Hospitals Boost IT Spending Plans

Health IT Boosts Patient Care, Safety

The federal incentive program for Meaningful Use of electronic health records seems to be having its desired early effect by spurring healthcare organizations to adopt more than just basic EHRs, according to a new study. And many hospitals are making plans to spend more on other forms of IT in the next few years, suggesting that EHRs are becoming integral to the overall organizational strategy.

"In hindsight, 2010 proved to be the year organizations ramped up their approach to meet the first stage of the [Meaningful Use] criteria," reads the report, "Essentials of the U.S. Hospital IT Market, 6th Edition," a publication of HIMSS Analytics. In its survey of hospitals and integrated delivery networks nationwide, the research arm of the Healthcare Information and Management Systems Society (HIMSS) found that spending on revenue cycle management (RCM), enterprise data warehousing, and associated areas such as business intelligence will continue growing for at least the next five years.

"While 2009 was a tough year economically, 2010 has proven to be a period of economic recovery," the report said. "Many hospitals are making capital investments to position themselves to qualify for Meaningful Use incentives." HIMSS Analytics forecasts that in 2011, hospitals will spend between 46.5% and 48.3% of their total IT capital budgets on IT applications such as EHR and RCM software, up about 2 percentage points from 2009.

The prospect of Meaningful Use dollars--courtesy of the 2009 American Recovery and Reinvestment Act (ARRA), which included the EHR-focused Health Information Technology for Economic and Clinical Health (HITECH) Act--has helped reinvigorate IT spending in healthcare. "The ARRA/HITECH funding is especially important to the U.S. healthcare IT industry. The economic recession has significantly affected a normally recession-resistant medical industry," HIMSS Analytics said. "We believe that the prospect of receiving ARRA funding re-stimulated IT budgets to overcome the recession's lag effects on hospital cash availability."

The report is notable for its update on adherence to the HIMSS Analytics EMR Adoption Model, a measure of progress hospitals have made in activating various components of electronic medical records.

"The data shows significant adoption levels of key EMR-related applications increased from 2009 to 2010. The number of hospitals reaching Stage 6 of the HIMSS Analytics EMR Adoption Model doubled last year," John P. Hoyt, HIMSS executive VP for organizational services, said in a statement.

Still, that means just 3.2% of nonfederal hospitals in the country have attained Stage 6 on the seven-step scale, with electronic clinical documentation, full clinical decision support, and full picture archiving and communication systems (PACS) for radiology. About 1% have reached the top level, Stage 7, which includes a full EMR as the legal medical record for all departments, an EMR capable of exporting patient records in the Continuity of Care Document format, and a data warehousing and mining operation. That is up from 0.7% a year ago.

Some 4.5% of hospitals are at Stage 5 on the EMR Adoption Model and 10.5% are at Stage 4, which HIMSS Analytics says is nearly equivalent to the federal standards for Stage 1 of Meaningful Use. HIMSS Analytics relies on self-reporting, but evaluates any hospital that claims to be at Stage 6 or higher.

Nearly half of all nonfederal hospitals in the U.S. remain at Stage 3, with flow sheets for clinical documentation, clinical decision support to check for errors, and PACS available outside the radiology department.

"The good news is with ARRA/HITECH funding to cover a portion of EMR environment spending, hospitals that have achieved Stage 4 of the EMR Adoption Model by 2011 should have more capital available to help with the transformation of their RCM environments," Hoyt said.

However, HIMSS Analytics identified a number of problems hospitals see with Meaningful Use. Notably, providers are concerned that the Centers for Medicare and Medicaid Services bases bonuses on each Medicare provider number. "The problem is that some organizations have multiple hospitals under the same number," the report said.

Also, a lot of hospitals are confused about how the program will work in the first year of each stage of Meaningful Use, currently 2011, 2013, and 2015, though federal officials seem likely to delay the start of Stage 2 until 2014.

"Does a hospital have to comply for all Meaningful Use criteria in 2011, 2013 and 2015 to get funding for each year? Or will funding be provided for partial compliance?" HIMSS Analytics asks.

Find out how health IT leaders are dealing with the industry's pain points, from allowing unfettered patient data access to sharing electronic records. Also in the new, all-digital issue of InformationWeek Healthcare: There needs to be better e-communication between technologists and clinicians. Download the issue now. (Free registration required.)