Healthcare information technology dominates the current issue of the policy journal Health Affairs, with several articles suggesting increased use of IT could save billions or trillions of dollars per year.
The September-October edition released Sept. 14 devoted 32 articles and more than 200 pages to healthcare IT (See related story, p. 17).
But the lead article in the IT package, "Can electronic medical-record systems transform health care? Potential health benefits, savings and costs," described research by the Rand Corp., a Santa Monica, Calif., think tank. Technology companies and a pharmaceutical and healthcare products manufacturer funded the research.
The Rand team reported that the nation could save an average of $41.8 billion a year from broad adoption of IT during a 15-year rollout period. They estimated those savings would occur if 90% of hospitals and physician office practices adopted EMR systems in that timeframe, at the end of which, national healthcare savings could reach $77.4 billion per year, the researchers estimated.
Assuming 20% of hospitals already have electronic medical records systems, the cost to reach the 90% penetration level would be $98 billion, or an average cost of $6.5 billion a year over 15 years, according to Rand. For office-based physicians, where EMR penetration rates currently range from 9% to 12%, reaching 90% adoption would cost $17.2 billion over the same period, or about $1.1 billion a year, the researchers said.
The researchers said the money saved "could be used to improve healthcare quality rather than to reduce costs" or accrue to different stakeholders, but, "in the long run, they should accrue to payers." Medicare could save $23 billion a year while private payers would save $31 billion a year, the report said.
Other IT savings of $40 billion a year could be achieved if IT is applied to disease-management programs that gain 50% patient adherence rates and prevention programs with 20% participation. The value of efficiency gains could skyrocket far higher if IT can improve healthcare productivity on the magnitude it has in other industries.
Richard Hillestad, head of Rand's Management Science Group and lead author of the study, said the aim of the research effort was to affix values to what was possible, even though some of the numbers produced were extremely large and national participation rates in disease-management programs, for example, were optimistic, at best. Another Rand-researched article in the current Health Affairs issue, "Promoting health information technology: Is there a case for more-aggressive government action?," argued that besides widespread IT adoption, two other key elements must be in place for the savings to occur: patient-provider connectivity and "a strong focus on improving quality and efficiency," according to lead author and Rand researcher Roger Taylor.
Taylor said the government should provide "targeted subsidies to create the change needed ... so the government, in helping create these networks, will create an epidemic effect in increasing the value of these networks." In addition, the government already is helping set interoperability standards, "and we say stay the course" (See p. 48).
Health Affairs published an opposing view, too. David Himmelstein and Steffie Woolhandler, husband and wife associate professors at Harvard Medical School and internal medicine physicians at Cambridge (Mass.) Hospital, contributed a biting opinion piece, "Hope and hype: Predicting the impact of electronic medical records." The two wrote that the Rand researchers didn't take into account the many past IT failures, and highlighted that Rand's work was funded largely by the IT industry.
IT vendors Cerner Corp., General Electric Co., Hewlett-Packard Co., Xerox Corp. and pharmaceutical manufacturer Johnson & Johnson are identified as the Rand research supporters.
"The authors foresee 14%-15% reductions in drug and radiology costs, based solely on experts' opinions," they wrote. "Savings of $106.4 billion on nursing are extrapolated from observations in one U.S. intensive-care unit and a single hospital in Norway. Projected savings of $289.6 billion from shortened hospitals stays are based on two anecdotes and one controlled trial from the era of seven-day stays (today's are five)."
"What this amounts to is a PR exercise by the companies that sponsored it," Himmelstein said in a telephone interview. "I'm a big fan of computing, I think we need to do it. ... But let's be realistic about what we have a chance to do. Some of the quality-improvement work, we've just begun to touch on, but the money-saving stuff, we're a long way to accomplishing that."
Taylor answered by saying the researchers aggregated optimistic scenarios for a reason. "The goal is to inform policymakers what is possible if it was done right," he said. "What he (Himmelstein) didn't do was look at my article, which said this won't be easy. It's not going to work by just buying a bunch of IT systems."
As for the IT industry funding, "The sponsors really weren't involved in influencing this study at all," Taylor said. "It's a Rand policy and I think Himmelstein knows that, but he was taking his shot."
Still, one of the sponsors, Cerner Corp., is hosting an e-seminar on Sept. 22 to tout the Rand study.