Meanwhile, an overwhelming majority of survey respondents, 71%, predict that their direct IT operating expenses will rise over the next three years. Only 13.5% of our survey participants estimated their IT expenses would drop and another 15.5% predicted no change.
Of those predicting IT operating expense increases, a plurality, 40.9%, reported expectations of only modest increases of 5% or less, with another 39.1% estimating increases of 6% to 10%. Of the respondents predicting their IT operating expenses would drop, 52.4% estimated they would drop by 5% or less.
Steve Little, chief financial officer for 175-bed Agnesian HealthCare, an integrated delivery system based in Fond du Lac, Wis., is one of the few hospital officials taking our survey who is budgeting more than 6% of operations on IT, a level reported by just one in 14 survey respondents.
I remind my director of information technology of that fact, constantly, Little quips. It gets me nothingexcept a lot of consternation and questions at the board level. Big spending in Fond du Lac is no mere passing fancy; rather, it reflects a multiyear IT overhaul.
We are paying for some sins of the past. We way underinvested in the early, mid- and late 1990s. We had very, very conservative leadership at that time and had plenty of cash on hand and were guilty of, both on the information technology side and on the facility side, of not budgeting and having the appropriate capital spend. When the administration did turn over, we inherited a pretty big project.
And while the hospital back then luxuriated in having more than 200 days of cash on hand, it soldiered along with an entirely paper-based clinical record-keeping system and patient accounting and general ledger software that ran on MS-DOS that used code, Little recalls, written back in 1978. Little says he used line commands at the DOS prompt to conjure up some of his needed reports.
As a result, Little says, starting in late 2001 and into 2002, we have been spending at a pace that is well above the rest of the nation to get this small to medium-sized integrated system up to speed with financial and clinical systems.