Analyst predicts a steady rise, fueled by stimulus funds

By Alice Lipowicz

State and local governments, using money provided under the economic stimulus law, will increase spending on health care information technology over the next few years, according to a report from the market research firm Input. The state and local market for the technology is expected to grow to $9.6 billion by 2014, from $7.6 billion in 2009, a compound growth rate of 4.6 percent, the report states.

State and local agencies also are investing in electronic health records systems, which are a primary component of health IT. Their spending on such systems is projected to expand from $850 million this year to $1.85 billion in 2014, according to Input’s “Health IT Transformation: FY2009-FY2014 State and Local Market Forecast,” which was released Aug. 26.

The agencies’ electronic health record spending will spike from 2009 to 2013 due to the economic stimulus law funding and then will level off, with a 17 percent compound growth rate over the period, Input said.

The flow of money for state and local health IT is complicated, with at least three federal sources of funding — the stimulus law, Medicaid supplemental payments and annual budgets — and spending from 11 different types of state and local agencies, including hospitals, clinics, mental health facilities, prisons, regional health organizations, Medicaid, children’s health programs and IT departments.

State and local agencies are buying 14 different types of health IT products and services, including software and systems for EHRs, decision support, clinical data, pharmacy, lab, patient tracking, health information exchange, telehealth, and disease outbreak management, Input said.

The State Alliance for eHealth, which the National Governors Association sponsors, recently encouraged state and local governments to prepare strategies and plans for health information exchange and other components of the economic stimulus law.

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Health care providers are gearing up to meet the privacy and security provisions of the federal economic stimulus law, Healthcare Informatics reports.

Under the health IT provisions of the federal stimulus package, all entities that handle protected health information must comply with HIPAA privacy regulations. In addition, the stimulus law calls for health care providers to:

• Notify all affected patients within 60 days of a security breach;
• Report security breaches to the HHS secretary and prominent media outlets if the incident affects more than 500 individuals;
• Track all personal health information disclosures; and
• Upon patient request, provide an account of every disclosure for the previous three years.

Experts say health care facilities could face serious penalties if they fail to comply with the new security provisions of the federal stimulus package.

Lisa Gallagher, senior director of privacy and security for the Healthcare Information and Management Systems Society, said health care facilities have focused on the funding aspects of the stimulus law instead of the security provisions. She said health care executives “need to devote time to creating additional policies, procedures and processes for meeting these requirements.”

Kate Healy, partner and chair of the health technology group at the law firm Verrill Dana, said, “Hospital executives need to stay engaged and have a few sources that can give them some of the nuts and bolts about the changes that the HITECH Act brings” (Gamble, Healthcare Informatics, July 2009).

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Stimulus-Package-Steps-Up-Health-Data-Privacy-Security.aspx