5 Ways to Save in Healthcare IT

by Krishna Subramanian, Cofounder and COO of Komprise.

Over the last two decades or more, the constant refrain in healthcare has been: control costs, reduce waste, manage care for better outcomes. That mantra is getting ever louder. Health spending in the United States is projected to have grown 7.5?percent in 2023, which is faster than the nominal gross domestic product (GDP) growth rate of 6.1?percent, according to federal government sources including the Centers for Medicare and Medicaid Systems (CMS) and the Bureau of Economic Analysis.

Headlines in the California healthcare industry recently focused on new legislation requiring state healthcare providers to limit spending growth to 3.5% in 2025 and to 3% by 2029. The idea is that by regulating hospitals, physician groups and health insurers with these spending caps, the savings will eventually trickle down to consumers.??

California isn’t the first state to pass mandates for cost control. Eight other states have passed similar legislation, with varying degrees of success. Massachusetts, the first state to set a health spending benchmark, has largely met its target growth rate of 3.6% over the past 10 years, according to CalMatters.?

Solving healthcare’s financial woes is a multifaceted problem with many fractious, contributing factors and challenges. Even so, every department is under the microscope, including the IT organization.?

Large healthcare systems typically spend 4% of their total operating budget on IT or an average of $8.4 million, according to Hospital View.? With about 30% of the world’s data volume generated by the healthcare industry, a significant portion of the IT budget is spent on storage and healthcare data management.? It is hard to fathom the scale of data in healthcare.? Hospitals produce an average of 50 petabytes of data each year, with as much as 97% of that data going unused.???

AI can be an invaluable tool to efficiently analyze and glean value from all this data, potentially leading to better patient outcomes, faster diagnoses and better efficiency. But given the tight budgets and pressure for healthcare organizations to do more with less, funds for AI initiatives must be derived from cost optimization of existing IT infrastructure.?

Here are five under-the-radar tactics for healthcare IT to save money and reduce waste.?

1. Manage cold and unneeded data.? Across industries, organizations typically spend more than 30% of the IT budget on data storage and backup, according to the Komprise State of Unstructured Data Management. The problem is particularly exacerbating because of the preponderance of large image files – such as X-rays, MRIs and CAT scans—which must be kept for years. Yet, it starts with having a policy. How long must files be kept and when can they be deleted? This will vary by data type and department. How much duplicate data exists across the organization? People copy files all the time, especially in research. What about orphaned data – such as the data left behind when an employee leaves the organization that is no longer needed???

1. Optimize data storage. Beyond duplicate and zombie data, healthcare organizations have plenty of data that could be stored on lower cost storage appliances in their own data centers or in the cloud. The point is to ensure that you can understand and analyze data across all storage, seeing which data is active and which has not been accessed in a year or more and could potentially be archived. Data tiering is a “live” archive that offers many advantages over traditional tape archives. Done the right way, organizations can tier cold data off their highest performing storage into lower cost locations and still provide employees a simple, painless way to get the data back if ever needed. This can typically save 60-80% on annual storage costs.??

1. Reduce ransomware attack surface.? We all know that ransomware is continuing to cause enormous financial pain for organizations that in some cases must pay up or close their doors. Another bonus of the cold data tiering strategy is that by moving data to a service such as Amazon S3 Object Lock, healthcare organizations can drastically reduce the footprint of data exposed to hackers. They are also, meanwhile, storing the data in a way that prevents any changes to the data--thwarting ransomware actors. Ensure that whatever strategy you select makes it easy to recover that data when needed and without unnecessary licensing, egress or other costs. Read this blog for more information on the strategies.?

1. Greening IT.? In a previous article on FastCompany, I discussed how going green should be financially motivating for businesses rather than a drain on resources to implement new technologies. Fortunately, this is getting easier all the time. Today there are many more competitively priced, energy-efficient servers, networks, storage devices and other data center technologies. Managing data over its lifecycle rather than “set and forget” goes hand in hand. Upgrade to the greenest technology possible when you must replace equipment and do not treat all data the same. Only a small percentage of data produced by healthcare organizations should reside on the expensive, top performing storage and backed up accordingly. The rest of it can be moved to lower-performing storage until it can be deleted, as discussed above.?

1. Scrappy AI.? It is still early days for AI in production, although healthcare is one of the industries which is poised to benefit the most. Many IT and business leaders are pondering how to go about it, given stringent budgets. Use cloud services? Build their own technology? There’s no right answer to this question. University of Pennsylvania Healthcare developed an AI-based diagnostics tool for abdominal CT scans to help in the early detection of fatty liver disease, spending only about $700 per month, as detailed on CIO.com. “We got creative and used tools and apps we already had,” the project chair said.??

Even though IT is a fraction of the overall cost equation in healthcare, technology will be increasingly crucial in years to come because it’s the best way to improve efficiencies and leverage AI for both saving lives and saving money. Taking a closer look at IT costs beyond the obvious – reducing staff, putting off nice-to-have projects and minimizing software customizations – is a smart and sensible strategy for any healthcare CIO.?

This article was originally published on FastCompany.

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