Think your health IT budget isn’t keeping pace with skyrocketing costs? Net (Net), an IT services firm, thinks it knows why. In a white paper published in mid-July, it compares health care to 29 other industries and determined that providers pay 17% more than their peers in sectors such as retail, non-profits and government.
“Healthcare organizations pay more for all types of technology, from Lawson financial applications, to Microsoft desktop productivity licenses, to Cisco net-working equipment, to IBM servers, to EMC storage arrays, and so on,” the authors report. “These overpayments extend to the vertical applications for healthcare like those provided by Epic, McKesson, Cerner, and others.”
Why? Among the 12 reasons Net (Net) cites:
- Marketing: While vendors tend to tailor technology offerings to the health care market, it turns out that many of the more expensive health care-specific packages are not different from those offered to other sectors. In essence, you’re paying for marketing.
- No profit incentive: Saving money doesn’t figure into the equation – health care providers just raise charges when back-end costs rise – so they don’t negotiate with services and technology providers for price breaks. Furthermore, the authors say that “alignment to financial concerns is often a secondary, if not an outright tertiary, objective. In these organizations, few if any members of the management team are directly accountable for optimizing costs.”
- Regulatory burden: Not only are health care processes difficult to automate, making compliance costly, but the authors believe that federal incentives may actually drive technology prices up because investments “do not really cost [providers] anything” when, for example, an EHR system purchase is paid with government contributions.
- Insular culture: The authors found that IT leaders outside of health care routinely network with peers in other industries. They reap the benefits of best-practice implementation advice and cost-saving strategies in settings such as user groups. Such cross-pollination doesn’t happen in health care, whose leaders tend to talk to one another only, because they claim they can’t relate to IT concerns of other industries. This leads to ignorance of actual market value of the technologies they’re buying – and leaves them vulnerable to overpaying.
Whether you agree with it or not, it’s interesting fodder for discussion at the next budget meeting, no? Download the white paper, titled “Top 12 Reasons Why Healthcare Providers Pay Way too much for IT” here.