Compared to industries such as retail and financial services, the medical industry has traditionally lagged behind when it comes to investing in new technology. However, since the COVID-19 pandemic, healthcare organizations have increased their investments in technology, digital solutions, artificial intelligence, and automation. The investments help to address labor shortages and improve margins. In fact, according to a new report by Bain & Co and KLAS Research, approximately 45 percent of health-care providers accelerated software investments over the past year with more expected to boost tech spend in the wake of immense cost pressures.
Tech spend in healthcare includes:
- Software, such as the customer management system and medical records system.
- Hardware, including printers, laptops, and tablets.
- IT management, whether in-house or outsourced.
Causes of Tech Spend Increase
The COVID-19 pandemic caused staffing issues and employee burnout, while increased labor expenses and inflation compounded the challenges. According to Axios, nearly 80 percent of healthcare providers identify labor shortages, inflation concerns, or specific organizational situations (like M&A or leadership changes as top reasons for new investment.
According to the Kaufman Hall September 2022 National Hospital Flash Report, most hospitals continue to operate with negative margins far below pre-pandemic levels. Investment in RCM software could help these organizations reduce bad debt by decreasing billing errors and tracking patient balances. Additional automation could also help to reduce labor costs.
Healthcare Tech Spending Priorities
Most healthcare providers are expected to invest in new software to improve productivity, efficiency, retention, and patient care. Their main priorities include:
- Managing the revenue cycle
- Security and privacy
- Patient intake/flow
- Clinical systems
Creating a Healthcare Tech Budget
Since tech is an important part of running a healthcare organization efficiently, creating a budget for it is essential. This also helps an organization to identify areas that need improvement. Below are some tips for creating an effective budget.
Since tech systems are used by many staff members, including office staff, physicians, and management, it’s important to get feedback from them, especially regarding systems upgrades. Your budget should also align with practice and customer satisfaction goals. For example, if one of your goals is to enhance the patient experience, you might invest in technology that improves the patient portal or phone system.
Invest in Strong Security
It’s especially important for the healthcare industry to have strong security because it manages sensitive data. Some security features to consider include firewalls, email filtering, antivirus systems, encryption, backups, and secure gateways.
Budget for Software and Hardware Updates
Healthcare organizations often use outdated hardware and software because they lack a system for tracking when updates or replacements should be made. When creating a tech budget, it’s essential to include a system for tracking this. Avoid trying to cut corners with software and hardware to reduce costs, which can end up costing more in the long run.
In addition, make sure to budget for training staff; avoid delaying training to lower costs as this can also cost more over time since staff members who are not trained are less efficient and can make more errors.
Creating Your Budget
To create your budget, first look at those from previous years to identify how expenses and revenue vary over time, month to month, and year to year. Create a budget for the current year and make adjustments to it for expected tech changes. Make sure that your tech budget covers everything you need to have a strong foundation for running your organization and to meet its goals.
CH Consulting Group can help your healthcare organization identify new technology investments while weighing ROI and cost savings. Contact us today to learn more about how together we can help improve efficiencies, lower costs, increase employee satisfaction and improve patient experience.