Getting Online Won't Be Cheap

An estimated $156 billion in capital investment and $48 billion in annual operating costs are necessary to create a model National Health Information Network (NHIN) in the next five years.

Though expensive, the capital investment figures represent just 2 percent of annual national health care spending for five years, according to a report in the August 2 Annals of Internal Medicine by Rainu Kaushal, M.D., of the Division of General Internal Medicine at Brigham and Women's Hospital in Boston, and colleagues.

A panel of 10 information technology leaders in government, industry, and academia estimated the costs of achieving a model NHIN, defined as the costs of moving from current levels of investment to a model NHIN in five years. Costs were estimated for two categories of spending:“ functionality,” or the specific functions that participants in the network need to be able to perform; and “interoperability,” or the ability of separate participants to exchange data with each other securely.

Critical functionalities for physician offices, hospitals, and skilled-nursing facilities were defined as electronic viewing of lab and test results, maintenance of electronic health records, computerized physician order entry, and electronic claims submission and eligibility checks.

To estimate the national costs of achieving interoperability, the panel used the experience of the Santa Barbara County Data Exchange, a“ brokered peer-to-peer” network of health care providers within Santa Barbara County, Calif., linked through a central host to allow data exchange.

Estimated total costs to achieve functionality of a model NHIN in five years are $103 billion in capital costs and $27 billion in annual operating costs. By comparison, the health care industry is currently expected to invest $24 billion in capital costs and $7 billion in annual operating costs over the next five years.

Total costs to construct a brokered peer-to-peer communication network nationwide are projected to be $53 billion in capital investment and $21 billion in annual operating costs.

“If we continue on our current trajectory of IT adoption, the health care system will spend about one quarter of the costs of the functionalities of a model NHIN and will probably not even begin to address issues of interoperability,” the investigators stated. “These findings suggest that policy initiatives are needed if we are to close this gap.”

“The Costs of a National Health Information Network” is posted at<www.annals.org/cgi/content/full/143/3/165>.