Mr. Carpio: In terms of the recession, for hospitals the biggest worry has been the rising unemployment rate because there is a strong correlation between that and an increase in the number of uninsured patients and Medicaid patients that they have to treat, which leads to margin compression and tough finances for the hospitals. And since we are in an environment right now where it appears that the unemployment rate is creeping up - we may be seeing possibly a 11% unemployment rate peaking before the recession is over - it's causing hospitals to pause and look over those capital spending budgets, and scrutinize them. And in particular, healthcare IT is one they're scrutinizing right now.
TWST: How will the Obama Administration's healthcare reform affect what's going
on in the industry?
Mr. Carpio: The reforms force hospitals to focus the healthcare IT spending on
short-term ROI projects that provide tangible benefits in the near term. For
example, if a hospital has to decide between an IT project on a longer-term
clinical high-end benefit, but for the ROI projects, versus projects such as a
billing software system that is short-term ROI that can help them immediately to
generate cash flow, they are going to choose the second one. What the Obama
reform has done is, basically, the hospital has agreed to take a lower
reimbursement in Medicare and Medicaid at its lower margins in the hopes to
gaining more uninsured being covered. But in the near term, it forces the focus
on their finances, and that leads into their healthcare IT decisions in terms of
shifting toward more revenue-cycle management, billing, FAS ROI projects that
will help them. And it could lead to the delay of some of the hospitals in terms
of putting together projects for bigger-picture IT projects such as electronic
record keeping and for digital order entry capabilities.
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