Profits and profit growth rates were higher among not-for-profit hospitals that had implemented advanced information technology, received quality awards or both as compared with other hospitals, according to a report (registration required) released today by Fitch Ratings.
Advanced IT linked with hospital profitability, Fitch finds
An analysis of 291 tax-exempt hospitals and health systems with Fitch credit ratings found that those with advanced IT or quality awards were more likely to be rated A- or above. Slightly more than 80% of those considered high quality or high technology were rated at least A-. That's compared with 67% of the organizations in the overall portfolio that received an A- or higher ratings, according to the report.
Roughly one-quarter of hospitals had received quality awards and about 8% had reached stage 6 or 7 on the Healthcare Information and Management Systems Society's seven-stage scale of electronic health-record system adoption, according to the report. The ratings agency considered patient-safety awards from HealthGrades, top hospital designation by the Leapfrog Group and quality awards from the Baldrige Performance Excellence Program.
One dozen of the hospitals with advanced IT also received quality awards. Of those, 92% were rated A- or higher.
Annual revenue growth exceeded costs growth by 1.8% among hospitals with advanced IT and quality awards between 2005 and 2009, according to the report. For the total portfolio and hospitals that earned quality awards but lacked sophisticated technology, annual revenue growth barely exceeded expense growth during the same period, by 0.2% to 0.3%.
"Fitch views advanced development of and investment in clinical information IT platforms as integral components to achieve the expected benefit of healthcare reform," the report's authors noted.
Hospitals with quality and technology strengths had 30% more unrestricted cash and investments than the overall portfolio, according to the report.
"Reflecting the significant investments required by quality programs and advanced information systems, Fitch found the size of the hospitals' revenues and unrestricted cash and investments were positively correlated to achievements in both quality and IT infrastructure," the analysts found.
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