More than 60 percent of hospitals in the U.S. have made significant enough investments in information technology to begin seeing reductions in operating costs, according to PricewaterhouseCoopers (www.pwc.com/healthcare) which has published a groundbreaking report on the relationship between health IT investment and hospital operating performance. The report, the culmination of two-years of research, provides the most comprehensive evidence that investment in information technology will improve hospital business performance and that IT capital investment can eventually pay for itself in the healthcare environment.

Entitled "The Economics of IT and Hospital Performance," (www.pwc.com/healthcareIT) the report includes analysis of performance data from nearly 2,000 U.S. hospitals, conducted by PricewaterhouseCoopers and Professor Lorin Hitt of the University of Pennsylvania, Wharton School of Business. After thorough analysis of data, the researchers concluded that ROI for health IT is a long-term promise that comes with caveats. IT investment must reach a tipping point before cost-reducing performance improvements occur, and until then hospitals experience increased operating costs with little near-term financial benefit.

PwC's analysis found that with six in ten hospitals at or nearing the tipping point, industry-wide costs, operational and quality improvements associated with IT investment may begin to be more widely apparent. However, PwC also found that hospitals are experiencing less dramatic return on IT investments than other industries that have realized productivity gains equal to five times the cost of IT investment. Moreover, some hospitals may not experience productivity increases at all, if they are starting from a low point of IT investment, according to PwC.

"Healthcare is typically described as lagging other industries in IT investments whereas the real culprit might be that hospitals have failed to take full advantage of IT by making more significant clinical and operational process changes," said David Levy, M.D., principal, PricewaterhouseCoopers LLP and Health Information Technology practice leader. "The business case for increased IT spending has been a foregone conclusion but it is based largely on untested claims and the experience of other industries. The lack of reliable, industry-specific empirical evidence has left hospital executives wondering whether IT investments will ever really pay off and unclear about the extent to which a transformation will occur. We can now retire this question and definitively say, 'Invest in IT; it works, but have patience.'"

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