The billions spent on electronic health records, and why there’s no way to know if EHRs will save money

Barack Obama is certain that electronic health records (EHRs) can improve the quality of care and the efficiency with which it is delivered. How certain? Certain enough to have bet billions on a program that pays providers to adopt and meaningfully use EHRs.

Of course there are many ways to improve quality and efficiency. The Pennsylvania Health Care Cost Containment Council (PHC4) for example, publishes outcomes data for the states’ 172 hospitals. Its reports have driven countless hospital-based efforts to improve quality.

But Obama didn’t bet on that. Nor did he bet on process improvement strategies like TQM or beefed-up peer-review and continuing medical education programs, or recertification programs for physicians.

So, did he bet wisely?

The answer depends on 2 variables: the extent to which EHRs actually do improve quality and efficiency, and the size of his bet.

EHR Bloggers has reviewed numerous studies showing that EHRs do improve care. For example, EHR data has been shown to predict domestic abuse, diabetes and cardiovascular disease and early warning systems like this allow providers to initiate prevention programs that save money and lives down the road.

And EHRs actually outperformed other quality improvement strategies in a recent head-to-head comparison.

So what about the size of the bet? Unfortunately, this is where things get murky, as Fred Schulte of the Huffington Post Investigative Fund recently revealed.

Many folks say Obama bet $19 billion. That number appears in a Health and Human Services press release from last March which introduced David Blumenthal as Obama’s National Coordinator of Health Information Technology.

The release notes that the American Recovery and Reinvestment Act “includes a $19.5 billion investment” in systems which “will save money, improve quality of care for patients and make our health care system far more efficient.”

The $19 billion figure subsequently worked its way into the national lexicon via many articles and blogs. Just last month in fact, Aneesh Chopra, our national CTO cited the figure twice in a podcast from the White House.

It turns out that things aren’t that simple. Two months before HHS went public with the $19 billion figure, federal forecasters estimated they’d pay out $31 billion between 2011 and 2016 via the HITECH “meaningful use” incentive program. From that number, they subtracted $12 billion based on an estimate by the Congressional Budget Office for savings in Medicare and Medicaid spending over the ensuing decade if EHRs made health care delivery more efficient.

Sometime after that and with very little fanfare, the HHS budget was released and the line-item representing anticipated Federal outlays was bumped up $47 billion.

When asked about the triple-step, HHS spokesperson Nicholas Papas said the higher figure is “undergoing revision and we anticipate it will decrease.” He told Schulte that his agency expects to have a “firmer figure” by year-end.

Papas denied any attempt to lowball the number for public consumption, but Steve Ellis, a VP of Taxpayers for Common Sense was quick to call out the Feds for “fuzzy math.”

“This is an effort to make the numbers look better,” he said. “It is always a concern when the costs are tangible and the offsets are squishy.”

Steve Findlay, a health policy analyst with the Consumers Union who advises the Feds on EHRs, agreed: “Nobody knows” whether savings will be realized, he said. “I think that everybody ought to stop guessing at how much money we will save. There’s no way to know.”

For their part, officials at the Cleveland Clinic seemed to concur. The prestigious hospital has spent $100 million on its EHR, and the EHR “drives the quality of care we offer, but is not a cost-saving measure,” said spokeswoman Eileen Sheil. “We don’t tout cost savings.”

Glenn Laffel is Sr. VP, Clinical Affairs at Practice Fusion.

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  • jsmith

    The author is half right. EHRs almost certainly won’t save money. But he should be more skeptical about their ability to improve care.
    There is no good evidence that they improve care much either. See the recent American Journal of Medicine article. A little better care maybe, but no good data on long-term important outcomes. And of course extrapolation is a fool’s game. Who can say what ripple effects EHRs might have, if widely adopted? If they demoralize primary care further, we will have shot ourselves in the foot with them. Let’s face facts: EHRs are simply a medical mania, a craze that has taken hold of decision makers who want desperately to believe that they are a panacea, even if there is no evidence to that effect. I don’t know whether EHRs will ever do much good for HC in this country. Neither does anyone else.

  • http://Laccheo.com Michael Laccheo, MD

    I’d just like to point out that while the author of this post has an interest in EMR’s given that Practice Fusion is an EMR, he clearly isn’t schilling for his company and provides a reasonable analysis of one aspect of thiis issue. I appreciate it.

  • othniel

    EHR and EMR are not the same thing. Companies have been working on EMRs all across the country, but very few are piloting an EHR.

  • http://www.bryantsstatisticalconsulting.com Tex Bryant

    Most of the discussion on HIT in the primary care setting or otherwise focuses on EHR’s. I have seen very little discussions on registries. I do know that the American College of Family Physicians under its TransforMed project makes extensive use of these. From their website I gather that patient health has improved with them and there has been an average 14% increase in income per physician at TransforMed sites, although this cannot be explicitly stated as due to the use of registries.

  • No TransforMed for Me

    RE: Transformed Project

    The clinic where my former doctor practices was part of the TransforMed Project. During the two years while the project was implemented, my doctor became unavailable without a two month wait. I was passed around to nine different providers, most of them NPs and PAs. My last visit, I was charged $290 to see a PA. In contrast, my new patient neuologist visit was $287. When I left the practice, my EMR was difficult for my new doctor to read with all the check boxes and lack of provider notes.

  • R Watkins

    The financial data that has so far come out of the Transformed Project has been very spotty and inconsistent.

    The project evaluators are on record saying that participation was financially stressful for many practices, even with the enormous amount of free assistance they were given. There have been vague references to “increased revenues,” but nothing specific about overhead, physician hours worked, etc. One physician participant stated (I can’t find the reference right now) that at the end of the two year project, not one insurance company was paying her anything for all the extra services she was providing.

    The patient registries were considered one of the most difficult features to implement, and many practices failed. Aside from a few demo projects, I am not aware of anyone who is getting paid for the trememdous amount of work that registries involve.