In recent years, the healthcare industry has increasingly emphasized the importance of controlling costs, minimizing waste, and enhancing care outcomes. This focus is particularly urgent in California, where new legislation mandates state healthcare providers to limit spending growth to 3.5% in 2025 and 3% by 2029. The goal is to implement spending caps on hospitals, physician groups, and health insurers, with the expectation that these savings will ultimately benefit consumers.
California isn’t alone in its efforts; eight other states have enacted similar cost-control measures, with mixed success. Massachusetts, the pioneer in establishing a health spending benchmark, has largely met its 3.6% target growth rate over the past decade, as reported by CalMatters.
Addressing the financial challenges of healthcare is a complex issue with numerous contributing factors. However, all departments, including IT, are now facing increased scrutiny. Healthcare systems typically allocate about 4% of their total operating budget to IT, averaging $8.4 million. Given that approximately 30% of the world’s data volume comes from the healthcare sector, a considerable portion of the IT budget is devoted to storage and data management. The scale of healthcare data is staggering, with hospitals generating an average of 50 petabytes annually, of which up to 97% remains underutilized.
Artificial intelligence presents a powerful opportunity to analyze this vast data efficiently, leading to improved patient outcomes and streamlined operations. However, given the constraints of tight budgets, funding for AI initiatives will need to come from optimizing existing IT infrastructure.
Here are five under-the-radar tactics for healthcare IT to save money and reduce waste.
1. Manage cold data
Across industries, organizations typically spend more than 30% of the IT budget on data storage and backup, according to the Komprise State of Unstructured Data Management. The problem is particularly exacerbating because of the preponderance of large image files – such as X-rays, MRIs and CAT scans—which must be kept for years. Yet, it starts with having a policy. How long must files be kept and when can they be deleted? This will vary by data type and department. How much duplicate data exists across the organization? People copy files all the time, especially in research. What about orphaned data – such as the data left behind when an employee leaves the organization that is no longer needed?
2. Optimize data storage
Beyond duplicate and zombie data, healthcare organizations have plenty of data that could be stored on lower-cost storage appliances in their own data centers or in the cloud. The point is to ensure that you can understand and analyze data across all storage, seeing which data is active and which has not been accessed in a year or more and could potentially be archived. Data tiering is a “live” archive that offers many advantages over traditional tape archives. Done the right way, organizations can tier cold data off their highest-performing storage into lower-cost locations and still provide employees a simple, painless way to get the data back if ever needed. This can typically save 60-80% on annual storage costs.
3. Reduce ransomware attack surface
We all know that ransomware is continuing to cause enormous financial pain for organizations that in some cases must pay up or close their doors. Another bonus of the cold data tiering strategy is that by moving data to a service such as Amazon S3 Object Lock, healthcare organizations can drastically reduce the footprint of data exposed to hackers. They are also, meanwhile, storing the data in a way that prevents any changes to the data – thwarting ransomware actors. Ensure that whatever strategy you select makes it easy to recover that data when needed and without unnecessary licensing, egress or other costs.
4. Greening IT
Today there are many competitively priced, energy-efficient servers, networks, storage devices and other data center technologies. Managing data over its lifecycle rather than “set and forget” goes hand in hand. Upgrade to the greenest technology possible when you must replace equipment and do not treat all data the same. Only a small percentage of data produced by healthcare organizations should reside on the expensive, top performing storage and backed up accordingly. The rest of it can be moved to lower-performing storage until it can be deleted, as discussed above.
5. Scrappy AI
It is still early days for AI in production, although healthcare is one of the industries which is poised to benefit the most. Many IT and business leaders are pondering how to go about it, given stringent budgets. Use cloud services? Build their own technology? There’s no right answer to this question. University of Pennsylvania Healthcare developed an AI-based diagnostics tool for abdominal CT scans to help in the early detection of fatty liver disease, spending only about $700 per month, as detailed on CIO.com. “We got creative and used tools and apps we already had,” the project chair said.
Even though IT is a fraction of the overall cost equation in healthcare, technology will be increasingly crucial in years to come because it’s the best way to improve efficiencies and leverage AI for both saving lives and saving money. Taking a closer look at IT costs beyond the obvious – reducing staff, putting off nice-to-have projects and minimizing software customizations – is a smart and sensible strategy for any healthcare CIO.
About Krishna Subramanian
Krishna Subramanian is the co-founder and COO of Komprise, a provider of unstructured data management and mobility software that frees enterprises to easily analyze, mobilize, and monetize the right file and object data across clouds without shackling data to any vendor. In her career, Subramanian has built three successful venture-backed IT businesses and was named a “2021 Top 100 Women of Influence” by Silicon Valley Business Journal.
