Health information technology (HIT) was predicted to control healthcare costs and improve care quality, but results show much room for improvement. Adoption rates are very low and those using HIT have seen poor to mediocre return on investments. Much can be improved by realigning economic benefits, having a better way to handle standardization, and using a cohesive HIT implementation strategy that encourages innovation.
In my next series of posts, I will discuss HIT's potential and evidence of its benefits; explain why adoption has been slow; and examine the need for a big picture blueprint. I will then present a new, comprehensive roadmap for achieving the initial predictions.
According to a Rand study published in 2005, "Widespread adoption and effective use of electronic medical record systems (EMRs) and other health information technology … improvements could save the U.S. health system as much as $162 billion annually by greatly improving the way medical care is managed, greatly reducing preventable medical errors, lowering death rates from chronic disease, and reducing employee sick days." [Ref: http://www.healthaffairs.org/press/septoct0501.htm ]
According to a recent report by the Congressional Budget Office (CBO) titled, Evidence on the Costs and Benefits of Health Information Technology, electronic health records (EHRs)* can enable healthcare providers (practitioners, clinics, and hospitals) to deliver healthcare more effectively and efficiently by, for example, helping them to:
HIT's Benefits: Return on Investment over the Past 5 Years
Despite HIT's potential to save money by increasing efficiency, and by improving quality at the same time, its return on investment (ROI) is not uniformly positive. Understanding why can be difficult since there are different types of benefits of HIT, as well as different groups who receive those benefits. In fact, one essential group is actually hurt in important ways.
The two basic types of benefits HIT can produce are:
And there are at least three groups to be considered:
Following is a brief description of how this all plays out.
Economic Benefits (and Losses) of HIT to Providers
Based on the same CBO report, the economic benefits (cost savings/margin improvements) to providers may be:
In integrated healthcare delivery system (such as staff-model HMOs in which clinicians are paid a salary, including Kaiser Permanente and the VA), the providers are paid on a contractual basis, not fee-for-service (FFS). The savings are thus internal, primarily driven by increased efficiency.
For nonintegrated providers, who are paid on a FFS basis, however, savings are external. This creares little incentive for them to adopt HIT. There are at least two additional reasons for this unintended consequence:
Economic Benefits of Provider HIT to Consumers and Health Plans (Insurers)
It is logical to conclude that both consumers and health plans gain when providers use HIT to lower utilization rates. Consumers benefit because they need less care and face lower charges. Health plans benefit because there is lower payout to the providers.
Economic Benefits of Consumers-Facing HIT
Consumer-facing HIT consist of personal health records (PHRs), which give consumers information and guidance for managing their own health, and the option to share certain information with the providers. The economic benefits of these tools reflect the same benefits derived when providers use HIT. That is, by helping consumers to remain healthier longer and receive more cost-effective care, consumers and health plans save money, while nonintegrated providers receive less revenue.
Care Quality Benefits of HIT
Key to improving care quality (safety and effectiveness) is to use HIT decision-support tools that promote use of evidence-based guidelines.
For consumers, higher quality care means better results (outcomes), including fewer diagnostic and treatment errors, more effective procedures, and better preventive care. It could even mean lower costs since poor quality can cost more, which means quality improvement would also benefit health plans.
Unfortunately, improving care quality can have the unintended consequence of diminishing providers' incomes. According to the CBO report:
So, the economic and quality improvement benefits of HIT are yielding modest and mixed ROI at best, which is one reason HIT is not realizing its potential. A second reason is low rate of HIT adoption, which I will discuss next time.
* Note that EHRs and EMRs are closely related and sometimes used interchangeably. The somewhat ambiguous distinction is that EHRs aggregate patient data for use among multiple providers, whereas EMRs are used by a single provider.