Government austerity measures are jeopardising urgent reforms in healthcare IT systems, according to Ovum.
The analyst firm said the installation of more up-to-date and efficient systems has been postponed in an attempt to cut cost in the short term.
But this will cost taxpayers more in the longer term, it said, because inefficiency will lead to more money being spent on services.
A new report on healthcare for technology providers finds the implementation of more efficient IT systems is "crucial" to improving healthcare, and it could decline without them.
Cornelia Wels-Maug, Ovum analyst and author of the report, said, "Governments are not doing the public any favours by putting off upgrading outdated systems as it will mean services will cost more to run and patient care could be jeopardised."
She recommended using cloud computing to bring down costs, as the technology's scalability and flexibility means it can be sized according to an organisation's needs.
"It also allows IT departments with restricted resources to focus more on critical projects, rather than maintaining e-mail or servers. Cash-strapped agencies and departments should look at cloud computing as an attractive proposition," said Wels-Maug.