Winners and losers in Healthcare IT

Implications: This will soon be the best time in history to be selling Healthcare IT software and services. More money will be spent in the next three years than ever before. It may not be the best time for the staff at many hospitals. The staff are woefully unprepared for a quantum leap in Healthcare Technology.

Analysis:  Healthcare IT usually progresses in the following order. Physicians lead the way because of a long term perspective. One can often justify the acquisition of new technology when considering the benefits over the lifetime of a physician practice. For profit hospitals tend to be next in line. Competitive pressures and stockholder oversight tend to be effective motivators for investment in efficient IT. Not for profit hospitals trail all others. This is due to the general lack of sophistication by Not for profit hospital boards and the short time frame of a Hospital CEO. Most Hospital CEO’s and CFO’s stay in one role for about two years. It is hardly enough time to see the benefit in a major IT investment.   Physicians and for profit hospitals are well on their way to Electronic Medical Records. In fact, some are there already. The Not for profit hospitals will be waiting for Federal and State grants as well as Medicare incentives. Since 2011 is the deadline, many will be waiting for up to three years.   In addition, each state has limited the number of IT vendors which can participate in the current grant process. Louisiana for example, only has three approved vendors, including Siemens. Any hospital wishing to proceed currently will have to select one of those three.   The bottom line is that hundreds of millions will be spent over the next three years for Healthcare IT upgrades and replacements. Some of these hospitals will jump from spending one percent of their operating budgets on IT, to millions in one step. It will be the largest investment they have made, other than their own real estate.