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2009 APAC Healthcare Information Technology Outlook
 

2009 APAC Healthcare Information Technology Outlook

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Presentation includes an outlook of the 2009 APAC healthcare information technology sector. The presentation also discusses an overview of the global economy, impact on the healthcare IT industry, ...

Presentation includes an outlook of the 2009 APAC healthcare information technology sector. The presentation also discusses an overview of the global economy, impact on the healthcare IT industry, healthcare IT trends, an outlook on the IT aspect of APAC, and a CIO & CFO healthcare IT Survey

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    2009 APAC Healthcare Information Technology Outlook 2009 APAC Healthcare Information Technology Outlook Presentation Transcript

    • 2009 APAC Healthcare Information Technology Outlook
    • Agenda 1. Introduction 2. Overview of Global Economy 3. Economic Crises – Impact on Healthcare Information Technology Industry 4. Healthcare Information Technology Trends 5. APAC Healthcare Information Technology Outlook 6. CIO & CFO Healthcare Information Technology Survey 2
    • Introduction • The adoption of Information and Communication Technologies (ICT) is essential for modern healthcare delivery systems if they are to gain greater efficiency, reduce overall healthcare costs and improve patient safety. • In recent years, the acquisition of computer technologies by healthcare organizations has increased substantially with the spending showing upward tendency placing the industry as one of the major consumer of ICT products and services. • In 2007, spending on Healthcare information system in Asia Pacific was valued at $15.50 billion. This accounted for 1.5 to 2.3 percent of total healthcare expenditure. By 2012, it is estimated that healthcare spending will almost double. • The HIT adoption trend by healthcare organisations is unstoppable, however there is expected to be a backlash in view of the current financial crisis. We are already seeing negative impact on the growth of the HIT industry as hospitals and health systems are taking measured but deliberate action by delaying capital projects, cutting capital and operating budgets, and laying off workers. 3
    • Agenda Overview of Global Economy 4
    • Global Economic Crisis – What? When? How? The NBER (US) has declared December 2007 as the beginning of recession in US. Soon the rest of the world followed. Unlike the 1997 – 1998 recession, which was mostly confined to Asia, the current slowdown has global implications. The global pull stems from the failing of the world’s largest economy engine – the US with weakening USD and decreased demand for imports being the main factors. Although the signs of recession are not so pronounced in APAC region, the early hints are already visible as the regions is predominantly dependant on exports to US. This has been cushioned, to a certain degree, by redirection of trade to China. The effect, however is temporary as China’s economy is likewise an export oriented and the local demand is already stagnating. Considerable uncertainty about likely duration & depth of current economic crises makes any predictions difficult as most economies/corporations correct their forecasts on a monthly basis December 2007 - ????; External to APAC •Credit crunch - shortage of finance •High Interest Rates resulting from underestimation of property July 1997 – March 1999; Internal to APAC March 2001 – November 2001; External to sector APAC •Initially, overvalued property sector followed by sharp drop in •Excessive Growth with Asset's price house prices - related to shortage of mortgages and credit crunch inflation and imbalanced BOP. •Dot.Com bubble burst – overvaluation of •Cost push inflation squeezing incomes and reducing disposable •Vulnerable Banking System due to rapid technology companies. income credit growth, large capital inflows and over- •High interest rates. •Secondary – fall in demand and industrial output, deflation, and valued exchange rate. •9/11 terrorist attack unemployment. •High fuel prices 5
    • Economic Crises: Impact on Different Industry Sectors • The effects of the downturn has disproportionately affected different segments of the economy • The healthcare sector has outperformed the broader market • This implies that investors expect that, while the healthcare sector will be affected by the downturn, it will still out-perform the general economy US Market Indices 16,000 14,000 Indices value (units) 12,000 10,000 8,000 Healthcare Indices, while declining, have 6,000 still outperformed the broader market 4,000 Dec-07 Feb-08 Mar-08 May-08 Jul-08 Aug-08 Oct-08 Nov-08 Dow Jones Industrial Average NasDaq Biotech NasDaq Financials NASDAQ Transportation S&P HEALTHCARE INDEX PHLX SEMICONDUCTOR SECTOR INDEX 6
