“What’s surprising is the interest this is getting at the board level. …They see it as a clear area where they want to invest in cybersecurity [solutions],” said Erik Pupo, commercial health IT advisory director at Guidehouse. “They see the reputational financial risks involved.”
For executives, there is a clear financial risk to data breaches, particularly as they work to improve financial margins, Pupo said.
During the past three years, the average cost of breaches to healthcare organizations has grown more than 50%, topping out at $10.93 million per breach this year, according to a report published by IBM in July.
2. More to attack and more to defend
What’s also spurring investment is there are more IT systems that can be breached by hackers, Pupo said.
Around 85 million patients have had their personal information compromised through the first nine months of the year, compared with 38 million in the same time period in 2022 and 43.9 million in 2021, according to the Health and Human Services Department's Office for Civil Rights. A report published last month from cybersecurity software company NCC Group found that cybersecurity incidents increased 86% in September.
3. AI indirectly plays a role in budgets
Better data security solutions will only get more critical as health systems implement AI, Pupo said. In fact, while AI itself wasn’t the biggest line item for IT budgets in 2024, it’s indirectly affecting how C-suite execs are spending their dollars.
“Hospital execs recognize that if we're going to start implementing AI, we're going to need better data governance and data security, and we’ll need to modernize our electronic health records and build these ecosystems where we can share data across a wide number of partners,” Pupo said. “[Executives] are not thinking necessarily about AI and automation as a standalone but thinking about AI, automation, analytics as more of a platform…to do other things on, such as EHR modernization.”
4. IT budgets are increasing overall
Despite tight margins, more than 85% of respondents expect their organization’s digital and IT budgets to increase next year. Forty-seven percent of respondents say they expect either significant or moderate increases.
The main driver of increased IT investments is coming from provider and patient feedback, according to 68% of respondents.
5. Efforts persist to cut costs
IT, however, isn't exempt from a larger effort across health systems to reduce costs. According to the survey, a third of respondents have expanded relationships with outsourcing partners on IT.
“There is 9-10% growth in IT budget,” Pupo said. “At the same time, it’s, ‘We’ve got to cut costs.’ You’re seeing budget increases and cost reduction efforts at the same time.”
Nearly a quarter of respondents said they lack a comprehensive business case for their IT budgets.