of the HIMSS Analytics EMR Adoption Model doubled last year,” said John P. Hoyt, executive vice president of organizational services at HIMSS.

The report identified enterprise data warehousing, with associated business intelligence systems and consultancy, as a growing market, and suggested spending on revenue cycle management (RCM) applications will continue to intensify during the next five years.

Many hospitals are making capital investments to position themselves to qualify for meaningful use incentives, HIMSS Analytics stated. “As such, hospitals’ capital spending for IT application solutions in 2011 is projected to constitute 46.5 percent to 48.3 percent of their total IT capital budgets; this is up approximately 2 percent from 2009.”

Thirty-seven healthcare IT applications tracked by HIMSS Analytics will have a projected compound annual growth rate of 5 percent or greater in the 2011-2016 time frame, the report found. ARRA funding will focus hospitals on key clinical applications, and unfunded mandates and payment reductions will force hospitals to invest in improved RCM applications.

 

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