    • Global Response: Massive Government Stimulus Japan: Interest rate cuts; $51 China: Interest rate cuts; $586 billion stimulus package billion stimulus (infrastructure, rural) South Korea: India: Interest rate cuts; $4 billion Interest rate cuts and stimulus package (infrastructure, efforts to keep currency exports, textiles) stable; $11 billion stimulus package Taiwan: $31 billion stimulus package (subsidies, tax cuts) Malaysia: $2 billion stimulus package Global Response • Governments infusing capital into financial institutions • Globally coordinated interest rate cuts • IMF offers bridge loan to meet foreign exchange requirements • Discussions, coordinated efforts (G20 summit) 7
    • Agenda Global Economy Crises Impact on Healthcare Information Technology 8
    • Impact on the Healthcare Sector Symptoms of the Downturn Downturn in Increased cost and Decrease in govt Sharp fall in capital markets reduced availability of revenues and sharp discretionary debt rise in expenditure spending Impact on Healthcare Companies in 2009 Development Stage Pharmaceutical Medical Healthcare Pharma/Biotech and Biotechnology Technology Services Companies Companies Companies Providers Common Factor: Reduced Access to Capital and Higher Interest Costs • Operational decline • Reduced corporate • Reduced corporate • Working capital deals deals constraints • Reimbursement • Reimbursement • Reimbursement pressures pressures pressures • Decline in consumer • Decline in consumer • Decline in consumer spending spending spending The economic downturn will impact the various segments of the healthcare sector differently in 2009 9
    • Impact on Healthcare Information Technology Industry • Decline in revenues - the economic downturn will affect the discretionary spending of patients. Although the life- saving procedures will feel lees impact the elective and complementary services will decline due to lower demand as patients will have less disposable income to spend with tendencies to increase their savings. D e • Constrains in procuring debt for financing operational activities will have negative impact on capital expenditure. m Healthcare providers will look for means to reduce spending on HIS components by extending the timeline of ongoing a projects, negotiations with vendors commercial arrangements and delaying new projects. n • Budgetary shortage will result in cutting non-essential, non-revenue generating spending . d • HIT expenditure will be affected. In most optimistic scenario it will remain the same but in majority will experience cut backs. • HIT vendors will be affected by a mixture of the above and factors originating from capital market : – Loss of revenue due to decline in demand – Defaults of payment on ongoing projects – Assets write-offs – Reduced access to debt • HIT vendors corrective actions: – Lay-offs – Virtualisation of activities – Outsourcing – Price Reduction (probably deflation) 10
    • Warding Off The Troubles - Recommendations • Governments can play crucial role by promoting the adoption of HIT, setting standards and providing financial help – example US’s USD 20 billion healthcare IT package. • Healthcare providers should not take on conservative approaches in implementing HIT but rather leverage on its inherent ability in reducing costs and promoting efficiency • Insurance industry will benefit from EDI, which could reduce paper workload , streamline processes and speed up processing times. • Vendors should look into providing affordable commercial arrangements and reducing price. 11
    • Agenda Healthcare Information Technology Trends 12
    • Healthcare Technology Hype Cycle (2007) 13
    • Healthcare Applications Hype Cycle (2007) 14
    • Shift in Healthcare Information Technologies 15
    • Major EHR Trends: Global View 16
    • Shift Towards Integrated and Patient Centered Healthcare Delivery - APAC 17
    • Top Ten Trends in Healthcare Information Systems: APAC Healthcare Information Systems: Top Ten Trends in APAC (2007) 18
    • Highest Growth Potential in APAC: Clinical Information Systems and EMR 19
    • Agenda APAC Healthcare Information Technology Market Outlook 20
    • The Asian Healthcare Sector Healthcare Market Revenue (Asia Pacific), 2008 Total: US$ 239.9 billion Medical Imaging HIT 1.5% Medical Devices 2.1% 21.2% Biotechnology 6.7% Clinical Diagnostics 2.1% Pharmaceuticals 66.2% In 2009 we anticipate the healthcare sector in Asia will grow by 5-10% 21
