Healthcare makes gains in technology even with modest spending, KPMG finds

Compared to other industries, healthcare organizations have been slower to invest in technology, but a new KPMG report indicates health leaders are spending more on digital solutions.

Vince Vickers, national healthcare consulting leader for KPMG in the U.S.

Even with relatively modest investments, healthcare organizations are more likely than other industries to be moving forward with their digital transformation and artificial intelligence and automation.

“They have made huge headway,” Vince Vickers, national healthcare consulting leader for KPMG in the U.S., told Chief Healthcare Executive.

In terms of investing in technology, a decade ago, even five years ago, “they were kind of at the bottom of the bucket. They lagged financial services, retail, etc.”

Many healthcare organizations have bolstered their investments in technology and digital solutions in the COVID-19 pandemic, and that’s where much of the growth in investments have come in recent years, Vickers said.

Healthcare organizations should embrace the agility they’ve shown in the pandemic, such as the expansion of telehealth, as they consider other technology investments. But healthcare organizations can still do more to find technology solutions that aid patients and their own employees, Vickers said.

Overall, healthcare organizations are spending less on technology than those in other sectors. More than half (53%) of healthcare organizations spend less than 10% of their budget on technology, compared to 42% of companies in all industries. Healthcare companies still aren’t exactly the biggest tech spenders.

KPMG gathered responses from 1,000 technology leaders, including 100 in healthcare, in its 2022 U.S. Technology Survey Report. Healthcare leaders are focusing more on technology, and seeing a strong return on that investment, the report found.

Here are some highlights of the report.

• 60% of healthcare organizations will make AI and machine learning a key area of investment over the next year, compared with 48% of all other sectors.
• Nearly two-thirds (63%) of health organizations are making progress on their digital agenda, compared to 44% of other industries.
• 62% of health organizations are making progress in their cloud strategy.

Improving patient care

Many healthcare organizations have been dealing with substantial losses this year, and more than half of all hospital systems could finish the year in negative margins. Healthcare leaders undoubtedly are going to be looking to reduce expenses.

Still, Vickers said he’s encouraged that healthcare leaders have committed to investing more in technology, even with the foreboding financial headwinds.

A decade ago, healthcare organizations were spending 1% of their budgets on technology, and now some are spending up to 10%. “That’s a big move in probably the last decade,” he said.

Some healthcare organizations have been turning to technology solutions for areas such as revenue cycle management. Providers have typically looked at technology as a cost-saving opportunity, and less about improving patient care, Vickers said.

“I don’t think it was looked at in its ability to impact patient outcomes,” he said. “Now I think they’ve gotten a taste of it.”

Automation and AI offer the potential to reduce some of the administrative burdens on physicians, who regularly cite administrative tasks as a contributing cause of burnout. Automation and AI could allow doctors to spend more time on patient care, with better results.

“It helps with the patient outcome and it helps with the employee satisfaction,” Vickers said.

Healthcare leaders have touted the ability of artificial intelligence to transform healthcare, saying AI can be used to study large groups of patients and identify individuals with greater risk of health complications.

Yet even the most ardent supporters say the widespread use of AI in healthcare is only just beginning.

“The good news is the technologies are not the limiting factor here,” Vickers said. He pointed out there are going to be regulatory changes needed to help facilitate the sharing of data.

“There’s a trust factor that we have that we need to get through,” he said. While consumers are willing to share data with Facebook, Google and retailers for added convenience, Vickers said there’s more reluctance when it comes to health information.

“We allow use of our financial data in all kinds of ways,” he says, adding, “That is not where we are in healthcare and we’ve got to get to that.”

Cyberattacks threaten to undermine efforts to improve the sharing of health data, Vickers said. The survey found 41% of healthcare leaders said they were progressing on their cybersecurity goals, versus 42% of all industries.

Still, more than half of those surveyed (52%) said their cybersecurity strategy is moving slower than expected, even with committed leadership.

While some healthcare organizations could be investing more, Vickers said healthcare leaders recognize the dangers of cyberattacks, such as the ransomware attack that hit CommonSpirit Health last month. “There’s awareness at the C-suite,” Vickers said.

“If we continue to have breaches, our ability as consumers to trust what you’re going to do with the data becomes more difficult,” he said.

• Read more: Ransomware attacks on hospitals are rising

The KPMG report revealed some healthcare leaders are seeing the value of investing in technology. About a quarter (24%) of healthcare leaders said digital transformation has led to gains of more than 10% on profitability or performance. That’s actually higher than other industries (21%).

Vickers cited the healthcare leaders’ enthusiasm on the return on investment in technology as “probably the most exciting thing I saw out of the survey.” He also pointed to health organizations meeting key milestones as another positive.

Advice for leaders

Still, healthcare leaders should think more carefully about some of their technology strategies.

While hospital and health system leaders are putting more resources in cloud technology, they shouldn’t view such efforts as one-time investments, Vickers said.

“That should not be a one-time event and a finite project,” he said. “That should be an evolution that allows them to be agile and nimble.”

Healthcare leaders should consider setting up operational structures that allow their organizations to approach technology as an evolutionary journey, he said.

Read more: The future of healthcare ‘is about the consumer’

Hospitals and health systems are also focusing more on improving the patient experience and adding more of the convenience seen in other industries. While Vickers applauds healthcare organizations for thinking about technological solutions that will help patients, he said they should also be putting more time into considering how digital strategies can help their employees.

“We need to give tools to our caregivers that allow us to be more employee-centric in terms of those investments,” Vickers said. “I’d like to see healthcare think through that more.”

Patients are at the center of everything, Vickers said, but he added, “the employees have to be right there, too.”