For instance, Nelson says compliance with HIPAA regulations--federal standards for electronic health-care transactions, patient privacy, and security--will help reduce from an average of 10 to one the number of papers needed for some health-care transactions. But when Nelson recently asked a hospital executive about the effect that will have in terms of reducing the number of people working in the facility's administrative roles, "it was apparent that process change wasn't part of the technology adoption for HIPAA" at the facility, he says.

For Kindred Healthcare, a significant part of its IT budget, which is holding stable this year at about 2.5% of the company's $2.3 billion revenue, is earmarked for HIPAA-related compliance, CIO Chapman says. Kindred has completed compliance work for transaction sets, which spell out standards for processing electronic health-care transactions for payment. Part of its HIPAA-compliance work and IT strategy of standardizing IT architecture for economies of scale is migrating 800 servers and 9,000 desktop systems to Windows 2000.

Next year, Kindred will roll out automated patient-care records at its hospitals and is looking to upgrade its pharmacy system to provide more real-time information that will alert doctors to patient drug allergies and other potential problems, something that's sorely needed. "As an industry, there's an average of one medical error per patient stay," Chapman says.

For health-care companies, IT is critical for eliminating those errors, improving patient care, and making their businesses more efficient.

INDUSTRY LEADERS Rank Company Revenue in millions Income (loss) in millions IT employees 11 Owens & Minor Inc. $3,800 $23 160 16 CareGroup Healthcare System $1,200 ($30) 250 40 Laboratory Corp. of America Holdings Inc. $2,200 $180 1,050 67 Fairview Health Services $1,538 $39 455 76 UPMC Health System $3,500 — 760 86 Baxter International Inc. $7,700 $1,063 1,200 89 Texas Health Resources Inc. $1,500 $39 254 110 Sun Healthcare Group Inc. $2,075 ($69) 160 131 Cardinal Health Inc. $44,400 $1,100 2,000 134 Quest Diagnostics Inc. $3,600 $162 1,400 176 Sisters of Mercy Health System $2,190 $51,800 520 205 Sutter Health $4,200 $100 850 242 St. Joseph Health System $2,378 $30 296 254 Kindred Healthcare Inc. $2,329 $51 371 282 Dade Behring Inc. $1,232 $232 210 321 Siemens Medical Solutions Health Services Corp. -- -- -- 352 Baptist Health System Inc. $1,914 $17 130 358 Tenet Healthcare Corp. $13,913 $785 170 389 Universal Health Services Inc. $2,840 $100 220 447 Catholic Healthcare West $4,530 ($54) 650 459 HCR Manor Care Inc. $2,694 $69 135 Financial data is from public sources and company supplied. Revenue is for latest fiscal year. Employee data is from InformationWeek 500 qualifying survey.

IN A NUTSHELL INSIDE COMPANIES Average portion of revenue spent on IT 3% Companies providing customized solutions to customers 40% Companies seeking IT patents, trademarks, or copyrights 48% HOW COMPANIES DIVIDE THEIR I.T. BUDGETS Hardware purchases 23% Services or outsourcing 11% Research and development 6% Salaries and benefits 21% Applications 24% Everything else 15% INDUSTRY FINANCIALS Average year-over-year revenue change 1.6% Average year-over-year net income change 137.4% DATA: InformationWeek research See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

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