Medicare no-pay list: Lessons for IT consulting
Effective today, Medicare will stop reimbursing hospitals for certain medical errors, such as using incorrect blood type during transfusions and leaving objects inside a patient during surgery. There are important implications for IT consulting and project failures.
The Washington Post summarizes the health care issue:
Starting today, Medicare will slash hospital payments for medical mistakes resulting in patient harm and higher costs to the sprawling federal health plan for the elderly and disabled.
THE PROJECT FAILURES ANALYSIS
Consider which costs rise most on delayed IT projects:
- Internal labor and overhead: These aren’t direct cash expenses, so while delays cause accounting and operational pain, they don’t actually raise out of pocket costs.
- Software license fees: In general, implementation delays alone don’t increase software license fees, so this is a non-issue in relation to over-budget projects.
- External consulting fees: Consulting is the big enchilada here. Since most large implementations pay hourly consulting fees, these costs rise directly with project length. Delayed projects often cause consulting fees to rise commensurately.
