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8 Things to Consider When Planning Your IT Budget

May 11, 2015

Technology expenses for your practice can easily run thousands of dollars per year, and failure to properly plan for these expenses can put your practice in a tough position, financially and legally. To determine a rough estimate of what your IT budget should be, look at what you spent last year. The estimate should include services and support, voice and data telecommunications, software and hardware purchases. Taking the time to identify your IT needs will help you stay on budget, provide uninterrupted service to your patients and be compliant with ever-changing regulations.

Consider these eight items when planning your IT budget:

1.    HIPAA Compliance. The recent changes to HIPAA place more pressure on practices to ensure their protected health information (PHI) is secure. With several high-profile data breaches in the recent years, it is critical that providers conduct an annual HIPAA security risk analysis to ensure PHI is protected from security issues. Practices should budget for these audits accordingly.

2.    Windows Server 2003. Similar to the changes that affected Windows XP and Office 2003 in 2014, Microsoft will no longer support Windows Server 2003 as of July 14, 2015. This means any practice using this software for anything involving PHI is considered vulnerable to security risks and will be in violation of HIPAA. Any machine not compatible will have to be replaced, or technology upgraded.

3.    Disaster Recovery. Technology disasters can happen at any time, and when they do, they have substantial impacts on operations and finances. It is important that your practice has a comprehensive and HIPPA-compliant disaster recovery and business continuity plan. To reduce short and long-term impacts, the plan should cover how to recover from any IT disaster, but also how to maintain business continuity during and after a disaster. Once a plan is established, it should be tested regularly and updated as changes are made to IT systems.

4.    Growing Your Practice. Planning on moving to a bigger location or opening an additional office? Plan for the costs of additional computers, software licenses and telecommunications for these new spaces.

5.    New Systems. Purchasing a new system such as an electronic health records (EHR) or an electronic dental health records (EDHR) system can be a large upfront cost, but there are other costs associated with this purchase to factor into your budget. Plan for installation, hardware updates, user licenses and training expenses.

6.    Software Maintenance. It is important to maintain your practice management software.  Planning for the cost of this maintenance is equally important. Costs typically run between 17 percent and 23 percent of the original licensing fee of the software. That may not sound like much, but considering systems can cost upwards of $100,000, maintenance costs can quickly add up.

7.    Contract Renewals.  It’s likely that at least one of your IT-related contracts will be up for renewal in the near future.  Determine if changes are needed in the contract or if it’s time to change service providers. Any change could affect the cost of these services.

8.    Warranties. Similar to contracts, it’s likely that a warranty on at least one major piece of IT equipment is nearing its expiration date. To determine if your practice should renew the warranty, consider things like the age of the equipment and whether you’re better off replacing the equipment altogether.

It is important for physicians to be engaged in the selection process of healthcare IT. Finding the right fit for your practice takes time, but by putting in the effort you ensure you find the systems that work best with work flow. Examining these eight key areas of your IT infrastructure will help you forecast the costs of these services and be prepared for the many IT changes you may experience. This plan will not only keep you on budget, but it will also ensure your practice continues to operate effectively and efficiently. 

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