Inflation recently reached its highest level in three years, testing health systems’ already tight IT budgets.
The Bureau of Labor Statistics’ consumer price index increased to 3.8% in April, a peak the U.S. hasn’t hit since May 2023, with higher energy prices driven by the war in Iran.
At Palo Alto, Calif.-based Stanford Health Care, inflation was the No. 1 issue Chief Technology Officer Christian Lindmark was trying to solve for during fiscal 2027 budget planning.
“Inflation is affecting nearly every aspect of our IT purchasing,” Mr. Lindmark told Becker’s. “The challenge is especially pronounced in healthcare because reimbursement has not increased at the same pace as technology costs. At the same time, we still need to support digital transformation, AI initiatives, clinical growth, cybersecurity and research computing, all within a much tighter financial environment.”
The biggest impact has been on infrastructure refresh cycles, with endpoint devices, networking, storage, and server infrastructure experiencing sustained price hikes in recent years. “As a result, we are consolidating vendors, negotiating longer-term agreements to help stabilize pricing, and approaching investment decisions with significantly greater financial discipline and prioritization,” he said.
Mr. Lindmark’s department is also extending infrastructure and endpoint lifecycles where possible, evaluating cloud versus on-premise decisions more aggressively, and partnering more closely with finance and operations to clearly articulate the effects of rising technology costs.
“The recent rapid inflationary pressures on IT hardware have been a significant pain point and extremely time-consuming for not only the IT department, but the organization as a whole,” he said.
Salt Lake City-based Intermountain Health, meanwhile, hasn’t had to delay or cancel any major IT-related purchases due to inflation, but its IT department continually monitors prices regardless.
“Inflation is one of several factors we always watch closely, and it reinforces the need to be disciplined in how we prioritize investments, focusing on technologies that expand access, reduce administrative burden, and deliver clear value across the organization,” said Ryan Smith, senior vice president and chief information and digital officer of the 34-hospital system.
Pittsburgh-based UPMC has taken a similar tack, with inflationary pressures reinforcing its cost-conscious approach to technology.
“What inflation has influenced is how we invest, with greater discipline around total cost of ownership, platform consolidation, and long‑term flexibility, while continuing to prioritize mission‑critical areas like cybersecurity, clinical systems, and reliability,” said Chris Carmody, senior vice president and chief technology officer of the 40-plus hospital system. “The focus remains on spending wisely, not spending reactively.”
Concord (N.H). Hospital Health System becomes more selective about IT investments when inflation rises, weakening its buying power. The three-hospital system’s IT governance committee ensures that digital spending aligns with business strategy, while IT partners with finance to confirm the organization is paying fair market value for IT assets and professional services. Partnerships are also affected.
“We want to make sure we are partnering with vendors that truly understand the financial pressures in healthcare,” said Jesus Delgado, chief digital and information officer of Concord Hospital Health System. “We want to work with vendors that can help share the burden and that can work with us to help us drive transformational digital healthcare during these turbulent times.”
Consumer price index-related inflation tends to be relatively low on the list of worries for Mark Weisman, MD, CIO and chief medical information officer of Salisbury, Md.-based TidalHealth.
Instead, the doubling of prices for some memory chips because of supply chain issues has hit desktop and laptop costs, which the three-hospital system simply has to absorb, he said. TidalHealth has also been contending with ballooning software price tags.
“Price increases of 20%-30% a year on a single product are not related to politics, oil, war or anything having to do with federal interest rates. It is simply greed,” Dr. Weisman said. “Our purchasing decisions are impacted by this in that we are cutting noncritical purchases, avoiding exploration of new products, and actively seeking to move away from predatory vendors.”
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