State and local health IT spending to hit $9.6 billion by 2014

State and local governments, using money provided under the economic stimulus law, will increase spending on health care information technology over the next few years, according to a report from the market research firm Input. The state and local market for the technology is expected to grow to $9.6 billion by 2014, from $7.6 billion in 2009, a compound growth rate of 4.6 percent, the report states.

State and local agencies also are investing in electronic health records systems, which are a primary component of health IT. Their spending on such systems is projected to expand from $850 million this year to $1.85 billion in 2014, according to Input’s "Health IT Transformation: FY2009-FY2014 State and Local Market Forecast," which was released Aug. 26.

The agencies’ electronic health record spending will spike from 2009 to 2013 due to the economic stimulus law funding and then will level off, with a 17 percent compound growth rate over the period, Input said.

The flow of money for state and local health IT is complicated, with at least three federal sources of funding — the stimulus law, Medicaid supplemental payments and annual budgets — and spending from 11 different types of state and local agencies, including hospitals, clinics, mental health facilities, prisons, regional health organizations, Medicaid, children's health programs and IT departments.

State and local agencies are buying 14 different types of health IT products and services, including software and systems for EHRs, decision support, clinical data, pharmacy, lab, patient tracking, health information exchange, telehealth, and disease outbreak management, Input said.

The State Alliance for eHealth, which the National Governors Association sponsors, recently encouraged state and local governments to prepare strategies and plans for health information exchange and other components of the economic stimulus law.