For 1998 healthcare delivery systems have budgeted an average of $8.5 million for capital and $7 million for operations related to solving problems created by a computer code that doesn't recognize the year 2000.
That finding came from a survey of 70 healthcare systems conducted by the Kennedy Group, a Redwood City, Calif.-based information technology research and consulting firm.
The average capital budget for preventing date-related malfunctions in software and computer chips is $17 million per healthcare system for the three years until 2000. Respondents' individual budgets ranged from $1.5 million to $40 million.
The problem is caused by a longstanding shortcut in computer coding, which stores years by their last two digits based on the assumption that the years are in the 1900s. So when calendar clocks begin stamping 00 as the date, the resulting confusion could cause the collapse of automatic date-based functions.
Based on its survey sample, the Kennedy Group forecasts the healthcare industry will allocate $6 billion to $7 billion in capital to correct problems in software, medical devices, telecommunications, facility control systems and infrastructure.
As expected, the replacement and retooling of software will grab the largest share of the year-2000 capital budget-more than 40% in 1998. But nearly one-fourth of the current budget is reserved for medical equipment, rising to 30% in 1999 as software allocations decline (See charts).
That finding shows how far most healthcare providers have to go to assess and remedy their problems with biomedical devices that contain microprocessors (Aug. 10, p. 46).
The average operational expense for remediation efforts through 2000 is $12.5 million, according to the survey, but that figure may be low, says Andrew Lederer, senior vice president of the Kennedy Group.
The survey records a free fall in operations spending in 2000, to an average of $500,000, compared with $5 million in 1999. That's just not going to happen, Lederer says. "It's not going to be a precipitous drop, because there's going to be a lot of cleanup" as the remedies are put to the test.
Just a year ago, healthcare systems weren't forecasting nearly as much spending on the millennium-date problem as they are now, Lederer says. And spending needs in 2000 are just beginning to be considered. "It's a little bit of a dartboard," he says.
