Hospital spending, negotiations expected to rise

More than half of hospital executives expect spending increases during 2012, although a new survey by L.E.K. Consulting suggests they will strive to keep purchase prices down as part of the procurement process.

According to the survey of more than 200 hospital executives, 61 percent expect their budgets to increase during 2012. The area in which the most spending is likely to occur is healthcare information technology: 57 percent of hospitals surveyed plans to up their spending over the next five years. Other likely areas for growth include facilities and large medical devices; more than a third of those surveyed expect to spend more in those areas. Disposable products that prevent infections and cut down on medical errors are also likely to drive additional spending.

However, hospitals are not expected to spend dollars without caution. "Although hospital leaders are optimistic that their budgets will grow during the next five years, they expect to continue to scrutinize purchases and use multiple levers to manage procurement costs," said Bob Lavoie, an L.E.K. vice president, in a statement.

As a result, 80 percent of those surveyed expect to continue aggressive negotiations with suppliers. Sixty-two percent also expect to increase their use of group purchasing organizations, versus 52 percent a year ago.

L.E.K. began forecasting in 2011 that hospital spending would begin rising post-recession, primarily due to the advent of the Affordable Care Act.

For more information:
- read the L.E.K. survey (.pdf)
- get the L.E.K. press release