Few industries today are wasting as much money as the healthcare industry. Today, healthcare has become extremely expensive resulting in a populace with few healthcare choices and disgruntled healthcare providers. Part of the big problem in this sector is healthcare IT whose costs continue to rise to unmanageable levels. Here are top three hidden costs that you can manage in healthcare IT if you get the right help and have enough motivation to want to bring the costs down.
New IT systems are too costly to operate
While most hospitals have embraced electronic health records (EHRs), some of the newest systems are far too costly to operate. They also do not deliver noteworthy results. Truth be told, some of the most prestigious and highly esteemed hospitals and healthcare systems run application software platforms that are far too expensive. This is why some notable hospitals have in the recent past suffered downgrades of their bond rating.
Other factors that have contributed to weakening financial performance include high operating expenses as well as the lower revenue that the implementation of their new IT systems is bringing. Instead of streamlining operations and bringing in more business, some of these new IT systems are to blame for creating inefficiencies that push up the costs and weaken healthcare institutions.
Total Cost Ownership Frameworks are failing
Through the years, healthcare industry investors have largely depended on Total Cost Ownership (TCO) frameworks for evaluating their investments in technology. While these systems are perfect for evaluating assets, they fall flat when used to evaluate services.
The concept on which TCO is based originated in IT and has often encompassed software upgrades, hardware, licensing, security, training and implementation. The problem with the costs associated with these is that they make presumptions with regard to owing and operating this technology that can now be easily administered remotely.
In any case, unlike in other industries, evaluating costs in the healthcare IT industry must include sizable operating expenses incurred in the attempts to record results using these software platforms.
It has been a long way from just a decade ago when hospitals only knew hosted software as their only option. Today, hardly any hospital uses that business model. The rise of new technologies and innovation has seen healthcare institutions embrace cloud-based platforms, partly as a way of slashing costs that were traditionally part of managing an IT department.
These next-generation cloud solutions have also improved the hospitals’ overall performance and made it easier for them to offer support services to their customers. These healthcare institutions chose to embrace this fast-growing industry and have incredible results to show as a result.
Reluctance to switch to cloud-based solutions
While most players in the healthcare industry have embraced cloud solutions, there still are some that still yet to do a complete cloud migration. Those who have can show undeniable results of embracing the cloud. By using cloud services, hospitals only pay for the results rather than the features they get. Because revenue of cloud providers is tied to the outcomes that those who use their systems get, they do everything they can to provide the best systems.
Those healthcare industry leaders who appreciate the place of risk and reward were quick to embrace the cloud because by using the cloud, they need not invest in fixed assets. Additionally, using cloud services tremendously increases efficiency and productivity.
Furthermore, the cloud offers relatively more predictable operating costs than the traditional systems. What’s more, with the cloud, it is extremely easy to adapt and scale in line with the growth of the organization as well as the industry at large.
The healthcare organizations that have been reluctant in switching to the cloud cannot optimally enjoy any of these cloud benefits. Instead, they are forced to build massive IT infrastructure as they try to get insights into their own systems in addition to getting insights into the industry as a whole.
Additionally, these institutions struggle with inefficiencies with their administrative arms, struggle with improving labor efficiency and have a hard time improving collections. All these are tasks that switching to the cloud would streamline.
Ultimately, the bottom line is that healthcare organizations that will survive into the future are those that will embrace healthcare IT as it transforms through emerging technologies and innovation. They can do this by partnering with reputable healthcare IT providers who will guide them through these emerging technologies, making sure the institutions only invest in IT systems that have been proven to increase efficiency and boost productivity in the healthcare industry.
