Healthcare IT Spend


Hospitals IT spend as a percentage of the operating budget or revenue can often be less than 1/4 spent by a bank or a telco. Looking at some of the private hospitals across Asia Pacific region, some of them spend are less than 1% of their annual revenue.

One of the key questions I spend time asking chief executives is, why is the IT budget so low?  This is probably also a reflection of the relatively low IT maturity in this sector especially in emerging markets in Asia.

There are many factors contributing to the relatively small spend.

Part of the problem I find is the lack of an open dialogue around the level of spend, and lack of strong business-cases that are presented to CFO and CEO.

Callum

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2 thoughts on “Healthcare IT Spend

  1. But a hospitals core business is not information, like a telco or bank, it’s sick people. What’s the average it spend in a similar business? (what is a similar business? Hotels, education, airports?)

    • Core-Business vs. Information heavy is a nice approach of thinking about this. Raises the question – Does hospital “collect” more information about per customer (patient) than a retail bank? The FSI sector relatively also has a much more robust compliance requirement than a hospital, resulting in information capture, but, compliance in hospitals is rapidly increasing, and I expect hospitals will catch-up. A hospital with 1,000 beds (incl outpatient) would generate more electronic transaction than a local retail bank serving the same population base. I recall talking to a banking chief executive >20 years ago of an asian retail bank, and his sentiments of IT spend was quite similar to those of hospital executives today. I often like to look at investment banking which would process relatively large data-sets, high-currency of data, and the number of computations that are made for each data-point, powered by computers; especially when we look at high-frequency trading or black-box trading. Would, Could, or Should clinical care over the next 10 or 20 years be far more informational rich operating at high-currency of data?

      As for comparing hospital financials (P/L and B/S) and the business-models, they don’t compare so well to hospitals, even though they share similarities in some of the operations.

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