The Higher Cost Limited Value Proposition of Healthcare IT

This is a topic I’ve written about before, but it keeps coming back on my radar over and over again. Plus, it’s a fundamental problem that we most overcome in healthcare. Far too many of the innovations in healthcare are around how to get the highest quality of care regardless of the cost.

Think about all of the really expensive treatments in healthcare are barely better than a much less expensive treatment. Plus, in most industries we find ways to make something that was really expensive much cheaper. Computers are a great example of this. At first they only had super expensive computers that only a few organizations could buy. In fact, Tom Watson, then IBM chairman, famously said in 1958, “I think there is a world market for about five computers.” The reason that wasn’t a far fetched statement at the time was that computers were so expensive that there were only 5 organizations that could afford them. What changed? Computers became so inexpensive that now we see them everywhere. If you consider a cell phone a computer (which is a pretty close comparison today), then more people have computers than clean drinking water.

Now think about that when we think about technology in healthcare. Why aren’t we seeing the drastic price drop in various technologies that are used in healthcare?

In fact, healthcare is interesting because in some cases the price for healthcare IT actually goes up rather than down. Sadly, I don’t know why this is the case and I’d love to hear your thoughts on it.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

5 Comments

  • Lower costs for healthcare products and servcices generated by advances in medical science, medical techology and pharmaceutical break-throughs
    are deliberately shielded from market forces– consumers. Pricing for healthcare is based on baseline negotiation, not economies of scale or innovation. In healthcare there is no such thing as a cheaper MRI scan in 2013 eventhough the cost associated with producing an MRI are now 90% less compared to 1980–even with adjustments for flation.

  • Health IT technology may be costly in the beginning, however, in the end if its used in a right manner will for sure going to deliver higher benefits for doctors, hospitals as well as patients.

  • John, I certainly don’t have all of the answers but here are my thoughts. The price for healthcare IT has increased because of the cost of technology. We are rapidly reaching the point where most every medical device today is built on electronics, in one form or another and is on the network, I’m not talking about the cost of the devices but the cost of maintaining the infrastructure including the physical cable plant. With this growth of technology comes also the need for additional building infrastructure which supports technology technical spaces such as data closets and pathways. In addition, the spatial relationships with changes in patient room furniture and OR equipment have impacted the budget. Since many of the network challenges and issues are related to the physical infrastructure, maybe the IT professionals could give themselves more time to deal with their network programing challenges and reduce their cost by utilizing structured cabling professionals and also taking advantage of the intelligent and monitored physical infrastructure solutions. Along with it being difficult to find network programming professional that can properly manage the physical cable plant, it is a more cost effective approach to separate those duties. I feel that this would help reduce the cost of healthcare IT.

  • William,
    I don’t think most of the costs that a hospital does are in infrastructure. Maybe there are some savings there, but I think those costs are pretty low compared to their other IT costs.

  • The costs will not go down due to a few factors:

    Infrastructure you have to deal with the initial costs of the equipment. Being that this is healthcare you will need yearly maintenance costs for support. After 3 years or so, the equipment is heading towards obsolescence. Granted if you have a descent IT support system and willing vendor for support, you could extend some parts of the infrastructure for another 3 years. Eventually though, there will be a requirement of infrastructure refurbishment. Thus costs of new equipment, training, and labor.

    Software…. Another beast on costs. This one, to me, appears to be the main source of a drain on our IT budgets. This includes, Microsoft Enterprise Software, EMR/HER software, backup software, security software, etc. You have yearly maintenance costs, upgrades costs, training costs, labor costs and so on. Oh and there is built in obsolescence in this software as well.

    Labor Costs are going to continue to rise due to the requirement of knowledge to the run the Healthcare IT and the general economy plays a factor as well.

    Your costs might be going down on your computer… but it just went up on your EMR/EHR implementation so that it will work with that new computer.

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