Originally Posted On: https://healthcareitsm.com/blog/optimize-it-spending-healthcare-providers/

Key IT Financial Metrics for Healthcare Providers: Optimizing Spending in a Data-Driven Era

Providing comprehensive healthcare services for patients while optimizing spending is a critical concern for healthcare executives. As the industry develops, many facets of this business can become even more complex, as additional regulations, an influx of data to manage and organize, and revised accounting standards make compliance difficult. All must be accomplished while balancing profits and spending, as well as keeping healthcare services reasonably priced so that they are available to everyone.

Healthcare IT budgeting best practices can vary from organization to organization, but most begin with financial management technology, a crucial asset for healthcare providers. These tools can simplify the processes so that organizations can continue to focus on offering excellent healthcare.

The Importance of IT Financial Management in Healthcare

IT financial management in healthcare is necessary to help reduce financial risk and manage a healthcare facility’s finances. This approach can help organizations address the constant struggle of improving care for their patients while keeping costs within the budget.

Healthcare organizations are already interpreting and striving to meet mandates made by the government, building awareness of patients’ safety needs, addressing staff shortages, combating rising operating costs, enduring competition from other healthcare facilities, and struggling with the limited availability of funding. While budget concerns can add to an already immense list of potential issues that can cause financial strain for healthcare organizations, financial management and IT budgeting in healthcare is a key way to ensure its success.

IT spending impacts compliance with HIPAA and HITECH regulations, and it is crucial to manage it well.

Security measures must be put in place for the protection of patients’ health records, including:

Without these security measures, there is a risk of expensive HIPAA and HITECH compliance issues, as well as a threat of a data breach. These issues can be costly in more ways than one, as losses of patient data can diminish patient confidence and satisfaction.

Using IT Metrics to Reduce Waste and Improve Efficiency

Utilizing IT metrics allows healthcare facilities to reduce wasting time and resources due to inefficient systems. Reducing waste and streamlining healthcare spending not only improves budget optimization for the organization but also results in better care for patients.

Key IT metrics highlight crucial aspects of a healthcare facility, such as:

Automated services can track these measures and help organizations calculate administrative costs. Commonwealth Fund reports that about 30% of US healthcare costs can be attributed to administrative services, such as insurance claims and human resources. Automating some tasks, such as processing claims, entering data, and scheduling patient appointments, can save healthcare facilities money.

Administrative mistakes can result in costly errors. Automation can eliminate these errors and reduce costs. It can also serve as a major benefit to healthcare staff as it allows them more time to focus on providing excellent care to their patients.

Healthcare-Specific ITFM Metrics

Healthcare IT budget metrics are influenced by many healthcare service factors, such as the length of time a patient waits to receive care, a patient’s satisfaction, and the average length of stay. Considering them together with these key metrics is crucial to identifying and addressing your healthcare organization’s budgetary concerns. Here are some of the most important metrics to address:

Cost Per Patient Visit

One important expense to monitor is the IT expenses associated with delivering care for each patient. In order to determine this, divide the total cost to carry out operations (including equipment, healthcare supplies, and salaries) by the number of patients treated within the target timeframe. Assessing these costs helps a healthcare facility determine the efficiency of its financial management and consider which areas need improvement.

IT Spending as a Percentage of Revenue

IT financial metrics for healthcare providers are used to assess how much is spent on IT resources in comparison to total revenue. To create a budget benchmark, the organization must divide IT operational spending by the total revenue, then multiply by 100 to learn the percentage. Target IT spending for healthcare facilities is typically between 3.0-5.9% of total revenue.

EHR Implementation and Maintenance Costs

Organizations must consider several aspects to track the cost-effectiveness of electronic health records (EHR) systems. The most important is the cost of implementing the system, including software, hardware, data migration, and staff training. Electronic health records (EHR) costs also involve maintaining the system, such as necessary updates, training for users, and technical support. Additionally, it is important to consider the efficiency of the healthcare facility after using EHR systems, including reduced time spent on documenting, improved management of patient medication, and gaining patient access.

IT Downtime Costs

IT downtime in healthcare can lead to several types of financial repercussions. One report compiled by Comparitech found that most healthcare organizations lost $1.9 million a day due to downtime from ransomware attacks. Any unplanned downtimes can severely disrupt IT systems, which triggers mitigation costs for healthcare facilities and also jeopardizes patient safety by delaying treatments and preventing access to patient information. Diminished patient satisfaction and damaged reputation as a result of IT downtime can also create financial implications.

