What is your opinion on why providers see IT as non productive capital? - Scott MacLean 3/5/2014 | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

What is your opinion on why providers see IT as non productive capital? - Scott MacLean 3/5/2014

There are really at least two elements to this. The first one is historical: historically, in a fee-for-service reimbursement system context, capital investment was focused on areas that could directly or indirectly increase revenues to a patient care organization. Examples include facility construction and expansion, the purchase of diagnostic imaging equipment such as CT, MR, and PET modalities, and even investments in hospital cafeterias and landscaping, to attract people to use services and stay on medical campuses. To the extent that early investments in information technology were seen as “productive,” they were primarily related to the business office or what has come to be known as revenue cycle management. Electronic health records, in their early forms, were primarily about storing clinical information that did not directly improve finances for any patient care organization.

Things are different now in a number of ways. For one thing, advanced electronic health record systems, fully fitted out with clinical decision support capabilities, and linked to business intelligence, analytics, clinical performance (e.g., dashboards and report-writing), and other capabilities, are finally starting to be seen by c-suite executives and patient care organization boards of directors as falling into “productive” categories, even if the ROI is always going to be softer than it would be for facility construction, diagnostic imaging modality purchase, or even revenue cycle management software solutions.

The second element of this has to do with meaningful use- and healthcare reform-related mandates. Given that hospitals and physicians are now being required to adopt EHRs, to reduce avoidable readmissions, and to document clinical outcomes, investment in IT is being seen differently by c-suite executives and board members. This is an ongoing evolution rather than a revolution, but with policy and regulatory mandates hitting patient care organizations from all sides, the conceptual environment around IT investment is gradually changing.


Thanks Gabriel - agree with all of the above.

I would also add that we (healthcare providers, particularly AMCs) are reluctant to embrace "business transformation through IT." Back in the late 90's, Amazon was challenging traditional business models and firms like Barnes and Noble and other retailers (Wal-Mart) had to reconsider their market strategy.

In 2014, the question is whether executives at provider organizations are viewing IT as a disruptive technology to healthcare delivery? If not, we are in for a big surprise. The post baby-boomer generations expect more.

Thanks for this follow-up Scott. Just to clarify, it was Mark Hagland who answered this question...I just submitted it on his behalf.

As for your question, obviously that's a huge one that the health IT industry must ask itself. I know a number of leading orgs do invest in the IT that can be disruptive to healthcare delivery (in a good way of course), but many are still coming to grips with the potential impact that, for instance, a clinical decision support system can provide. It's a crawl, not a sprint. As Mark said, evolution rather than a revolution.

But you're right in regards to the post baby-boomer generations, if the time isn't now...then it's soon.

Thanks again!

Scott, yes, I agree very much with what Gabe added here above. Inevitably, given all the pressures on patient care organizations these days, there's no way that hospitals, medical groups, and integrated health systems will be able to fulfill their "dream" wish lists for technology, so the result will inevitably be an ongoing series of compromises, in which patient care organizations move forward as much as possible in leveraging IT for all the things they need it for--population health, readmissions reduction, accountable care, patient-centered medical homes, analytics to support all of those initiatives, etc. We continue to urge our readers to do what their peers in the most pioneering organizations are doing: prioritizing strongly based on vision and mission, and engaging the entire c-suite and board of their organization to move forward in a consensus-based way. I know that you are doing that in your organization, and it's what we hear constantly from the top industry leaders we regularly interview.