Despite recession fears, C-suite execs are all-in on tech investments

Health systems are pushing forward with major technology investments despite widespread belief that an economic recession is on its way, according to a new C-suite survey from Sage Growth Partners. 

Sixty percent of the 108 health system and hospital executives participating in the survey believe a recession is likely or very likely, and most are anticipating the need to tighten their belts in response to upcoming economic disruption. 

However, they’re not pulling their budgets on technology investments. Instead, many are leaning into EMR modernization, AI and analytics, and revenue cycle technologies as way to strengthen their resilience in the face of financial uncertainty and are instead focusing on other areas to cut costs and prep for the future. 

The results highlight the crucial role of digital health and analytics strategies for supporting the financial sustainability of healthcare organizations in times of economic stress. 

Top strategic and investment priorities for C-suite executives

The post-pandemic era is still bringing a number of challenges to the healthcare industry, including high costs and limited access to care. While executives believe workforce resilience issues may get better over the next two years, they are most concerned with rising risks around financial sustainability (69%), rising care costs (69%), and access to care (43%).  

 As a result, 57% of C-suites are laser focused on increasing revenue and 46% are prioritizing methods of reducing costs. In contrast, efforts to improve staff recruitment and retention are starting to take a back seat, with only 55% of executives prioritizing this issue in 2023 compared to 61% the previous year. 

To support their efforts, the majority of respondents are hammering away at a perennial problem: the EMR. Sixty percent tapped EMR modernization as their top priority investment in the next two years, with a strong emphasis on data and analytics (42%) and revenue cycle optimization (37%). 

That’s because only a quarter of participants believe that their current EMR vendors are still not living up to their promises, with persistent poor interoperability and sub-par integration of both telehealth and hospital-at-home technologies.  

Due to these issues, many leaders are investing in technologies that sit outside the EMR instead, with just under a third stating that an external solution promises better quality, better ROI, and more affordability compared to an integrated approach. 

Surfing the AI hype wave

Artificial intelligence is top of mind for most health systems, even if only a relatively small number are actively implementing AI-driven tools. 

 Health systems are already using AI in a variety of areas, including clinical decision support (17%), remote patient monitoring (14%), virtual assistance/chatbots (14%), and imaging test analysis (13%). In the next 12 months, adoption rates are likely to at least double as similar numbers of executives look at clinical notes and documentation, predictive analytics, quality improvement analytics, imaging analytics, and revenue cycle management solutions to supplement their existing infrastructure. 

However, those that have already taken the plunge are largely ambivalent about it. While only a third have found it challenging to integrate AI into their technology stacks, 71% say it’s too early to tell whether these solutions are directly fostering cost savings or additional revenue. 

Some users have seen moderate gains in data quality and accessibility (45%) and data privacy/security (37%), but 35% said they haven’t seen any of these benefits yet, while 20% say that AI creates regulatory and legal challenges the industry is not yet fully prepared to manage. 

This is not wholly surprising so early in the adoption process, but both executives and technology developers will need to be careful that initial disappointments don’t translate into a reduction of willingness to innovate and invest in cutting-edge tools. 

Value-based care is back on the table

Perhaps unexpectedly, health systems are throwing their weight behind value-based care (VBC) over the next 24 months. Twenty-nine percent of respondents said they are “aggressively” adding value-based contracts while a further 52% are planning to maintain their current levels of participation. Just under half of organizations have more than 20% of their revenue associated with VBC contracts at the moment. 

While VBC participants still anticipate challenges with managing data, reporting on quality, and ensuring effective care coordination, they still feel that these models offer a way to drive efficiency and innovation in care delivery and establish closer relationships with patients while keeping pace with regulatory requirements and differentiating themselves in a highly competitive marketplace. 

Building a strong foundation for the future of healthcare

 After a period of reduced investment as health systems dealt with the stresses of the COVID pandemic, it’s encouraging to see that leaders are returning to the market in search of innovative solutions to their clinical, administrative, and operational pain points. 

C-suite leaders are eagerly looking for technology options to support their highest priority agenda items, and more than 40% are open to devoting more capital to key issues such as care delivery (44%), new markets or revenue streams (34%), acquiring new consumers (29%), and streamlining back-end processes (27%). 

If given an unlimited budget, they would still pour their funds into similar tech-driven areas, such as AI and automation, analytics, and productivity solutions, and EMR upgrades, before considering other investments such as hospital facilities and equipment needs. 

Clearly, the consensus is that optimized, high-value technology will be the secret to seeing them through any potential economic upheaval in the near future. While AI’s long-term place in the healthcare environment is still evolving, the overall emphasis on achieving meaningful integration with measurable ROI to support financial sustainability bodes well for the continued maturity of healthcare’s digital ecosystem. 

Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry.  Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.  She can be reached at jennifer@inklesscreative.com.