The US Congressional Budget Office (CBO) released a controversial report last week questioning how much information technology use in health care (especially electronic health records) would actually save.
The CBO report, while acknowledging there are benefits from using IT in health care, argues that the savings are over-stated. Quoting from a CBO blog summary of the report,
"Research does indicate that in some instances, health IT appears to have reduced the cost of providing health care, helped eliminate inappropriate services, and improved the quality of care. In general, however, health IT appears to be necessary but not sufficient to generate cost savings; that is, health IT can be an essential component of an effort to reduce cost (and improve quality), but by itself it typically does not produce a reduction in costs."
"The most auspicious examples involving health IT have tended to involve relatively integrated health systems. For providers and hospitals that are not part of integrated systems, however, the benefits of health IT are not as easy to capture, and perhaps not coincidentally, those physicians and facilities have adopted electronic health records (EHRs, the primary health IT package commonly purchased by a provider) at a much slower rate. For example, office-based physicians in particular may see no benefit if they purchase such a product – and may even suffer financial harm. Even though the use of health IT could generate cost savings for the health system at large that might offset the EHR’s cost, many physicians might not be able to reduce their office expenses or increase their revenue sufficiently to pay for it."
The report goes on to question the widely-quoted 2005 RAND study and its claims of about a $80 billion in net annual savings if health IT were widely employed.
The CBO report says, "This study has received significant attention, but unfortunately it suffers from significant flaws and is therefore not an appropriate guide to estimating the effects of legislative proposals aimed at boosting the use of health IT:"
"- The RAND researchers attempted to measure the potential impact of widespread adoption of health IT, assuming that it was used effectively—rather than the likely impact, which would take account of factors that might impede its effective use. For example, health care financing and delivery are now organized in such a way that the payment methods of many private and public health insurers do not reward providers for reducing costs—and may even penalize them for doing so."
"- The RAND study is based solely on empirical studies from the literature that found positive effects for the implementation of health IT systems; it excluded the studies of health IT, even those published in peer-reviewed journals, that failed to find favorable results. The decision to ignore evidence of zero or negative net savings clearly biases any estimate of the actual impact of health IT on spending."
"- The RAND study was not intended to be an estimate of savings measured against the rates of adoption that would occur under current law, but rather, against the extent of adoption in 2004. That is, the study did not allow for growth in adoption even without a policy intervention, as CBO would in a cost estimate for a legislative proposal."
According to the Wall Street Journal, the primary RAND report author, Richard Hillestad, a senior principal researcher at RAND, "... said he disagreed with the budget office's argument that his group overstated the likely savings tied to health-information technology. Mr. Hillestad said he stood by the RAND projections, and indeed feels they may 'actually be relatively conservative' because they didn't take into account some potential benefits such as billing efficiencies."
I am glad the CBO has published its report and its criticisms, as this may finally start to begin a serious debate on the value of health IT and what is truly needed to create that value from a societal as well as technology perspective. There is a tremendous amount of hype about what health IT can do, and very little discussion of the true costs or risks involved. I am all for health IT, but its application needs to be addressed in a realistic fashion.
