Federal agencies to go on a $6.5B health IT spending binge

Federal agencies will spend $6.5 billion on their own health IT needs in 2016, up from $4.5 billion in 2011, according to a new report from Deltek, a government IT contractor that operates a research subsidiary.

The estimate of government health IT outlays does not include the Department of Health & Human Services' electronic health record incentive program, nor its grants to states for health information exchanges, Angie Petty, a senior principal analyst for Deltek, told FierceHealthIT.

What it does include are the health IT systems of the Department of Defense (DoD), the Department of Veterans Affairs (VA), and the Bureau of Indian Affairs. It also encompasses the money that the Centers for Medicare & Medicaid Services (CMS) plans to spend on upgrading its payment systems, Petty said. Also accounted for are the National Institutes of Health's tracking of medical research and the Centers for Disease Control and Prevention's surveillance of disease outbreaks.

The main drivers of the rapid increase in federal health IT spending, according to the report, are rising healthcare costs, population aging and the proven reductions in health costs that health IT can achieve.

The report predicts that federal healthcare expenditures will more than double from $766 billion in 2011 to $1.4 trillion in 2020. Much of that growth will spring from the aging of the population, according to Deltek. And health IT spending will increase in response to the rise in health costs.

Meanwhile, the DoD and the VA, the two largest government IT customers, are engaged in intertwined modernization programs that eventually are expected to result in a single lifetime electronic health record for active military personnel and veterans.

In the omnibus spending package just passed by Congress, the fiscal 2012 budget allocates $1.4 billion for DoD spending on health IT, and a whopping $3.1 billion for VA health IT projects.

Interestingly, the Military Health System is planning to launch a new EHR even as it supposedly is collaborating with the VA on the joint EHR. But Congress placed a hold on research for the new DoD system until the department shows that it will be cost-effective and interoperable, and defines the role of the VA-DoD interagency program.

To learn more:
- see the Deltek announcement
- read the Healthcare IT News article
- check out the Nextgov piece on the 2012 budget for health IT