Compliance Drives Health-Care Changes

Health-care costs are on the rise, but why? As companies in the health sector struggle to comply with stringent government regulations such as the Health Insurance Portability and Accountability Act, related costs are being passed along to policyholders. This is necessary because investment in personnel, IT systems, and security are chipping away at profits.

Hospitals and doctors continue to rely on inefficient paper trails to manage patient records. As compliance with HIPAA takes hold, many find it necessary to move to electronic operations. HIPAA's guidelines regarding information sharing, patient privacy, and information security are presenting other changes, too.

According to InformationWeek Media Network's The New Age Of Regulatory Compliance study, nearly half of the 59 health-care sites surveyed say that regulatory compliance has changed staff responsibilities. Forty-six percent of companies report changes to executive responsibilities as well as reporting structures.

Health-care executives spend an average of 22% of a typical workweek on regulatory issues. That's about one day a week devoted to compliance. This has a direct impact on productivity, and four in five respondents report spending more on compliance-related issues in the past 12 months than in 2002.

While spending is increasing, many health-care companies don't see these investments as contributing to better customer relations. Two of five sites report that regulatory compliance is making it more difficult to serve their customers.

Most companies outside of health care agree that spending to meet government and industry regulations will continue to increase. Will these investments ultimately translate into deeper customer relationships? Let us know how regulatory compliance is changing your company's business practices.

Lisa Smith
Managing Editor, Research
[email protected]

Regulatory Focus

With which government regulations does your company comply?

HIPAA, which regulates the exchange and security of patient information, is the main regulation with which health-care sites need to comply, but it's not the only one. With Sarbanes-Oxley, the Financial Modernization Act, and even the USA Patriot Act to contend with, business-technology professionals in health care have their hands full.

Business As Usual

How has compliance with government regulations affected your company's productivity?

Three in five health-care companies report that regulatory compliance hasn't had an impact on their productivity. However, 38% say that additional time and energy is needed to address compliance issues, and this is having a negative impact on worker productivity. Only a few respondents say that compliance and the initiatives needed to support it are making their companies more productive.

In Control

Has your company created an executive team or executive position to oversee compliance?

Achieving compliance in the health-care sectorrequires a companywide commitment. For some companies, this has meant the creation of executive teams to oversee compliance initiatives and projects. At others, compliance has required the creation of an executive position to ensure that goals are achieved. These changes could foster the managerial attention that compliance requires, bringing clarity and consistency to regulatory strategies.

Application Impact

How is compliance affecting the way applications are deployed and used?

Health-care companies are split on whether they should build onto existing software applications to achieve regulatory compliance or replace their programs altogether. Nearly two-thirds of respondents say their companies are rewriting existing apps to implement compliance requirements; approximately half have resorted to creating new apps.

For some companies, new investments have proven necessary. Nearly half of the health-care sites polled report purchasing new packaged applications to achieve regulatory compliance.