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States, local health agencies’ health IT spend projected to grow by $1.5B to 2017

December 21, 2012 7:08 pm by | 1 Comments

Although many governors are leaving health insurance exchanges to the federal government, don’t expect health IT spending to go down at the state and local government level. In fact, it is projected to grow by more than $1.5 billion over the next five years, according to findings from Deltek, a Virginia-based Deltek enterprise software and IT solutions provider for government contractors.

Christopher Dixon, Deltek’s senior manager of state and local industry analysis said one important consideration will be how governors use IT to move health insurance towards quality-based care.

Asked where the focus of the spending would fall in health IT, Dixon said in an e-mail:

“Significant investments will be made in a wide variety of health IT enhancements, with particular emphasis on Electronic Medical Record/Personal Health Record systems, including the network infrastructure, hardware/software, cloud services, e-discovery tools, data integration, and mobile devices.”

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The majority of states have been reluctant to set up their own health insurance exchange or work with other states to implement a health insurance exchanges consortium because of a lack of clarity about what they are supposed to look like, how they are supposed to function and how they would impact their regional insurance markets. They’re also uneasy with the January 2014 timeline for implementation.

But most states have no such reluctance with health information exchanges which have a much higher comfort level. In about 40 of 50 states, local and state governments have awarded contracts to set up these exchanges depending on the state’s size, population and structure preference. Delaware, for example, is one of three states that has opted for a statewide exchange that’s part of the state government. New Jersey and California are among 13 that have adopted a nonprofit format that allows flexibility for special tax credits and incentives. New York is one of 17 states that have chosen to go with treating their HIE as a public utility. One downside of this structure identified in the report is that states have to be ready to step in if things if it goes pear shaped.

There also seems to be more flexibility with information exchanges. For example, hospitals that don’t have the scale or ability to fully implement electronic medical records have been met halfway with the Direct Messaging initiative. The program provides grants to healthcare providers to set up secure e-mail exchanges that permit them to transmit medical information such as lab orders or e-prescriptions through encrypted e-mails. The benefits are also clearer.

Dixon added that state and federal efforts to shift Medicaid/Children’s Health Insurance Program (CHIP) for children toward outcomes-based service provision will drive investments in improved intake processes, better data integration and analytics, and, eventually, advanced efforts to eliminate waste, fraud and abuse. States have until December 31, 2015 to take advantage of enhanced funding to update eligibility systems  for healthcare coverage for Medicaid and CHIP, according to the report.

The Centers for Medicare and Medicaid Services are also in the process of implementing 13 quality of care incentives for healthcare to drive transformation of Medicaid/CHIP systems, according to the report.

“Given that those system serve as much as 40 percent of the U.S. population at some point and virtually every medical provider, these initiatives will be the center of gravity for quality of care across the entire medical landscape.”

Copyright 2014 MedCity News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Stephanie Baum

By Stephanie Baum

Stephanie Baum is the East Coast Innovation Reporter for MedCityNews.com. She enjoys covering healthcare startups across health IT, drug development and medical devices and innovations deployed to improve medical care. She graduated from Franklin & Marshall College in Pennsylvania and has worked across radio, print and video. She's written for The Christian Science Monitor, Dow Jones & Co. and United Business Media.
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