Compliance and Security Costs

Cybersecurity includes spending on HIPAA compliance and other systems to protect against data breaches. Without cybersecurity measures in place, expensive losses can result in compensation costs to all involved, as well as legal fees and diminished reputation.

To track the spending of both cybersecurity and compliance measures, organizations must first assess the risks by discovering any potential threats to the facility. Then, analyze the potential effects a data breach could cause. Compliance requirements are a crucial concern when creating a security budget, as is the eventual classification of the resulting spending on security controls such as network security, data encryption, and network security.

Telehealth Investment ROI

ROI on healthcare IT investments can be evaluated by comparing telehealth costs with the revenue generated, as well as any savings that result. Telehealth technology costs can be determined by assessing start-up costs, as well as associated software, hardware, and training costs.

Revenue can include not only payments received from patients but also reimbursements from insurance companies. Potential telehealth savings can include reduced office space and fewer administrative tasks. Keep in mind that the size of the healthcare facility, as well as how many patients can be accommodated, plays a crucial part in ROI.

Aligning IT Spending with Patient Care Goals

Optimize IT costs in healthcare with the goal of ensuring care is affordable for patients while also keeping their needs and satisfaction in mind. One way healthcare managers can achieve this is by creating a digital health strategy. A digital health strategy involves utilizing technological tools that ensure patients receive better care, including telehealth, wearable health devices, and applications dedicated to improving healthcare delivery.

There are several ways in which these types of technology can help to make healthcare more affordable for patients and organizations alike:

Allows for Preventative Techniques

Preventing health conditions from developing or worsening is one of the best ways to save money in healthcare. If preventative techniques are used early, patients can develop healthy habits and reduce the chances of the condition becoming chronic or even prevent it from occurring altogether. Preventive techniques can help reduce costly treatments and resources used for chronic issues.

Electronic health records (EHRs) can assist with this goal. They maintain mountains of helpful data on patients that can alert healthcare providers to worsening patient issues.

Enhances Early Detection

Similarly, healthcare data can also help create more efficient screening tools for early detection and provide useful information to patients to promote better health. Artificial intelligence (AI) is one efficient way to identify early warning signs of certain health issues so a physician can diagnose and treat the condition. Early detection and proactive treatments can help reduce healthcare costs.

Connects with Patients Wherever They Are

Telehealth and telemedicine are great ways to connect with patients while also saving healthcare costs. Those with all types of health issues can meet with a healthcare provider from the comfort of their own homes. Virtual monitoring, diagnosis, and treatment can reduce the costs of a healthcare facility by reducing overhead and eliminating the need for physical expansion.

Streamlines Operations

Any size of healthcare organization can quickly experience budget issues if operations are not efficient. Data analytics can identify inconsistencies and errors to better organize staff workflows, healthcare supplies and other resources, financial records, and patient information. IT cost optimization in hospitals, mid-size clinics, and smaller offices can boost profits while reducing patient costs.

Ensuring scalability for growing patient demand comes with utilizing digital strategies that give the systems the ability to grow as the number of patients grows. Using these digital health tools allows healthcare facilities to increase patient quantity while still providing quality care and ensuring that operations run smoothly and efficiently.

Relevant Case Studies

One real-world example of a healthcare provider optimizing IT spending while improving care is Geisinger Health System. This case study demonstrates how a large healthcare facility utilized augmented intelligence as well as predictive analytics in order to streamline workflows, identify early disease detection, and advance resources for physicians.

Atrium Health is another important example. Atrium used telehealth expansions to advance patient care and satisfaction in this case study. Their program, Hospital at Home (AH-HoH), has provided excellent home healthcare, lowering hospital costs by utilizing both in-person visits as well as remote visits and remote patient monitoring kits. A key component of AH-HOH’s success is the implementation of EHR systems.

Begin Assessing IT Financial Metrics Today

If you’re a healthcare leader looking to enhance your organization’s IT financial management, consider the many problems that must be resolved, such as government mandates, patient safety needs, staff shortages, and rising operating costs. Financial management not only helps achieve success but also aids in advancing patient care. For more information about IT financial management services and how they can help your healthcare organization, reach out to the professionals at Healthcare ITSM today.

Resources:

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