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Healio
Issue: June 2006
June 01, 2006
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Information technology use spreads in hospitals, but unevenly

Cost remains a significant barrier, especially for small and rural centers. Will the feds ever step in to help?

Issue: June 2006

Most hospitals have adopted some level of information technology or are considering doing so. But as a recent American Hospital Association survey shows, even large hospitals struggle mightily with the costs and smaller ones cannot afford to keep up with the pack.

Of the 929 hospitals surveyed, 92% were “actively considering, testing or using” information technology (IT). An analysis of IT use for these centers revealed that 36% were “getting started,” while only 10% reported “high” usage. The remaining hospitals fell into “low” and “moderate” use categories (both 27%).

“What we found in this survey is that hospitals are clearly committed to adopting IT and that there is progress,” the American Hospital Association’s (AHA) senior associate director for policy Chantal Worzala, PhD, MPA, told Orthopedics Today. But, “The use of IT is going to be evolutionary. ... Hospitals are building up their systems in a way that makes sense to them and then building on this forward momentum,” she said.

Clearing the cost hurdle

Yet, high costs associated with technology could hamper this movement, an obstacle that has become an ongoing theme in the struggle for greater operational efficiency and safety. Hospitals ranked cost as the greatest barrier to embracing IT. “The median annual capital investment on IT was over $700,000 and represented 15% of all capital expenses,” the AHA wrote in the survey’s results, Forward Momentum: Hospitals Use of Information Technology. Operating expenses were much higher: $1.7 million, or 2% of all operating expenses.

“Overall, hospitals are just not seeing an efficiency return, a financial return that commensurate with the cost of an IT investment,” Worzala said. “But they still do it because they think it’s the right thing to do and that it’s promoting safety and quality of care." Other obstacles for IT use included staff acceptance, difficulties in recruiting and retaining IT staff and incompatible current systems, the AHA wrote.

The organization contacted hospital CEOs, AHA members and non-members to participate in the survey through e-mail. Participant then opted to complete the survey through e-mail or written response. The survey’s sample closely reflected national hospital demographics. “Our sample has a little bit more representation of the biggest hospitals, 500 plus beds, but it’s really very close,” Worzala said. In addition to demographic information, the survey included questions about IT use, the kind of systems employed, obstacles to use and information sharing. The AHA conducted the survey in April 2005.

Who is using IT?

Not surprisingly, the survey showed a correlation between annual revenue and IT use. Centers with moderate or high usage had average yearly revenues of $187 million and $168 million, respectively compared to centers in the low use ($113 million) or getting started ($42 million) categories. Similarly, 11% of high IT use hospitals showed positive margins vs. 6% of centers with negative figures.

“On average, use increases with the number of beds,” the AHA wrote. “The smallest hospitals (fewer than 50 beds) are almost 10 times more likely to be in the getting started group than the largest ones (more than 500 beds).” Rural centers also proved half as likely as urban hospitals to have high or moderate use.

So what causes this technological lag in small and rural hospitals? The smallest hospitals surveyed (those with less than 50 beds) and rural centers most frequently cited cost as a “significant barrier” to implementation. “These hospitals face a lot of challenges, both financial, and then having an IT system requires a certain amount of sophistication so you need a sophisticated IT staff,” Worzala said. “And obviously the smaller the hospital, the smaller the IT staff.”

Meanwhile, only 15% of teaching centers reported that they were “getting started” with IT vs. 41% of non-teaching hospitals. Just 28% of system hospitals noted the same level of IT involvement compared to non-system centers (42%). Despite discrepancies in use and progress, 53% of all centers reported sharing electronic data.

“We’ll be working with Congress and the administration to try to identify innovative financing mechanisms and other ways to support this because, clearly, it’s a goal of the administration,” Worzala said. “"So we want to see what we can do to realize the vision that the President set forward.”

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