    • Opportunity Assessment on Emerging Market Segments Key Focused Market Segments & Geographies High Least Worthy Competitive Centralized/Traditional Healthcare Management Singapor e, Malaysia, India, India Australia, Non-applicable to all 8 Countries – Traditional Malaysia Australia, Healthcare management lacks China, patient care effectiveness, Taiwan, PHI operational efficiency and India market attractiveness Market TPA Penetration Rate Challenging High Priority HCIT Taiwan, Thailan PHI Singapore d Indonesia , Indonesia Taiwan, Thailand, PHI , China Thailan Malaysia, d Singapore HCIT Australia, TPA HCIT China TPA Low Low High Growth Potential The paradigm shift of healthcare from provider to patient centric, centralized to decentralized, have pushed the standards of healthcare in terms of quality and efficiency to a higher level. Hence, value added components, such Health Information Technology, Health BPO and private health insurance are likely to play significant roles in the transition process. PHI = Private Health Insurance, TPA = Third Party Administration, HCIT = Healthcare Information Technology 22
    • HIT Market Assessment - Malaysia Percentage of ICT Spending / Total Healthcare Expenditure Malaysian HIT Background • Malaysia implemented its national plan for the development of ICT in 2003 US$ 23m 0.6% health in 1995. • In 2000, the country has embarked on Telehealth implementation that aimed at providing uniform HIT infrastructure across the entire nation for 2005 US$ 113m 2.2% creating single EMR and providing Subsequently in 2007, the government increased its emphasis on E-Health with its strategy and vision to 2020 of the Multi-Media Super Corridor initiative and the Telemedicine Act 1997. 2007 US$ 171m 2.6% • The Multi-Media Super Corridor initiative was aimed to establish a health- care system which could leverage advanced information and multimedia Key E-Health Players in Malaysia technologies to significantly enhance its healthcare standards with telemedicine and medical informatics as the crucial components. Company Country Key Expertise of Origin • Government funds were also allocated to expand Tele-Health and Tele- consultation services, to share health records and plans, to set up the SPK THIS, Electronic Medical Record, National Health Informatics Centers and to implement hospital information Technology Malaysia Patient Management, Physician Order systems in selected hospitals and clinics, which provides a positive Management outlook for the E-Health industry. IBA Health Electronic Health Record, Patient Australia Group Management, Electronic Health Claims • Malaysia is planning to introduce National Health Insurance Scheme which will include developing Casemix System to facilitate Kompakar Malaysia THIS reimbursements. Worldcare TeleRadiology, Patient Management, Health Malaysia TeleCardiology, TeleDermatology, TelePathology Profdoc (under Patient Administration, Electronic CompuGroup) Sweden Medical Record, Care Planning, Hospital & Laboratory Management Peransang Jati Malaysia Personal Health Management, THIS AHIS Austria THIS – penetrated KPJ Healthcare Source : The Association of Computer & Multimedia Industry of Malaysia (PIKOM), National Information Technology Council Malaysia, Frost & Sullivan estimates 23
    • HIT Market Assessment - Singapore Singapore’s HIS Market: Revenue Forecast 25 (2003-09) Overview of Singapore’s Healthcare IT 20 CAGR % (2005-2009): 21.8 • Hospitals in Singapore are taking full advantage of 12.7% 19.3 technological advances in Healthcare IT to improve efficiency US$ Million 15 17.1 and speed up patient care 15.2 13.5 • Some examples of information technology playing a major role 10 12.0 in revolutionizing healthcare delivery in Singapore include: 11.0 Hospital Information Systems (HIS), Picture Archiving and Communications Systems (PACS), Electronic Medical Records 5 (EMR), E-Health, wireless technology, radio frequency identification (RFID) 0 • Healthcare service providers in Singapore can boast of being 2003 2004 2005 2006 2007 2008 2009 the leaders in technology adoption in the Asia Pacific healthcare space Healthcare IT Systems Market: Market Life • Healthcare delivery in Singapore is made up of both public and Cycle for Selected APAC Countries (2004) private systems. In 1999, there was a reorganization of the public healthcare delivery system into two vertically integrated networks, the NHG and SingHealth - to enable a greater degree of integration, cooperation, and collaboration among the public sector healthcare providers • Major private healthcare providers in Singapore are: The Parkway Group and Raffles Medical Group Source : Frost & Sullivan; E-Health in Asia and the Pacific, United Nations ESCAP 24
