HIT Systems May Be Costly Initially but Have Advantages in Long Run

The savings promised by advocates of health information technology (HIT) may materialize for large payers of health care after widespread adoption by physicians and hospitals. However, individual doctors will likely suffer long-term net losses along the way, according to some health care financing experts.

Unless policymakers address physicians' concerns about the costs, technological compatibility and the legal exposure they face in adopting health care technology, the large savings that federal, state, and local governments and other large payers of health care expect as the end product may take a long time to appear, according to health policy experts and a report by the Congressional Budget Office (CBO) released in May.

An increasing amount of research has indicated that large-scale public and private health systems have had less expensive and improved patient care from the use of computer-assisted medicine. But individual hospitals and clinicians that have started to implement HIT—such as electronic health records (EHRs)—have seen less benefit, which is a likely reason relatively few have adopted comprehensive HIT systems, according to the CBO report.

“Office-based physicians in particular may see no benefit if they purchase such a product—and may even suffer financial harm,” concluded the report's authors. “Even though the use of health IT could generate cost savings for the health system at large that might offset the cost of a EHR system, many physicians might not be able to reduce their office expenses or increase their revenue sufficiently to pay for it.”

Widespread use of HIT tools, such as EHR systems that provide notification to avoid duplicate tests on the same patient, could provide up to $80 billion in net annual savings, according to a recent RAND report. But most expected savings would not benefit clinicians.

Clinicians would have to bear substantial costs for HIT systems. A 2005 report by David Gans and others published in Health Affairs estimated that the total price tag for office-based EHRs can typically range from about $25,000 to $45,000 per physician. The annual costs for operating and maintaining the system, which includes services such as maintenance and technical support, range from about $3,000 to $9,000 per physician per year, according to another 2005 survey by Robert Miller and others published in Health Affairs.

The research indicates that smaller groups of physicians typically pay more per physician to implement HIT systems than larger offices.

“Significant financial benefits [from HIT adoption] will never flow to individual doctors and hospitals,” said Peter Orszag, director of the CBO, at a June briefing before Congressional staff.

Although HIT adoption will have large costs for many physicians, the CBO noted in its report that those costs for physicians are somewhat lessened by the fact that nearly all clinicians already have much of the hardware necessary to operate a HIT system and need only the software.

Even limiting HIT to software can become expensive, according to Janet Wright, M.D., a cardiologist and vice president for Science and Quality at the American College of Cardiology. Physicians not only have to buy replacement systems when a HIT software provider goes out of business, but they have to fund expensive transfers of data to a new system.

Even worse than the cost of transferring data is discovering that data in a defunct vendor's program cannot be transferred to a new program because of incompatibility.

“We've learned that platforms have to be flexible and accept data quickly,” Wright said.

Another cost to physicians is the drop in productivity as they learn how to use the system and adjust the ways in which they practice. The 2005 Miller survey of HIT adoption among physicians found an average drop in revenue of $7,500 per physician during a months-long implementation period from loss of productivity related to training.

Convincing more physicians to adopt HIT systems may be facilitated by educating them about the potential cost savings. Savings could stem from reducing the pulling of paper charts and the use of transcription services in larger practices. Savings also could be gained from the use of templates that can significantly reduce the amount of time spent on regular activities, such as typing in notes and ordering medications, according to the CBO.

Sara Rosenbaum, chair of the Department of Health Policy at George Washington University, said Congress can overcome physician reluctance to adopt health technology if it effectively addresses the increased cost for clinicians, the lack of national physician HIT standards to improve interoperability, and the legal vulnerabilities the technology creates for clinicians.

In a survey she conducted of physicians on health technology, Rosenbaum found that clinicians who had not yet adopted the technology were much more focused on potential legal liabilities that could arise from the exposure of their practices' statistics on health outcomes, which could come from their use of digital records (see chart). The survey results were published online in the June 18 New England Journal of Medicine in the report “Electronic Health Records in Ambulatory Care—A National Survey of Physicians.”

Physicians would be more likely to adopt HIT systems if the liabilities for not adopting them were perceived to be greater than the liabilities they may face by adopting them, Rosenbaum said.

Congress has made little progress to date on legislation promoting comprehensive HIT adoption, although it recently began to advance legislation under consideration since 2005 to encourage the adoption of EHRs. The fate of the legislation (S 1693) still appears uncertain because of differences over how much control patients should have over their records.

Broader clinician and hospital adoption of HIT would require a system of rewards and penalties for health care professionals, according to Orszag and others. Widespread adoption of HIT systems could be spurred by subsidies to help with adoption of new technologies, penalties for failing to use a HIT system, and a legal requirement that clinicians use a HIT system.

The CBO report concluded that the federal government could spur HIT adoption by subsidizing physicians or by requiring them to purchase health technology. Among the possible approaches the report cited was having Medicare pay an additional amount per billed service to health care professionals who used EHRs or limiting Medicare participation to clinicians who use EHRs.

“If policymakers are interested in promoting health IT, some version of a requirement or an explicit or implicit penalty for providers who fail to adopt health IT is likely to be more cost-effective for the federal government than a subsidy,” said the report.

The CBO report can be accessed at<www.cbo.gov/ftpdocs/91xx/doc9168/05-20-HealthIT.pdf>. The RAND report on HIT is posted at<www.rand.org/pubs/research_briefs/2005/RAND_RB9136.pdf>. An abstract of the NEJM report is posted at<http://content.nejm.org/cgi/content/abstract/NEJMsa0802005v1>.▪