When Dr. Robert Schultz started his presentation to the Board of Directors of the hospital, he was not too confident on the outcome. After all, as his Chief Financial Officer had pointed out, it was not easy to convince the Board to allow an increase of nearly 10 percent in their capital expenditure budget. While it was true that the hospital was making large strides in population health management, Dr Schultz was also aware of the large investments that the hospital had already made in various equipment and technology – investments that would take a long time to recover. However, Dr. Schultz was convinced of the need to increase the investment in information health technology and it took the Board just a few minutes to approve the new budget.
According to a recent survey, hospitals are recognizing the need to manage population health effectively and are increasing their investments in related technology. Out of the total number of respondents polled, more than 64% stated an increase in their capital budgets for the year. According to 72% of the respondents, the largest investments were in health information technology. 39% percent of the total respondents reported an increase of at least 10% in their yearly budget, highlighting the need for investments in technology to cater for value based care goals.
An increasing budget reflects a greater focus on healthcare providers needs for greater patient engagement. Nearly 55% of the polled respondents are looking to increase these capabilities over a period of the next three years. According to the report, about 50% of the respondents are planning to expand their budgets, with the focus on health data analytics.
There is one more driving force behind these increased budgets – the Affordable Care Act. In order to comply with the Act, hospitals have had to increase their spending during the transition to the alternative payment models. The Affordable Care Act has brought cuts in reimbursements and increased the pressure on health systems to manage their budgets more tightly than before, which has made it necessary for health systems to make new investments in infrastructure and high value care networks to deliver better outcomes, while simultaneously manage risk-based contracts and decreased reimbursements.
Hospitals are working towards the increased need for population health management and are increasing their budgets and spending to support this endeavor. Hospitals are investing in technology forpatient engagement(54.7%), chronic care management (53.8%), wellness programs (51.9%), patient outreach and reminders (47.2%) and advanced analytics (46.3%).
A word of caution is needed as hospitals increase their budgets and spending. The ever increasing cost of health care has become a major concern for decision makers. Although technology has succeeded in making things better and cheaper in all industries, new or increased use of medical technology is contributing to nearly 50 percent of annual health care cost increase. Just using new technology is not going to be enough; controlling this technology will be the key to reducing the rising cost of health care.