Overlooking AREs Can Lead to Budgetary Challenges for Health Systems
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Contributed by: Kate Gamble
Summary
Bill Russell's article underscores a significant gap in healthcare financial management, where Annual Recurring Expenses (ARE) are often overlooked in favor of the more frequently reported Annual Recurring Revenue (ARR) by health tech vendors. He argues that while ARR helps inform investment and growth strategies, neglecting ARE—representing predictable, contractual costs—can lead to budgetary challenges for health systems. By highlighting the need for greater discipline in tracking ARE through existing data sources, Russell emphasizes that consolidating this metric is crucial, as rising expenses threaten financial stability. This oversight is particularly evident at high-profile industry events, where health systems rarely address their ongoing financial commitments, potentially misleading stakeholders about their true fiscal health.
