Health Information Technology: Costly Reform, No Savings

Health Information Technology was one of the cost saving initiatives in Obama’s health plan. The White House promised it would save us billions over time, but a new study finds it may actually be costing us more.

In 2005, the RAND corporation published an analysis which found the United States could save $81 billion a year by moving to digital medical records. So when Senator Obama ran for office in 2008, part of his health care plan involved spending $50 billion over 5 years to switch to cost saving digital medical records. Obama never came up with $50 billion but Democrats did slip a little over $30 billion worth of funding into the stimulus bill, about $26 billion of which has been spent so far.

As the money was being spent, the White House continually assured Americans that the end result would be better health and savings. Here’s the White House website on the issue of Deficit-Reducing Health Care Reform. About halfway down is this paragraph, “Widespread adoption of health information technology ensures patientsand providers have access to accurate, private, and secure information.It can improve care quality, prevent medical errors, cut paperwork, andreduce costs–all goals of the Affordable Care Act.” [Emphasis added]

Nancy Ann DeParle, the White House Director of Health Reform, wrote last year “Thanks to President Obama’s leadership, the number of physicians usingthis important technology to help patients get better care and savemoney has more than doubled, from 17 percent to 34 percent, since2008. And we can’t wait to do more.”

In 2011, the President even issued a proclamation declaring a week in September National Health Information Technology Week. Again, the President assures us “Better technology can also cut costs for providers by reducing paperwork and duplicative tests.”

There’s plenty more of this sort of thing on the White House website if you want to spend hours sifting through it all. Suffice it to say, everyone at 1600 Pennsylvania Ave. has been very excited about the promise of health information technology for a long time.

So after all the billions spent, how has HIT worked out? A September 2012 article in the NY Times highlights the unexpected results of all this investment, “hospitals that received government incentives to adopt electronicrecords showed a 47 percent rise in Medicare payments…compared with a 32 percent rise in hospitals that have not received anygovernment incentives.”

Asked about the sudden spike in billing, hospitals claimed the new system simply allowed them to more accurately bill for services rendered. Others familiar with the situation believe digital records lead some doctors to simply cut and paste descriptions of work performed onto multiple requests for payment. In other words, the new system makes everything easier, including cheating.

Now that the HIT horse is well out of the barn, the RAND corporation is back with an updated analysis which finds there may not be any savings at all from electronic medical records. One of the authors of the new report explains how industry bandwagon-jumping cost taxpayers tens of billions of dollars:

“RAND got a lot of attention and a lot of buzz with the originalanalysis,” said Dr. Kellermann, who was not involved in the 2005 study.

But evidence of significant savings is scant, and there is increasingconcern that electronic records have actually added to costs by makingit easier to bill more for some services.

Of course it’s still possible digital record keeping could benefit someone besides unscrupulous doctors down the line but there’s no guarantee. RAND’s new report omits a revised estimate of how much money the system could save/cost in the future. What’s clear is that the savings that were promised, which led to billions of taxpayers money being invested, haven’t materialized and may never do so. Not that the government has given up, “Federal officials say they are drafting new rules to address many of the concerns about the current systems. “

Health Information Technology is a dramatic change to our health care system which looked promising in theory but has turned out to only benefit a few at the expense of many. With the rest of Obamacare surging toward implementation, let’s hope it’s not a harbinger of things to come.