Still the matter of money (part one of four)

Despite all the hoopla in the past two years about healthcare information technology, when it comes to allocating money to buy IT systems, healthcare executives have been, by and large, unmoved, according to responses to the annual Modern Healthcare Survey of Executive Opinions on Key Information Technology Issues.

Asked what percentage of their organizations’ total operating budgets were allocated to information systems in 2006, survey respondents this year gave answers that tracked very closely to those from readers in the previous year’s survey.

A similar question asking leaders to report their IT spending as a percentage of their organizations’ capital budgets showed a mild softening of demand from 2005 to 2006.

Taken together, it appears there have been no dramatic increases in executives’ IT spending plans, even with all the tub thumping by David Brailer, the former national coordinator for health information technology, and HHS Secretary Mike Leavitt. A big part of the problem, observers say, is that there has been little federal money to back the government’s ambitious goals.

“Until they pull out their wallets, it’s all platitudes,” says physician informaticist William Bria, chief medical information officer at Shriners Hospitals for Children, a system based in Tampa, Fla., and chairman of the Association of Medical Directors of Information Systems.

Both years, the survey asked readers to select from 13 possible ranges of operating budget percentages they had allocated for IT spending, with ranges starting at 0% to 0.5% and rising to more than 6% in increments of 0.5 percentage points.

In 2006, the 2.1%-to-2.5% range was most frequently chosen (by 15.7% of respondents) while in 2005, the same range also was the most commonly selected (by 16.1% of respondents).

The second and third most frequently selected ranges also were the same in 2006 as in 2005: the 2.6%-to-3% range was chosen by 13.7% of respondents in 2006 and by 14% in 2005; and the 1.6%-to-2% range was chosen by 13.1% of respondents in 2006 and 12% in 2005. The 2.6%-to-3% budget range was also the median selection for both years.

The survey also asked readers to select from six possible levels of spending as a percentage of their capital budgets, beginning with 10% or less, then continuing with 11% to 20%, 21% to 40%, 41% to 60%, 61% to 80% and 81% or higher.

In the 2006 survey, 38.1% of respondents indicated they had allocated 10% or less of their capital budgets to IT, up from 34.3% with allocations in the lowest spending bracket in 2005. In other words, the year-over-year trend showed an increase in the percentage of people who had budgeted the least for IT in the prior three years.

Further, in the 2006 survey, 31.7% of respondents projected future IT spending in the next three years would be in the lowest spending group, an increase from 24.3% in the 2005 survey, indicating more executives also planned to spend the least for IT in the coming three years.

Such flat or shrinking budgets point to the real barrier to healthcare IT adoption, Bria says.

“It’s still high on our radar, but I’m not spending more money on it” has been the “classic” response thus far, Bria says. Healthcare IT “is clearly at the turning point in terms of hearts and minds, but not pocketbooks.” Compared with the level of IT spending required, he says, “We’re not doing any investment at all in it.”

For many office-based physicians, “they’re saying: I’m barely treading water now. There are a lot of ‘Oh, dears!’ in American medicine right now that IT could improve, but if somebody doesn’t step up and decide they’re going to put in the interstate highway system and stop saying, ‘I’m going to let the market do it,’ they’ll continue at the 10% or 20%” IT penetration rates.

“I think there is a lot of reason to be encouraged,” Bria says. “But I think there is a lot more reason to be informed and concerned that the electronic medical record is not going to happen without a lot of effort. There needs to be somebody putting an urgency to it and say it has to be done by a date. You’ve got to get money behind it.”

Click here to continue on with this series to view Eyes on the EHR (part two of four); Looking for a helping hand (part three of four); More moving to entry level (part four of four). (Registration required)