More than 60% of U.S. hospitals have made significant enough investments in IT to begin seeing reductions in operating costs, according to a PricewaterhouseCoopers report. After analyzing performance data from nearly 2,000 U.S. hospitals, the report finds that IT investment must reach a tipping point before cost-reducing performance improvements occur, and until then, hospitals experience increased operating costs with little near-term financial benefit. However, PwC also found that hospitals are experiencing less dramatic return on IT investments than other industries that have realized productivity gains equal to five times the cost of IT investment. And some hospitals may not experience productivity increases at all if they are starting from a low point of IT investment. (Download the report.)
Overall, the analysis found that hospitals making high levels of IT investments perform at a higher level of efficiency than hospitals with low levels of such investments. But hospitals with the lowest levels of investment in IT have lower overall operating costs than hospitals with moderate levels of IT investment. Hospitals that are low on PwC's IT capital index--which determines the capital value of hospitals’ healthcare IT application mix--experience increases in total operating expenses as they bring more IT online. Eventually costs leveled off, regardless of the added costs of additional IT capital, as IT applications displace costs elsewhere in the organization, such as improved quality. To fully realize the value from IT investments, organizations should also redesign clinical and business processes.
