KLAS: CIOs speak out on impact of stimulus package

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Despite renewed discussion around health IT investments because of the federal stimulus package, most budgets are still tight. Providers are looking to IT vendors for creative solutions to keep projects moving; however, such creative solutions are virtually non-existent, according to a new report from KLAS.

The report, Executive Reaction to the Stimulus Package, released June 3, reflects feedback from dozens of CIOs and other healthcare executives on a range of economic issues. Among a number of findings, the report explores the gap between what providers need and what vendors are offering to deal with a troubled economy.

"Simply put, the solutions providers are requesting the most are the options vendors are pursuing the least," said Jeremy Bikman, executive vice president of research and strategy for KLAS. "Certainly, reduced maintenance fees and other cost-cutting measures would be welcomed by providers, but not every creative solution has a dollar sign attached to it.

Economic impact

Beyond the vendor-provider relationship, the report addressed the shift in IT project timelines since the ratification of the American Recovery and Reinvestment Act of 2009 (ARRA) and its provisions for health IT. Although the 2008 economic downturn redirected most hospitals into survival mode, the future reimbursement changes outlined in the ARRA have caused a shock to the market.

Approximately 85 percent of organizations surveyed have been affected in some way by the economic downturn--but of interest is the 15 percent that said they have not felt any negative impact.

In analyzing what these organizations were doing differently, KLAS noted that all have implemented a long-term health IT solution. Additionally, almost all have nurses using the core IT solution at some level, and almost half had physician usage. Lastly, all have plans to initiate or further advanced usage of computerized physican order entry (CPOE) with their current core IT strategy. Size and location were not common themes the report stated.

According to the results, 57 percent of survey respondents say their vendors are not offering creative solutions that can help them during the economic downturn. The report noted that while several respondents mentioned that vendors had offered new pricing schemes or deferred payments on up-front capital purchases, these were "only a temporary relief to ongoing fiscal pressures." Respondents suggested that a real solution be a reduction in maintenance fees or a hold on annual fee increases.

IT investments

The report also found that 28 percent of providers have speeded up or changed the direction of their IT plans since the announcement of the stimulus package, with 43 percent ready to move but watching cautiously.

"Hospital executives hope that the ‘meaningful use' bar is not set too high or the timelines too short,"  the authors noted.

Approximately 68 percent of respondents have put IT projects on hold; of that group, 39 percent plan to have projects back on schedule in 2010-2011 while 39 percent simply do not know.

Those providers who are accelerating their plans not only have an eye toward reimbursement dollars, but are also eager to have first pick of the best resources. According to the responses, however, access to capital is the major hurdle they must overcome.

Though no health IT vendor received overwhelming praise for their efforts to help provider customers deal with the challenging economy, a few companies were noted for their efforts. Microsoft, Epic Systems and GE Healthcare received the highest ratings from providers for trying to support their customers with creative solutions, while Agfa HealthCare, Kronos and Meditech received the lowest scores. Other vendors referenced in the study include Cerner, CPSI, Eclipsys, Lawson, McKesson, QuadraMed and Siemens Healthcare, according to KLAS.

"Almost every organization, provider or vendor, is struggling right now in some way. What vendors must understand, however, is that the short-term sacrifices they make today will create relationships that can bear fruit for years to come," Bikman said.

KLAS reported that 155 healthcare executives participated in the research for report, with the majority (77 percent) being CIOs. Most of the research was conducted earlier this year, with a second round of questions going out to a number of CIOs after the announcement of the stimulus package, providing some before-and-after context.