Once hospitals exceed a certain tipping point in its IT investments, they see a reduction in operating costs, improved efficiencies, and a slight drop in patient mortality rates, according to a new report by PricewaterhouseCoopers.
The study of 2,000 U.S. acute care hospitals found that about 60% so far are near or have reached the tipping point, in which investments in IT have begun to pay off. In total, there about 6,000 acute care hospitals in the U.S. The tipping point is slightly different for for-profit versus non-profit hospitals.
However, to reach the tipping point, a hospital needed to make pretty significant investments in IT, based on the complex scoring system PwC used to evaluate the hospitals. The scoring system rated hospitals on their investments in about 40 different applications.
Higher-cost applications, such as electronic medical record systems, organization-wide electronic nursing systems, and PACs -- or picture archiving and communication systems—were among highest-scoring deployments. "The number of points for each application was associated with the price of those applications," said Dr. Nick Beard, a physician and a director at PwC's technology center.
The scoring system ranged from 0 to 1. For-profit hospitals hit the tipping point for seeing return-on-investment when their scores exceeded 0.7. For non-profits, that threshold was reached when their scores exceeded 0.88. In general, "it takes several years for those benefits to be visible," he said. However, hospitals with only median investments in IT -- or those who haven't yet hit the tipping point -- see operating costs-per-bed rise compared with hospitals with low IT investment.
Once the tipping point is reach, benefits include a slight drop in patient mortality rates, to about 39.2 deaths per 1,000 patients compared to the national average, which is about 41 deaths per 1,000 patients, said Beard. That that might appear to be small, but the drop is "statistically significant," especially when multiplied across hospitals nationwide, he said.
When it comes to operating costs and business improvements, the IT investments can eventually "rise to millions of dollars for per for large hospitals," according to the PwC report.
The information that PwC used to evaluate the hospitals was not based on the hospitals participating in a PwC survey. Rather, PwC analyzed IT adoption information from outside sources, including public and private databases from organizations such as American Hospital Association.