    • HIT Market Assessment - Indonesia National Health Information Systems (NHIS) • The NHIS Policy and Strategy has been developed in support of Drivers the decentralization on health to achieve Healthy Indonesia by the year 2010. The presence of reliable and valid information is NHIS Policy and Strategies and a decree on Hospital Information System hoped to accelerate the achievement the national program (Oct, 2003) have been developed and adequate health centers has been set up by the government Mission of NHIS include development of data management , which includes data collection, storage, retrieval and analysis, Cooperation and assistance from both public and private sectors as well as from international bodies like the World Bank, UNDP and JICA to support development of data bank, health profiles and presentation of NHIS initiatives information for different purpose, development of network and information sharing among information users as well as Rapid development of IT in the region development of methods for the use of health information Restraints Financial support for HIS maintenance is considered the least priority in the national budgetary Lack of Health Information Technology personnel in Indonesia to manage the HIS network. Currently almost all HIS centers are staffed with medical personnel with limited IT/IS background Percentage of IndonesianHealth Providers Utilizing HIS for Daily Operations (2007) HIS spending in Indonesia is primarily done by the private sector, most of the times focusing on private healthcare centers in cities like Jakarta, Bandung and Denpasar, Bali. 5% 3% Fragmented health IT and IS infrastructures Not utilizing HIS No comprehensive data exist that covers the entire nation, except for certain diseases like Tuberculosis and AIDS/HIV Utilizing HIS to Challenges some extent The geographical outlook of Indonesia and its population distribution Fully utilizing HIS The current state of decentralized health services and administration makes HIS implementation much more complex. The decentralization and lack of central authority help to further breaking down of the routine HIS 92% Source : WHO – Indonesia Country Health Profile (2008), Biskom Indonesia (2008) 25
    • HIT Market Assessment - Thailand Percentage of Establishments with Internet Usage 100% Establishment Coverage % by size (number of Total persons engaged) & Economic Activity 80% Manufacturing 60% Other Land Transport etc 40% Business Trade Services 20% Construction Hospital 0% 2004 2005 2006 2007 Modernization of Thailand through ICT • Globalization effect has triggered Thailand’s emphasis on E-Health, and subsequently, the “Modernization of Thailand” project further reinforce the government’s aim in utilizing technology for its key sectors, including healthcare and medical insurance. • In a recent survey conducted by the National Statistical Office, Thailand, the hospital segment accounted for about 0.2% ICT coverage in terms of the number of establishments, out of the total 820,137 establishments in 2007 (a majority 82.67% of the total hospital population. • Furthermore, in contrast with the other industries, the hospital segment creates more ICT job opportunities, whereby 55.2% of the establishments employ 51 to 200 persons for their ICT activities, and is highly active in terms of internet usage (95%). Source : National Health Statistical Office, Thailand: Information and Communication Technology Survey 2007, United Nations: E-Health in Asia and the Pacific 26
    • HIT Market Assessment - Australia Health IT Market Size by Expenditure US$ Bn (2001-07) Growing Importance of Health IT 3.5 • It is estimated that the healthcare IT market in Australia is 3 Expenditure (US$ Bn) worth US$2.89 billion in 2007-08, growing by CAGR of CAGR % (2001-2007) 2.89 16.6% since 2001. 2.5 E-Health Expenditure: 16.6% 2.48 • In an effort to resolve the implications caused by the Privacy 2 2.12 Act on the development of Healthcare information, the 1.82 Australia government amended the legislation in 2004 to 1.5 allow for legitimate operations of health IT. 1.44 1 1.32 1.15 • The nationwide implementation of “HealthConnect” National Information Network was also announced by the Australian 0.5 government in the same year, demonstrating Australia’s 0 commitment to expanding the health IT industry. 