Monday, November 10, 2008

The Impact of the Economy on Healthcare IT Spending

I was recently asked to comment on the impact of the struggling economy on my IT spending.

In all my organizations, I have two kinds of budgets - capital and operating.

Capital is used to purchase durable equipment and to fund project implementations. We often capitalize the labor, consulting, and license costs incurred when acquiring and installing a product.

Capital in my organizations is based on the following equation:

Available capital spending = Operating Margin + Investment Performance + Donations + Depreciation - Debt Service

In today's economy, spending on elective surgical procedures is going down, energy costs are rising, and reimbursement is falling - all putting pressure on operating margin.

Investment performance for many organizations, especially those which invested in mortgage backed securities, is causing loss of principal. Luckily my organizations had invested conservatively.

Donations are more challenging when consumer confidence is low.

The end result is that 2009 will be a challenging capital year because of lower operating margins and investment performance. We will have enough to keep the trains running on time, to ensure our disaster recovery efforts continue, and to remain compliant with all our regulatory requirements. However, we will extend the timelines of some projects to conserve capital.

Operating budgets are used to fund salaries, maintenance contracts and supplies.

For now, operating budgets are stable, but the outlook is conservative. Adding new positions is challenging and we are managing all our contracts carefully. We're negotiating hard and thinking creatively about how to trim operating expenses by reducing the complexity of our hardware and software environment.

All projects are function of Scope, Time and Resources, so tight operating budgets mean fewer resources which means narrower scope and longer time for our projects.

All this being said, I believe that economic challenges are good for IT organizations because it forces customers to prioritize their projects, matching their demand to limited IT resource supplies.

In summary, we are limiting major capital purchases, extending timelines, and focusing on the highest priority projects. We are not expecting major new enterprise purchases, instead we will refine and improve what we have.

One last thought. In the spirit of buy low, sell high - the best time to purchase is when demand and prices are at a low point. We will keep looking for bargains that will reduce our capital and operating costs over the long term. Eventually, the economy will improve and we want to be in the best position when that occurs.

4 comments:

Project said...

The lack of comments on this segment is evidence that the IT community has not learned from the past.

Rather than remain in the wiring closet, they need to be involved or atleast aware of the day to day challenges of their end-user.

What aspect of supporting the enterprise don't they understand. The current economic downturn is an opportunity to interact and improve they way systems are used, implemented and refined. You don't have to be a surgeon to make the system work better.

You can't improve systems unless you spend more time with the end-users and vendors. This is not about spending less money, it is about doing more with what you have. Project management seems to have escaped this segment of IT which is why we get screwed during these downturns. Wake Up!

平平 said...

^^Thanks!!

婚前徵信婚姻感情大陸抓姦外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回大陸抓姦離婚工商徵信婚前徵信外遇抓姦感情挽回尋人大陸抓姦離婚家暴工商徵信法律諮詢跟蹤工商徵信婚前徵信感情挽回外遇抓姦法律諮詢家暴尋人大陸抓姦離婚大陸抓姦外遇尋人家暴工商徵信法律諮詢家暴感情挽回大陸抓姦外遇婚前徵信離婚尋人工商徵信外遇抓姦法律諮詢家暴婚前徵信大陸抓姦尋人感情挽回外遇抓姦婚前徵信感情挽回尋人大陸抓姦工商徵信法律諮詢離婚家暴工商徵信外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回大陸抓姦離婚婚前徵信工商徵信外遇抓姦尋人離婚家暴大陸抓姦感情挽回法律諮詢離婚感情挽回婚前徵信外遇抓姦家暴尋人工商徵信外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回">徵大陸抓姦離婚婚前徵信工商徵信外遇抓姦尋人離婚家暴大陸抓姦感情挽回法律諮詢

平平 said...

^^Thanks!!

婚前徵信婚姻感情大陸抓姦外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回大陸抓姦離婚工商徵信婚前徵信外遇抓姦感情挽回尋人大陸抓姦離婚家暴工商徵信法律諮詢跟蹤工商徵信婚前徵信感情挽回外遇抓姦法律諮詢家暴尋人大陸抓姦離婚大陸抓姦外遇尋人家暴工商徵信法律諮詢家暴感情挽回大陸抓姦外遇婚前徵信離婚尋人工商徵信外遇抓姦法律諮詢家暴婚前徵信大陸抓姦尋人感情挽回外遇抓姦婚前徵信感情挽回尋人大陸抓姦工商徵信法律諮詢離婚家暴工商徵信外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回大陸抓姦離婚婚前徵信工商徵信外遇抓姦尋人離婚家暴大陸抓姦感情挽回法律諮詢離婚感情挽回婚前徵信外遇抓姦家暴尋人工商徵信外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回">徵大陸抓姦離婚婚前徵信工商徵信外遇抓姦尋人離婚家暴大陸抓姦感情挽回法律諮詢

Affordable Luxurious Wedding Dress Blog said...

cheap wedding gowns,
discount bridal gowns,
China wedding dresses,
discount designer wedding dresses,
China wedding online store,
plus size wedding dresses,
cheap informal wedding dresses,
junior bridesmaid dresses,
cheap bridesmaid dresses,
maternity bridesmaid dresses,
discount flower girl gowns,
cheap prom dresses,
party dresses,
evening dresses,
mother of the bride dresses,
special occasion dresses,
cheap quinceanera dresses,
hot red wedding dresses