Study: Health IT fails to reduce healthcare costs
The increased computerization of U.S. hospitals hasn't made them cheaper or more efficient, although it may modestly improve the quality of care for heart attacks, Harvard researchers reported in the Nov. 20 edition of the American Journal of Medicine.
"Our study finds that hospital computerization hasn't saved a dime, nor has it improved administrative efficiency," said lead author David Himmelstein, MD, associate professor at Harvard Medical School in Boston.
Data from approximately 4,000 hospitals for the years 2003 to 2007 were analyzed for evidence of increased quality, cost savings or improvements in administrative efficiency. Although the researchers found that U.S. hospitals increased their computerization between 2003 and 2007, they found no indication that health IT lowered costs or streamlined administration, even in the "most wired" institutions.
According to the study, while U.S. hospital administrative costs increased slightly, from 24.4 percent in 2003 to 24.9 percent in 2007, hospitals that computerized most rapidly actually had the largest increases in administrative costs.
The authors noted "modest quality gains" in the treatment of heart attacks in more-computerized hospitals, but even these small improvements may merely represent better documentation rather than actual gains to patients.
Co-author Steffie Woolhandler, MD, professor of medicine at Harvard, said several factors may explain why health IT has failed to reduce administrative costs.
"Any savings may have been offset by the costs of purchasing and running new computer systems," she said. "In addition, most software is designed around the accounting and billing needs of hospitals, not the clinical side."
Himmelstein said a report from the Congressional Budget Office in 2008--which was signed by Peter Orszag, now President Obama's budget director--expressed skepticism about claims by RAND and others that health IT could generate $80 billion annually in savings.
"Part of the skepticism was based on the limited information available to the RAND study and similar studies," Himmelstein said. "But this new, detailed, national survey of diverse hospitals shows such doubts are well-founded. IT can't rescue us from our national healthcare crisis."
According to the researchers, the study found no evidence of lagged effects; for example: lower costs in 2007 resulting from IT introduced in 2003.
The data came from the Healthcare Information and Management Systems Society (HIMSS) Analytics annual survey of hospital computerization; Medicare cost reports submitted annually to the Centers for Medicare & Medicaid Services (CMS); and the 2008 Dartmouth Health Atlas, which compiles CMS data on costs and quality of care.
"Our study finds that hospital computerization hasn't saved a dime, nor has it improved administrative efficiency," said lead author David Himmelstein, MD, associate professor at Harvard Medical School in Boston.
Data from approximately 4,000 hospitals for the years 2003 to 2007 were analyzed for evidence of increased quality, cost savings or improvements in administrative efficiency. Although the researchers found that U.S. hospitals increased their computerization between 2003 and 2007, they found no indication that health IT lowered costs or streamlined administration, even in the "most wired" institutions.
According to the study, while U.S. hospital administrative costs increased slightly, from 24.4 percent in 2003 to 24.9 percent in 2007, hospitals that computerized most rapidly actually had the largest increases in administrative costs.
The authors noted "modest quality gains" in the treatment of heart attacks in more-computerized hospitals, but even these small improvements may merely represent better documentation rather than actual gains to patients.
Co-author Steffie Woolhandler, MD, professor of medicine at Harvard, said several factors may explain why health IT has failed to reduce administrative costs.
"Any savings may have been offset by the costs of purchasing and running new computer systems," she said. "In addition, most software is designed around the accounting and billing needs of hospitals, not the clinical side."
Himmelstein said a report from the Congressional Budget Office in 2008--which was signed by Peter Orszag, now President Obama's budget director--expressed skepticism about claims by RAND and others that health IT could generate $80 billion annually in savings.
"Part of the skepticism was based on the limited information available to the RAND study and similar studies," Himmelstein said. "But this new, detailed, national survey of diverse hospitals shows such doubts are well-founded. IT can't rescue us from our national healthcare crisis."
According to the researchers, the study found no evidence of lagged effects; for example: lower costs in 2007 resulting from IT introduced in 2003.
The data came from the Healthcare Information and Management Systems Society (HIMSS) Analytics annual survey of hospital computerization; Medicare cost reports submitted annually to the Centers for Medicare & Medicaid Services (CMS); and the 2008 Dartmouth Health Atlas, which compiles CMS data on costs and quality of care.