Health Affairs Reports Discuss Barriers, Advantages, Costs of Implementing Health Information Technology Systems

Several newspapers on Thursday addressed three studies and one editorial on health care information technology published Wednesday in the September/October edition of... Health Affairs. Summaries appear below.

Cost Effectiveness: Implementation of a nationwide electronic health records network would take about 15 years and cost hospitals about $98 billion and physicians about $17 billion, according to a study by Richard Hillestad and colleagues at RAND, the AP/Las Vegas Sun reports (Neergaard, AP/Las Vegas Sun, 9/14). Over the 15-year period, the average annual cost to hospitals would be $6.5 billion and the average annual cost to physicians would be $1.1 billion (CQ HealthBeat [1], 9/14). However, if 90% of providers adopted such a network, annual savings would total $81 billion, including $77 billion from improved efficiency and $4 billion from reduced medical errors, the study found (AP/Las Vegas Sun, 9/14). The study estimates that an EHR network would reduce adverse drug events in inpatient hospital settings by 200,000 annually and reduce such events in ambulatory settings by two million annually, saving $1 billion annually in hospitals and $3.5 billion in ambulatory settings. For hospitals, about 60% of these savings would be from reduced adverse drug events in patients ages 65 and older, while 40% of savings to ambulatory practices from reduced medication errors would be in patients 65 and older (CQ HealthBeat [1], 9/14). In addition, the study estimates that a national EHR network would save Medicare about $23 billion annually and save private insurers about $31 billion annually. The study projects that the estimated total annual savings of $81 billion would double if providers followed all checkup reminders and other prompts from the system (AP/Las Vegas Sun, 9/14). Currently, about 20% to 25% of hospitals and 15% to 20% of physician offices have EHR systems, according to the study (CQ HealthBeat [1], 9/14).

An abstract of the study is available online.

Editorial: RAND's projections are based on "a disturbing array of unproven assumptions [and] wishful thinking," David Himmelstein and Steffie Woolhandler of Harvard Medical School write in a commentary piece accompanying the RAND study (AP/Las Vegas Sun, 9/14). Although EHR technology has progressed over the past three decades, "computers don't offer the panaceas that politicians hope for and computer firms are peddling," they wrote (Trehan, Reuters/Boston Globe, 9/15).

An abstract of the commentary is available online.

Small Practices: Physician practices spent an average of about $44,000 per full-time equivalent provider to implement an EHR system and about $8,500 per provider to maintain the system, according to a study of 14 solo and small group practices with EHR systems. On average, the practices recouped the costs of the systems through business savings within two and a half years, although "some practices didn't recoup the investments for years," the AP/Sun reports. The study was led by researchers at the University of California-San Francisco (AP/Las Vegas Sun, 9/14).

An abstract of the study is available online.

Group Practices: About 14.1% of group practices use an EHR system, according to a nationwide survey conducted by researchers at the Medical Group Management Association Center for Research and the University of Minnesota School of Public Health and funded by the Agency for Healthcare Research and Quality. The percentage of practices with EHR systems increased as the size of the group practices increased, the survey found. About 12.5% of practices with five or fewer full-time equivalent physicians reported use of an EHR system, compared with 15.2% for practices with six to 10 FTE physicians, 18.9% for practices with 11 to 20 FTE physicians and 19.5% for groups with 20 or more FTE physicians, according to the survey. The average cost of purchasing and implementing an EHR system was $32,606 per FTE physician, with monthly maintenance costs of $1,500 per FTE physician, the survey found. In addition, the average cost of EHR system implementation was about 25% higher than initial vendor estimates, the survey found (CQ HealthBeat [2], 9/14).

An abstract of the study is available online.

NCQA Opens Public Comment Period
In related news, the National Committee for Quality Assurance will be accepting public comment on its Physician Practice Connection program until Oct. 11, CQ HealthBeat reports. The program recognizes physicians who use health care IT in their practices. It includes 80 practices representing 700 physicians (CQ HealthBeat [3], 9/14).

Broadcast Coverage
APM's "Marketplace" on Wednesday reported on the studies. The segment includes comments from Hillestad; Robert Miller, a health economist at the University of California-San Francisco; and Woolhandler (Palmer, "Marketplace," APM, 9/14).

The complete segment is available online in RealPlayer.


"Reprinted with permission from kaisernetwork. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at kaisernetwork/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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