As Biden signs CHIPS Act, CIOs debate whether it will help hospitals

On Aug. 9, President Joe Biden signed into law the $280 billion CHIPS and Science Act, which provides $52 billion to boost the U.S. semiconductor sector. The global chip shortage has affected a variety of industries over the past two-plus years, including healthcare.

But how exactly has the dearth of semiconductors affected hospitals and health systems? And do CIOs believe the new law will provide some relief? Becker's asked several health IT executives these questions, and 12 sent responses via email.

Note: Their responses have been lightly edited for clarity.

Shakeeb Akhter. Senior Vice President and CIO Children's Hospital of Philadelphia: Due to the chip shortage, we have had to order infrastructure one year in advance of implementation timelines. This has required us to budget additional funds in the current year and make a significant cash outlay that otherwise could have been deferred to the following fiscal year.

It is great to see the administration take steps to reduce the chip shortage; however, its impact remains to be seen. If the shortage of chips is due to a shortage of raw materials to manufacture chips, the new law is unlikely to help. However, if the shortage is due to limited production and the bill assists in expanding or mandating an increase in production capacity, it may prove extremely helpful.

Scott Arnold. Executive Vice President and CIO of Tampa (Fla.) General Hospital: The chip shortage and supply chain delays for computer hardware were a problem for Tampa General Hospital in 2021. To overcome the ongoing delays, the health system made large buys for hardware and stockpiled for projects and urgent needs in the last quarter of 2021 and into 2022. Recently, the chip shortage has not had an impact on most of our technology orders and deliveries.

The parts of the new law that support the increase in semiconductor production in the United States while also encouraging innovation should certainly help but likely not make much of a difference for a few years.

Tom Barnett. Chief Information and Digital Officer of Baptist Memorial Health Care (Memphis, Tenn.): We have been seeing increased lead times for computers and that lead time has been growing over the past few years. This is spurring us to reevaluate our sourcing partners strategically and also to have multiple product pathway options for ourselves. Part of what is driving the shortage, and what we are experiencing, is the accumulation of delays across an increasingly interconnected and interdependent global supply chain.

I don't know that more government programs are necessarily the best answer to the situation. The market has remarkably resilient ways of allocating resources and meeting product demand when allowed to do so along with innovative problem-solving creativity. However, we certainly find ourselves in "interesting" times at the moment.

Sunil Dadlani. Senior Vice President and CIO of Atlantic Health System (Morristown, N.J.): We live in a digitally connected world and the semiconductor industry plays a key role in digital enablement across all industries and geographies. President Joe Biden's $280 billion CHIPS Act is the right step in the right direction to secure semiconductor leadership and independence across the world.

The current scenario of a chip shortage along with supply chain, logistics and workforce disruptions have a direct and exponentially negative impact on care delivery starting from preventive care to diagnostics to treatment planning across all the care delivery sites, from hospitals to outpatient to retail to home care settings.

The key is to expedite and prioritize the efforts from chip manufacturing to chip allocations as the medical technology industry competes with the automotive, industrial and consumer industries for a limited supply of critical chips in the near future.

Christian Lindmark. Chief Technology Officer of Stanford (Calif.) Health Care and School of Medicine: We continue to face extremely long lead times for IT and biomedical equipment. Typical four-to-six-week lead times are now at least three to four months, with some specialty equipment nearing a year. Our IT team, in collaboration with our strategic partners, was able to foresee and plan for much of this. We adjusted our processes to buy equipment earlier than normal back in April and May of 2020, so the impact to Stanford Health Care has been minimal; however, there have been some slight impacts on our budget cycles for growth and refresh, and we've had to move a few project go-live dates out a couple weeks.

While we are happy about the long-term prospects of the CHIPS Act increasing U.S. semiconductor manufacturing, the reality of this act is that it will not have any immediate impact on the supply chain for hospitals and health systems (or any other industry) and will take many years to see its impact. But as they say, better late than never.

Dennis Lee. CIO of Mountain Health Network (Huntington, W.V.): We have definitely seen long lead times for computers, printers, etc., and have sometimes experienced delays of four to six months on our standard equipment purchases. At times, we've bought more expensive devices just due to their availability.

