How To Create a Practice Technology Plan and Capital Budget
Physician practices have been overwhelmed with HIPAA changes, the off-again on-again ICD-10 changes, Meaningful Use, and a number of technology changes, both voluntary and compulsory. With multiple technologies to consider and scarce resources to fund them, how should a physician practice go about planning for IT expenditures?
Many practices create an operating budget, but don’t have a capital budget process for major investments such as an EHR purchase. In Physicians Practice, Nelson Gomes provides provides a list of several technology-related expenses to consider in your practice’s planning process. These include telecommunications software and hardware, such as voice and data, with contracts which may be expiring. Security and compliance requirements should also be contemplated when anticipating technology-related expenses. Gomes also reminds us that with Windows XP no longer being supported, it will be susceptible to viruses, and practices that continue to use it will be out of compliance with HIPAA.
The purchase of a new system, such as EHR, is a major item. A part time cfo can assist with financing, contract review, and cash flow planning for big ticket items. Cloud based EHR can be attractive to small practices, suggests Physicians Practice’s Marisa Torrieri, because it minimises the need for internal IT infrastructure and its upkeep. Capital outlays are relatively minimal, however even smaller investments can be substantial to small practices who lack the robust capital budgets of larger organisations like hospitals. Consequently, technology planning is particularly important to smaller practices.
A part time cfo can provide guidance on systematic ways to evaluate software and quantify expenses associated with various options. Do you have a list of all your software and maintenance contracts? What about equipment and warranties? If you don’t have a comprehensive list of equipment referencing warranty terms, a part time cfo can help you create one.
Other likely technology investments by practices include tablets, patient responsibility estimator tools, and the replacement of old or obsolete equipment. The latter is an area where a part time cfo can help practices. Many physician offices continue to run outdated, unsupported software. This has both direct and indirect costs. A part time cfo can help you quantify both. For example, staff might spend extra time on inefficient workarounds for failing systems, causing uneven work flow with a potential deleterious effect on patient satisfaction. If you are not earning eRx and Meaningful Use incentives, are you prepared for eRx and Meaningful Use penalties? Do you know the amount these penalties represent for your practice? Penalty amounts are affected by both payer mix and volume, and a part time cfo can model the impact to the practice.
Outsourcing the technology planning process to a consultant represents a way for your practice to enjoy the benefits of a structured, thorough approach to choosing the right technology. In addition to using formal tools to rank potential IT investments, a part time cfo can help practices determine the right time to purchase and implement new technology, how much the practice can afford without jeopardising its cash flow, and the best ways to pay for new technology.
Gomes, N. (2013). Your Healthcare IT Budget: 7 Important Considerations. Physicians Practice. http://www.physicianspractice.com/health-it/your-healthcare-it-budget-7-important-considerations
Torrieri, M. (2013). Top Healthcre Technology Tools and Trends of 2013. Physicians Practice. http://www.physicianspractice.com/blog/top-healthcare-technology-tools-and-trends-2013