Tech budgets at Mountain View, Calif.-based El Camino Health are absorbing a price increase that has nothing to do with vendors relabeling old tools as AI, Deb Muro, the health system’s CIO told Becker’s.
The pressure is coming from further up the supply chain, she said, as AI investment from hyperscalers pulls chip and memory supply away from the rest of the tech industry.
That squeeze is hitting infrastructure hardware, consumer devices, and software and cloud/SaaS pricing, with increases of 20% or higher, Ms. Muro said. She expects the pressure to extend through 2027.
El Camino Health is also seeing a separate shift as the cost of AI large language models used within the organization moves toward usage-based fees, a new category of spending she said is often difficult to forecast and manage.
A price increase now triggers three reviews at El Camino Health, Ms. Muro said.
The health system checks actual usage reports to confirm the new cost reflects real consumption, benchmarks the market to see whether competitors have made similar moves in response to industrywide cost pressure, and runs an updated cost-benefit analysis to confirm the higher expenditure still makes sense.
“We’ve also begun asking vendors for a breakdown of how much of an increase is AI-infrastructure-driven versus margin expansion,” Ms. Muro said.
She called it a new mechanism, designed to obtain real evidence behind new pricing models and higher cost structures rather than accepting a vendor’s explanation on its face.
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