I think the U.S. is in a very challenging place with a majority of the chip manufacturing coming out of Taiwan, especially with China's claims to that land. Developing manufacturing in-state will alleviate that dependence. The only lingering question I have is if the U.S. can be competitive in pricing their chips to compete.

Bernard Rice. Senior Vice President and CIO of Nemours Children's Health (Jacksonville, Fla.): It certainly has affected our planning and ordering process. Previously, the question around supply chain delivery was much farther down the list but now is one of the first questions we ask in our process. In some cases, we are placing orders three to five months in advance due to expected delivery timeframes for items we used to get within one or two weeks. In addition, the delays are also affecting pricing as lower inventory levels have had an effect on unit pricing and are also compounded by increased shipping costs.

I don't see the CHIPS Act having a short-term impact but agree it is more of strategic importance for our nation and our manufacturing needs.

Cephas Silvera. CIO of Jewish Social Service Agency (Rockville, Md.): The chip shortage has affected both the acute and post-acute care environment. COVID forced us into the digital transformation that many have talked about in healthcare for years. An example of this was the advancement in virtual care that enabled care teams to monitor and treat patients and clients outside of "normal" clinical settings. However, without devices such as laptops, smartphones and innumerable other products, this transformation will be delayed as these technologies are largely dependent on the availability of chips.

I do believe the new law will make a difference. With improved manufacturing and investment technology, we will regain our footing as a leader in the production of these much-needed chips. However, in the short term, I believe we will continue to experience the frustration of the chip shortage.

Nicholas Szymanski. Vice President and CIO of Signature Healthcare (Brockton, Mass.): Luckily, our day-to-day operations were not impacted much due to the continuous refresh plan we put in place a few years ago. This provided a significant and positive defense against the shortage. However, for capital projects, many teams within the organization had to work hard, rely on vendor relationships and think outside the box to provide the needed infrastructure and devices required to support a given initiative. Had that not occurred, those types of projects would have been delayed not by just weeks, but months.

I certainly do think the new law will provide much-needed relief, opportunities and have a widespread impact … in time. The target and goals of the CHIPS Act are pretty clear and much needed; however, the key to success will hinge on thoughtful guidelines that are continuously monitored.

Richard Temple. Vice President and CIO of Deborah Heart and Lung Center (Browns Mills, N.J.): The chip shortage has had significant impacts on our hospital as it has caused significant delays in procuring everything from new computers, printers and other hardware to new switches, which we are looking to buy as part of keeping our network as state-of-the-art as we possibly can.

While I am delighted that President Biden signed the CHIPS Act into law, our expectation is that it will take some time to reap the benefits of the incentives to bring chip manufacturing back to the United States. So, yes, we see it being a big help, but over a longer time horizon than we might ideally desire.

Jerry Vuchak. Senior Vice President and CIO of Children's Hospital & Medical Center (Omaha, Neb.): We have seen delays in networking equipment orders and some biomedical device orders due to the shortage, but it is not as invasive, yet, as we originally thought it would be. By that, I mean that we have generally been able to stay on time with major projects with the exception of some network upgrades that have been delayed. What we have really experienced is cost increases in our networking equipment, which is concerning. The proposed law will help the current situation, I believe.

J.D. Whitlock. CIO of Dayton (Ohio) Children's Hospital: Yes, there were (and are) supply chain delays, but it is generally not clear what is chip related, what is glass related (another shortage related to PCs), and what is general-supply-chain-challenges related. So it is tough to pin down and quantify the blame on chip shortages.

Will the new law make a difference? The new law is smart public policy for the country as a whole, because it is critical to national security in the long run. Will it make a difference in healthcare in the short run? Not clear. As other commentators have pointed out, it is critical to revise immigration policy so that STEM grads who have been studying in the U.S. on student visas can stay and work in the U.S. Without that, no amount of throwing money at chip manufacturers will keep us competitive — we are simply not graduating enough native STEM students. And this is not only relevant for chip manufacturing; it is relevant for other STEM disciplines needed in healthcare like software development, data science, cybersecurity, etc.

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