Health IT and Cost Saving

A recent RAND Corporation study estimated the savings from electronic medical records would be about $77 billion a year. The Center for American Progress found the federal government would save $196 billion over the next ten years. Yet, from a new survey by Dr. David Himmelstein, an associate professor at Harvard Medical School, and his team, they have concluded that so far cost savings from health IT adoption have not materialized. The results of the national survey of about 4,000 hospitals were published online in the American Journal of Medicine (see study below).

Michael W. Painter, JD, MD, Senior Program Officer at the Robert Wood Johnson Foundation said:

"Research by Ashish Jha et al., in our recent EHR Adoption report (results also published in April NEJM) show that only 1.5% of hospitals have a comprehensive EHR system—and only another 8% have a so-called basic system. I’m not sure how one can draw important conclusions from with such a low rate of adoption.

Mike is absolutely right! Without widespread adoption of EHR systems it is unlikely that we will ever see significant cost savings. The idea of using information technology to lower costs and increase quality has been around for a long time. Below is an excerpt from a 1966 film on the use of computers in healthcare. This segment from Akron general hospital predicts great things for computers in medicine:

The time has come to make the most of health information technology. But, it will take time before we can achieve efficiencies from better use of information technology in healthcare. John Reaves, part of the Twitter healthcare community, sent me a link to Changing Productivity Trends from the August 31, 2007 Federal Reserve Bank of San Francisco Economic Letter. There is a powerful analogy to the productivity slow down from the 1970s as workers and firms struggled to learn and implement the new information technologies; as this process moved ahead, productivity surged in the 1990s. The idea that learning is costly and may be accompanied by temporarily lower output growth makes sense.

As Dr. Blumenthal the National Coordinator for Health Information Technology said on the Health IT Buzz blog:

As a scientist myself, I take the academic literature very seriously. I believe that policy should be based on the best available information, carefully analyzed and considered. However, recent studies raising questions about the benefits of EHRs are informative, but limited in their applicability to our HIT program. To the extent that they accurately capture past experience with EHRs, these studies illustrate something that the Congress and the President understand and have allowed for: namely, that having an EHR alone is not sufficient. Doctors and hospitals have to use this technology effectively, have to employ its extraordinary power to improve clinical decisions, in order to achieve its potential benefits. The federal government’s new programs of incentives and penalties are totally focused on encouraging the meaningful use of EHRs. The resources set aside by the Congress to encourage the adoption of EHRs will go only to physicians, hospitals, and other providers who meet carefully designed new requirements for the use of EHRs that will translate into health improvements and cost reductions for the American people. And the plan passed by Congress includes new resources and support that will help make it possible for providers and hospitals to meet these requirements. We have already announced the availability of grants that will help providers adopt and use EHRs, and we will be making additional announcements in the weeks and months ahead.

The problem really comes down to "meaningful use" of health information technology. We need to ensure that implementation of health IT coincides with training, and dissemination of best practices so that the goal of reducing costs and improving quality are within reach. The conclusions drawn by the report below should give us pause... But really it just strengthens the argument that we absolutely must forge ahead on the current path. Only through wider adoption and more effective use of electronic health record systems will help to lower costs and improve clinical outcomes.