Strategic value impacts hospital purchasing decisions, L.E.K. survey finds

Spending decreased or froze at nearly two-thirds of hospitals in 2009, with budget pressures forcing many providers to negotiate aggressively with suppliers and payers, delay facility upgrades, freeze capital expenditures, cope with longer equipment replacement cycles and reduce staffing levels. While the majority of hospitals expect to make additional cuts this year, hospitals also are considering departmental budgets based on their strategic value (i.e., how pivotal a role the department plays in helping the hospital distinguish itself in the healthcare market), according to "The L.E.K. Consulting Hospital Purchasing Survey," a survey of more than 200 hospital executives from L.E.K. Consulting LLC in Boston.

"In fact, 76 percent of respondents believe that hospital differentiation is important, and a key strategy to increasing revenues," says L.E.K. "This broad notion of differentiation typically incorporates activities including outsourcing, separation of specialized services, mergers and acquisitions, and a focus on complete personal health." 

So even with the recession-driven financial constraints, hospitals are maintaining or even increasing strategic program budgets, particularly for patient safety, which can help hospitals improve their reputations in chosen specialties. "Almost all respondents indicate that patient safety, infection control and patient-error initiatives will not be cut," states L.E.K. "Hospitals of all sizes are committed to reducing errors and infection rates, and more than one-third of respondents are willing to increase spending by 10 [percent] or more to do so." 

In addition, more than 90 percent of hospital executives expect healthcare reform to result in increased information technology (IT) spending, and most hospitals will continue to increase their IT investments through 2014 as they implement physician order entry systems, electronic health records and enhanced IT-based patient monitoring and safety programs. 

To learn more about the study:
- read the L.E.K. press release
- here's the executive summary