Average hospital IT expenses

Hospitals and healthcare systems use hundreds of different software and information technology (IT) vendors functions from the everyday, such as patient scheduling and systems management, to advanced features, such as imaging technologies or artificial intelligence.

What are the common types of IT in hospitals?

Hospitals use business and clinical software across departments, including solutions for:

• Artificial intelligence (AI)
• Bed management
• Data mining
• Diagnostic imaging
• Electronic health records (EHRs)
• Nurse scheduling
• Revenue cycle management

These solutions cost anywhere from hundreds of thousands to millions of dollars, which in turn significantly impacts a hospital’s balance sheet, budget, and spending ability.

What are hospital IT expenses?

In the Definitive Healthcare HospitalView product, estimated IT operating expenses are a proprietary calculation based on a facility’s size, services, and the data they provide in the Medicare Cost Report

In this Healthcare Insight, we review the average IT expenses at U.S. hospitals and compare metrics by hospital bed size and location. Data is aggregated from the last five calendar years of hospital financial performance tracked in our database.

What is the average hospital IT operating expense?

Based on data from more than 4,500 U.S. hospitals in HospitalView, the average hospital IT expense for U.S. hospitals is estimated at $8.4 million. IT expenses are estimated to be about 3% of

What percentage of total expenses do hospitals spend on healthcare IT?

Hospital IT expenses are estimated to be about 4% of a hospital’s total operating expense.

Average hospital IT expenses 2017-2021

Fig. 1 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report with estimated IT expenditures based on proprietary calculations. Accessed September 2023.

How much do hospital IT expenses increase each year?

Estimated hospital IT expenses at U.S. hospitals have increased annually by more than 5% on average from 2017 to 2021. In comparison, hospital expenses have risen by about 5% each year from 2016 to 2020.

Hospital IT expenses by bed size

Fig. 2 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report with estimated IT expenditures based on proprietary calculations. Accessed September 2023.

Hospitals with 25 beds or fewer spend less than $1 million for IT solutions, compared to hospitals with more than 250 beds, which spend nearly $29 million on average.

Hospitals with more than 250 beds also had the highest average annual increase in IT expenses since 2017 at more than 6%. Hospitals with 250 or fewer beds had average IT expense increases of less than 5%.

Hospital IT expenses by region

Fig. 3 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report with estimated IT expenditures based on proprietary calculations. Accessed September 2023.

Hospitals in the northeastern United States have the highest estimated IT expenses, with an average of $15.1 million reported for 2021. Large cities, such as New York City, and metropolitan regions in states such as New Jersey and Massachusetts, have large hospitals that contribute to the higher averages in the northeast region.

Hospitals in the Midwest and northeastern U.S. had the highest average annual increase in IT expenses from 2017 to 2021 at about 6%.

Why are hospital IT expenses important?

The spend on healthcare IT solutions not only helps healthcare facilities monitor patient vital signs or provide free Wi-Fi in the waiting room but can also provide a great data point for companies that target the U.S. healthcare market – how much targeted accounts spend on IT, how it compares to hospital peers, and how that budget changed over time are all important metrics software and IT companies can use to guide their sales strategy and marketing activities.

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Healthcare Insights are developed with healthcare commercial intelligence from the Definitive Healthcare platform. Want even more insights? Start a free trial now and get access to the latest healthcare commercial intelligence on hospitals, physicians and other healthcare providers.