Wednesday, December 9, 2009

Trendspotter: Will EHRs save money?

And if not, what does that mean for physicians’ “meaningful use” payments?

By Ken Terry

The Obama Administration’s push for widespread adoption of EHRs is based on the premise that it will lead to a reduction in healthcare costs.

During the presidential election campaign, then-candidates Barack Obama and Hillary Clinton both cited a RAND Corp. study that predicted savings of nearly $80 billion a year. But some observers assailed that conclusion after the RAND study was released, and recent research has clouded the issue further.

A new study published in the American Journal of Medicine’s online edition found that, while U.S. hospitals increased their use of health IT between 2003 and 2007, the technology was not correlated with lower clinical or administrative costs in the institutions that adopted it. In fact, the hospitals that computerized most rapidly had the biggest increases in administrative outlays, the researchers said.
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It should be borne in mind that two of the three Harvard professors who conducted this study, David Himmelstein, MD, and Steffie Woolhandler, MD, are single-payer supporters who oppose the Democratic approach to healthcare reform. Showing that health IT will not help save our system is part of their agenda.

Still, their study has statistical power. The researchers linked a HIMSS survey of computerization at 4,000 hospitals with administrative cost data from Medicare Cost Reports and cost and quality data from the 2008 Dartmouth Health Atlas. The impact of health IT on quality, they found, was mixed. “Higher overall computerization scores correlated weakly with better quality scores for acute myocardial infarction…but not for heart failure, pneumonia, or the three conditions combined,” they concluded.

On the other side of the coin, a study by Ashish Jha, David Bates, and other experts found that adverse events in hospitals and redundant tests ordered by multiple physicians—both of which could be mitigated through the use of health IT—contribute significantly to hospital costs. In 2004, they calculated, preventing adverse events could have reduced hospital spending by $16.6 billion, or 5.5 percent of inpatient costs. Prevention of redundant testing would have cut costs by an additional $8 billion, or 2.7 percent. Of course, the use of health IT, even if it were ubiquitous, would eliminate only part of this waste.

There’s also evidence that it takes a long time for the use of EHRs to improve the quality of care or reduce costs significantly. In a recent survey of 200 large physician groups by the American Medical Group Association (AMGA), 63 percent said they’d had EHRs for two years, and 25 percent had had them for five years. Yet only half were using their systems to drive clinical protocols, 27 percent were using them for population health management, and a quarter were using the EHRs to improve clinical cost effectiveness.

In a commentary on the KevinMD blog, Glen Laffel, MD, Ph.D., points out that some other studies have shown that EHRs can improve the quality of care delivered. But it’s still unclear whether they will save money at a societal level.

This issue, Laffel notes, has implications for the government incentives for meaningful use of EHRs under the HITECH Act. Originally, it was reported that the legislation had allocated $19 billion to help physicians and hospitals acquire EHRs. The CBO estimated that the total cost would be $30 billion and that health IT-related savings would save about $12 billion from 2011 to 2019. Recently, the Office of the National Coordinator of Health IT (ONC) has been floating a figure of $47 billion for the total cost, although that may change, according to an ONC spokesman. As the late Senator Everett Dirksen memorably quipped, “A billion here, a billion there, pretty soon it adds up to real money.”

The real savings from EHRs will come from networking them together so that clinicians know what everyone else is doing for a patient and so they can work together across care settings to produce the best outcomes. We are still in the early stage of building such networks and getting EHRs from different vendors to communicate with one another. But when those goals are achieved, and when we create the right incentives for physicians to collaborate, the resultant increase in quality and efficiency could have a major impact on the sustainability of healthcare.

Ken Terry is a New Jersey-based freelance writer and the author of the book "Rx for Health Care Reform." In his weekly Trendspotter column, Ken is looking out for trends and changes that may affect your practice.

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