2001-02 2002-03 2003-04 2004-05 2005-06E 2006-07E 2007-08E • The Health IT industry gained further momentum with the creation of the National E-Health Transition Authority Key Australian Health IT Players (NEHTA) in 2005, in which the government committed US$85 million funding in 2006. Company Revenue Key Expertise (US$ Mil) • The extent of health operating budget invested in IT varies IBA Health Group Electronic Health Record, Medication Management, greatly amongst different health organizations, ranging from 235.6 Limited Patient Management, Electronic Health Claims 1% to over 10% - with public hospitals spending an average of 1.5% of their total budget on IT. Health Practice Management, Patient Management, Clinical Communication 19.58 • In 2008, approximately 90% of the General Practitioners in Information Sharing, Health fund management Network the country are computerized. Meditech Global Electronic Health Management, Personal Patient 5.46 Limited Monitoring, Clinical Information Sharing ICSGlobal Transaction Health Exchange Linking Multiple 1.19 Limited Applications (Thelma) Source : Fujitsu Australia: Achieving Benefits from Investments in Health IT, Frost & Sullivan analysis & estimates 27
    • HIT Market Assessment - Taiwan Hospital Usage of Information Technologies in Taiwan (%) (2002-06) Overview of Taiwan’s Healthcare IT • Leaders in Taiwan acknowledge that HCIT not only helps to provide efficient and safe medical care but will also play a significant role in sustaining the 2002 89.8% economy’s national health insurance system • Currently, all hospitals and most clinics are connected to the Bureau of National Health Insurance through (BNHI) a Virtue Private Network (VPN) for e-claim purposes 2006 98.7% Key Drivers • The government is the key driver of an integrated island-wide health information HIT Adoption in Taiwan system in Taiwan, and is responsible for the creation (and funding) of Taiwan’s successful health smart card 1989 Government-initiated decision to establish a • Hospitals, too, have played an important role in integrating IT into the health National Health Information Network (HIN) sector and generally cover the costs of their individual HCIT systems 1991-1993 Pilot HIN tested in Hsinchu medical care region Challenges • Interoperability Some hospitals treat health and medical data as their exclusive property and are unwilling to share patient data with other hospitals 1994-1996 HIN plan extended to other regions in Taiwan • Privacy Medical data is sensitive and “proprietary”. Many are concerned that de- Phase II of HIN begun with: bandwidth and VPN identification is not sufficient to protect privacy as practice patterns, upgrades, local resources analysis, web-based medication use, and outcome variations are all sensitive information 1999 application and standards development BNHI introduced smart cards 2001 Source : Health Information Technology and Policy Lab 28
    • HIT Market Assessment - India Implication on India HCIT market by US Service India HCIT Framework Providing Penetration (2003-2010) • The rapid increasing and aging of population, gradual increase in 5000 800 Workforce required in HCIT Industry ('000) disease burden, rural-urban healthcare coverage disparity, and Revenue Workforce Revenue (US$ Mil) 700 manpower constraints in the healthcare sector, have magnified the 4000 600 importance of e-Health intervention on healthcare in both the public and private sectors. CAGR % (2003- 500 3000 2008) • The Ministry of Health, of Family Welfare, of Communication and 400 Revenue : 82.10% Information Technology, state government, and the Indian Space 2000 300 Workforce: 70.00% Research Organization (ISRO) are those who have played significant 200 roles in the development e-Health in India 1000 100 • The major fields of e-Health more rapidly developing in India involves 2 0 0 main aspects: (1) Total Hospital Information System and (2) 2003 2004 2005 2006 2007 2008 Telemedicine Key Contributors of Telemedicine • To date, majority of e-Health development in India are outsourced from US service providers. Company/ Sector Key Involvements Institution ISRO GRAMSAT project – Develop telemedicine Total Hospital Information System (THIS) & Telemedicine Public application through aerospace technologies • The hospital segment is undergoing an evolution since the early 1990s, DIT Facilitator for development of technology, pilot Public with the rising requirement for automation. scheme initialization, and co-ordination • Although a large number of HIS services providers are available in the Apollo Pioneer in-house developer from the hospital market, the