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Web-Exclusive Report: 50 Percent of Hospitals Cut IT Investments in Difficult Economy

June 7, 2010
by Jennifer Prestigiacomo
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Beacon Partners CEO Ralph Fargnoli sheds light on study of IT investments

A just-released economic study from healthcare management consulting firm Beacon Partners finds that 50 percent of the participating healthcare organizations have had to cut back on IT investments due to the difficult economic climate. According to Ralph Fargnoli, Jr., CEO of the Weymouth, Mass.–based firm, 80 percent of these healthcare organizations surveyed had decreased their capital spending, while 40 percent had made staffing cuts. “We saw this trend start in September 2008 as we were in the process of projects that were completely stopped by the economy or that really delayed decision-making processes,” says Fargnoli. For CIOs, this study should bring comfort that other hospitals have faced tough times and made drastic cutbacks over the last couple years. “Across the board CIOs weren’t very different in terms of what happened to them in late 2008 and 2009,” says Fargnoli. “So when they look back they can say ‘we’re not different from anyone else out there who had to cut capital spending and reprioritize their projects.’”

The study also concluded that just under 50 percent of the healthcare organizations polled were connected to private practice physicians, with most being connected via portals. Respondents, who were mostly c-suite executives (nearly 40 percent were CIOs, over 20 percent were CEOs, and about 15 percent were CFOs), said these portals improved connectivity with their healthcare community to give them a competitive edge. Many of these respondents were using demographic data sharing portals and insurance verification and eligibility portals. “We see that community physicians are linking with more and more insurance companies, payers and hospitals to share data,” says Fargnoli. “And while they’re not to the level of HIEs [health information exchanges], we do see more referrals through physician portals, so the connectivity is improving, but not to the level of very complex systems yet.” Even though some hospitals are developing enhanced connectivity with their private practice physicians, the study did find more than 40 percent of physicians were resisting IT adoption. Fargnoli believes there’s still a learning curve with user interface design and finding the best workflow for these systems. “It’s all about ongoing support. Sustainability with any of these systems will require CIOs and other executive sponsors to have someone available to answer questions on the floor in the hospitals and nursing stations.” Despite the study’s gloomy results, Fargnoli does see hope for the future. “With the new budget year starting soon, we are hearing that many of these organizations have recovered from an investment and cash flow standpoint,” says Fargnoli. “We are seeing an uptick in the planning process and new projects starting.”