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How to Increase IT Costs

December 22, 2008
by Vince Ciotti and Barry Mathis
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H.I.S. Pros offers a tongue-in-cheek approach to healthcare IT budgeting

Vince Ciotti

Vince Ciotti

Yes, you read correctly: This is about how to

increase your IT costs during this economic turmoil. Why? Any day, your CEO or CFO might call a meeting to start cutting costs in light of dwindling revenues and reimbursement. If you've been keeping your costs under control, how are you going to find 5 percent to cut? The answer is: act now to

add 10 percent or more to costs, so when the axe falls, cutting will be easy.

Barry Mathis

Barry Mathis

We must give credit for these cost-increasing ideas to the more than 100 hospitals we have assessed during our work with such firms as the Hunter Group and Catholic Health Audit Network. Their audits and assessments have shown us first-hand how these techniques can bloat IT costs to the point of driving hospitals insolvent. Thus, these are practical techniques — not just academic theories — and they have been proven in the real world.

These cost-increasing techniques are broken down into three categories:

  • Internal — that can be implemented from within the IT department

  • External — those that require cooperation from user departments

  • Ultimate — a single technique that can increase IT costs the most

Don't forget, it is important to act now, during the current budget year, since next year's budget is usually current, plus “x” percent. If you don't increase them now, your costs may be too thin to reduce when the crisis occurs.

INTERNAL — easy ways to bloat costs within IT:

  1. Shorten PC refresh

    Most hospitals replace PCs every three years due to increased price performance from manufacturers and the need to keep users happy. Why not try for every two years? You can take advantage of the latest developments and impress physicians with all the shiny new machines. It could easily add six figures to your hardware budget, plus increase payroll costs in field engineering. Then when the budget axe falls, blame administration for forcing you to increase to a four- or five-year refresh (which is closer to what users do at home anyway).

  2. Partner with vendors

    In the old days, people treated outside vendors like they were trying to sell something. In our cost-increase model, vendors should be treated like business partners and be treated with more respect to their bottom line. Stop subordinates from reviewing invoices for questionable items, or challenging any add-on fees for new products or services. Never short pay.

    A corollary is to never question how high maintenance has grown in the years since you signed a contract. A 5 percent per year CPI can increase software maintenance as high as 50 percent of the original license fee — meaning you are buying the old system again every two years! Never re-negotiate these high fees — after all, they're your trusted “partner,” not a vendor.

    And never, ever, hire a firm to review your telephone bill; most do it for free and only charge a percent of the huge cost savings they find.

  3. Maximize Microsoft

    In a quest to increase costs, no vendor can truly be a “partner” as much as Microsoft. Working with them can increase your costs as much as their dividends. For example, make sure every device has the full suite of Office, even if users only need Word and Outlook. After all, if you give users Access or PowerPoint as well, they might waste hours of payroll trying to learn them, increasing that cost as well. Don't question Microsoft's periodic audits of the number of licenses: Who else but Bill Gates knows exactly how many devices/users you really have to pay for? And if anyone ever suggests free products like Open Office, mock their technical naiveté for not appreciating Redmond, Calif.'s bloat-ware.

  4. Early adoption

    To increase costs, nothing succeeds like buying systems before their time. The biggest way to blow bucks is by buying an entire HIS within minutes of it being GA (Generally Avoidable). This maximizes the cost of reporting bugs, reveals missing features that might create ROI, and incurs the costs of installing multiple releases as the vendor's programmers slowly catch up with their marketers.

    In the PC world, a sure-fire technique is to put in Vista ASAP — the heck with the commercials! Think of the thousands or even millions you can spend upgrading all of your devices — you might even find hundreds of PCs that have to be refreshed even earlier due to Vista's appetite for memory. And the crashes and bugs will go a long way to increasing overtime and on-call budgets. What if your HIS vendor doesn't support Vista? Then shop for a whole new HIS as well!

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