major players in the field include CDAC, Wipro, TCS, and Hospital Private segment with more than 45 telemedicine centers set Siemens Information System Ltd. up in the country SGPGIMS, Co-development, whereby SGPGIMS is responsible • The government-led CDAC, in particular, was the pioneer for the Public - Lucknow for R&D and educational initiatives; Lucknow development of the first HIS solution in collaboration with SGPGIMS Private provides the platform for trial implementation. and Lucknow in 1997. ISRO = Indian Space Research Organization, DIT = Department of Information Technology, SHPGIMS = Sanjay Ghandi Postgraduate Institute of Medical Science Source : WHO: Mode 1 GATS Report India – Cross –Border Trade in Health Services (E-Health), United Nations: e-HEALTH in Asia and the Pacific, SGPGIMS 29
    • HIT Market Assessment - India Positive Negative Strengths Weaknesses • Manpower – High English proficiency, qualified, • Lack of international certification Internal Forces and techno savvy workforce • Poor Domain Skills • Safe Electronic Environment – Official • Lack of grading of healthcare organizations – recognition for Digital Signatures and E- thus no incentive to standardize & benchmark Transactions • Lack of international marketing capabilities • Competitive cost of human capital • Weak Legal framework • Strong & buoyant domestic healthcare industry – facilitates upgrading of skills and • Inadequate infrastructure infrastructure Opportunities Threats External Forces • HIPPA compliance of US Service Providers – • HIPPA compliance for Indian Service thus provide ease of entrance of best-in-class Providers service providers from the US. • Over dependence on US expertise • Remote Disease Management • Regional competition from other countries, who have also enhanced their information technology capabilities on healthcare, such as China, and key ASEAN countries. Source : WHO: Mode 1 GATS Report India – Cross –Border Trade in Health Services (E- Health) 30
    • HIT Market Assessment - China Growing Importance of Health IT • Due to the Health Informatization Development Plan, all hospitals are Health IT Market Size by Expenditure US$ required to increase investment in building digitized hospitals. This 700 Million (2001-06) requirement is expected to accelerate the growth of China’s HIT market by 600 Expenditure (US$ about 25-30% a year during 2006-2010 500 • By the end of 2006, China’s investment in its healthcare information Million) systems (HIS) had increased by nearly 16% to RMB 5.8 million, year-on- 400 year. This amount accounts for approximately 0.5% of the country’s total 300 healthcare expenditures of RMB 866 billion during the same period 200 • The market size is expected to expand to approximately RMB 15 billion in 100 2010. The development of China’s HIT industry is generally considered to be at a preliminary stage, resembling that of western countries 20 years 0 ago. Nevertheless, as they learn more about available and emerging 2001 2002 2003 2004 2005 2006 technologies, they now have the opportunity to leapfrog ahead • In 2007, 380 domestic companies in China have developed HIS solutions in response to the healthcare industry’s rapid growth and government policy Hospital Management Information SystemHospital Clilnic Information System (HCIS (HMIS) Implementation Level (2006) Implementation Level (2006) None Partial 99% Government Policy Driving Demand of Healthcare IT in China 41% None HC Reform Entry into WTO Hospital IS Policy 32% • Elimination of • Modernized IS of • Standardized inefficient paper Chinese hospitals in HIS processes order to compete with development Partial Complete the market entry of None foreign competitors Complete Partial Partial 27% None 1% 2000 2001 2002 Source : CCID Consulting; China Ministry of Health; US Commercial Service 31
    • CIO & CFO Healthcare Information Technology Survey Conducted in US in November 2008 by •College of Healthcare Information Management Executives (CHIME), •The National Alliance for Health Information Technology (NAHIT) •AHA Solutions, Inc. 32
    • Key Findings •Over half of the CFOs/VPs Finance (55%) report experiencing slight or significant delays in accessing capital and expect the financial crisis to last another 12 to 24 months. •For now, CFOs/VPs Finance are dealing with budgetary pressures by delaying or lengthening timeframes for completing new facilities or facility upgrades, (74%), deferring IT equipment purchases (57%) and delaying or lengthening timeframes for implementing health IT initiatives (52%). •CIOs are responding by implementing longer timeframes for application projects (63%) and reducing spending on outsourced IT services (34%). •One-third (33%) of CFOs/VPs Finance plan to or have cut budgets while one in four (26%) plan or have laid off staff or instituted a hiring freeze. •Almost all respondents (94%) have cut IT budgets by extending implementation time of existing projects and delaying or reducing the slate of new projects. 33
