Health information exchanges (HIEs) could save billions in Medicare and Medicaid spending, according to a study conducted by researchers from the University of Notre Dame.

Led by Idris Adjerid and Corey Angst, IT professors in Notre Dame's Mendoza College of Business, and Julia Adler-Milstein of the University of California San Francisco, the study set to be published in Information Systems Research aimed to provide evidence that utilizing information technology can save billions in healthcare costs.

"Our results focusing on the interplay between HIE value and financial incentives in health care are highly relevant to an active debate on how to best design payment models to incentivize high-quality and cost-effective care," said Adjerid. "This research is also important because it highlights the conditions under which HIEs can have the largest impact. Policymakers and health care entities need to ensure that financial incentives align with the goals of HIEs and give them sufficient time to mature before expecting promised value."

The study analyzed annual data from 2003 to 2009 on the average Medicare spending per beneficiary. Researchers compared rates of spending in healthcare organization with and without HIEs and found the potential to save $3.12 billion.

"We are the first to use nationally representative samples and robust approaches to show that HIEs are having a meaningful effect on health care spending," said Adjerid. "We find significant spending reductions in health care markets that have established operational HIEs, with an average savings of $139 per Medicare beneficiary per year (1.4 percent decrease). This equals a $3.12 billion annual reduction in spending if HIEs were to be implemented nationally in 2015.”