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HIS integration  market

Although analysts differ in their definition of the market, they all agree it is set for major expansion.  According to Alex Brown & Sons, the health care information technology industry will more than double in size by the end of the century, from about $9 billion a year to $20 billion (Salganik 1995).  Integrated hospital information systems are expected to have a 39 percent compound growth rate from 1991 to 2001, when revenues of $53 million are projected (Frost & Sullivan 1994).  Information gleaned from a 1994 survey of 137 integrated health care delivery organizations conducted by Charles J. Singer & Co. indicates that virtually every information system in operation today will be replaced in the next 5 to 10 years.  As a result, these organizations are expected to spend more than $2 billion annually for integration services over the next five years (Charles J. Singer 1995).  The Singer survey projects that information technology expenditures by the health care industry will rise from their norm of between 1 percent and 2 percent of revenue to an average of 5 percent to 7 percent.

The absolute dollars that organizations are targeting to enhance their information infrastructures are not insignificant.  For example, delivery systems such as Fallon Health Plan in Worcester, Mass., and Allina in Minneapolis, Minn., are earmarking $50 million to $150 million annually in capital and operating expenditures over the next 5 to 10 years.  Kaiser Permanente Northern California Region is projecting that it will invest $1.2 billion in clinical information systems over the next five years.  This figure is very comprehensive as it includes money being spent on existing applications as well as all operation costs, the computer network and platform to support the new system, training and replacement costs, redesign costs, and central computing costs.  Based on current forecasts, Kaiser estimates that the break-even point associated with the achievement of anticipated benefits for an integrated and comprehensive clinical information system is approximately 6« years, with a 200 percent benefit pay back on investment achieved in 10 years. 

Offsetting these industry expenditures are a number of prospective savings.  Projections on the use of basic intranet administrative systems indicate a savings of $45 billion from reducing redundant testing and excessive paperwork and through the identification and earlier treatment of disease (AHA 1993).  An HHS study estimates that a nationwide electronic health care information network could produce savings of more than $100 billion over the next eight years on these grounds.  Over half of these savings are expected to come from a reduction in the number of diagnostic tests ordered, increased efficiency, and shorter hospital stays (HHS 1992b).

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