    • Tighter Access To Capital Is Forcing Project Delays • More than half (52%) report slight or significant delays in accessing capital and expect the financial crisis to last another one to two years. • 74% CFOs/VPs Finance are dealing with budgetary pressures by delaying or lengthening development of new facilities, facility renovations and health IT initiatives. • 33% reported cutting budgets, • 26% are planning or implementing staff layoffs or have instituted hiring freezes. • Those who reported an increase in their IT capital budgets (11%) are finding ways to reduce costs by more aggressively negotiating with payers or providing increased oversight on charity/uncompensated care. • 52% of CFOs/VPs Finance reported delaying or cutting EMR rollouts and 43% pushing back or reducing CPOE implementations. • However, an equal or larger number plan to move full- speed ahead with these strategic clinical IT application projects. 34
    • Decreases In 2009 It Capital Spending Will Affect Hospital T Vendors • More than half (52%) of CIOs reported that their organization’s capital budget will remain the same in 2009 while 36% said it would decrease. Just 2% expected their organizations’ capital budgets to rise. • Nearly half (49%) of CIOs and 44% of CFOs/VPs Finance report that their organizations’ IT capital budgets will be lower in 2009. • 36% of CIOs and 33% of CFOs/VPs Finance said they expect IT capital spending will remain the same. • Both CFOs/VPs Finance and CIOs expecting capital IT budget cuts said reductions will impact applications, software and outsourced IT services such as consultants. Some also pointed to cuts in spending on servers, networking and storage. 35
    • 2009 Operating Budgets Target Outsourced Services For Cutbacks • 67% of CFOs/VPs Finance say their organization’s operating budgets will increase or stay the same vs. 26% of CFOs/VPs Finance reporting a decrease. • 54% of CIOs report that their organization’s operating budgets will increase or stay the same vs. 39% of CIOs reporting a decrease. • 49% of CIOs and 44% of CFOs/VPs Finance report that their organizations’ IT capital budgets will be lower in 2009. 65% say the annual budgets for running their departments will increase or stay the same in 2009 . 31% say their budgets will decrease. • Of the CIOs who are cutting their 2009 operating budgets, 59% plan to reduce IT services, 30% will cut staff, and 27% will decrease new applications and other software. • Applications, software and outsourced IT services to see the biggest cuts, followed by staff layoffs. • 64% are delaying or reducing new projects. Outsourced IT services are the most common area targeted for cuts, and many also are looking at staffing reductions and decreased training and professional development to manage the operating budget constraints. 36
    • Health It Initiatives Are Strategic Imperatives But Delays In Funding Support Is Anticipated Major clinical IT initiatives show the biggest dichotomy among respondents. Half (50%) of CFOs/VPs Finance and 52% of CIOs report reductions or delays in funding for EMRs. Slightly fewer - 43% of CIOs and 36% of CFOs/VPs Finance - expect cuts or delays in funding for CPOE systems. Many of their counterparts, however, are moving head with these types of efforts. 37
    • Conclusion Going into 2009 and possibly some or all of 2010 will be challenging years for hospitals. Before economic turmoil hit, hospitals had shown important progress in health IT adoption, and for now, many of these initiatives are funded and moving forward. But a prolonged or deeper economic slowdown will inevitably be met by further reductions in IT capital and operating budgets, so even those health IT initiatives that have a demonstrated return on investment could become difficult to fund. Health IT is no longer a “nice to have.”. It is a strategic priority for hospitals to deliver safer, higher quality and more cost-effective care, thus enabling hospitals to stay competitive. Some hospitals executives surveyed see this as the time to invest in IT initiatives that will deliver direct and quantifiable savings to their organizations. ...hard times are time to invest in the future 38
    • We Accelerate Growth Thank You 39