How the widespread adoption of electronic medical records can raise health care costs

One of the pillars of health care reform is modernizing our antiquated health records system.

That means pouring billions of dollars into the current generation of electronic medical records (EMRs), despite both the flaws, and the myriad of reasons why doctors are so resistant to go digital.

In an excellent piece, orthopedic surgeon Scott Haig points to why electronic records are not likely to save money, and worse, can further balloon health spending.

The major reason is the physician payment system.

“The slightly embarrassing financial reality of EMR,” writes Dr. Haig, “is that large, mechanized medical operations like hospitals, clinics and big multi-doctor practices stand to make quite a bit of money by adopting them “” given our current convoluted system of paying for health care. Two clear factors make EMR a money-winner: improved billing and internal cost control.”

Indeed, EMRs make it very easy to “upcode,” or easily pick a diagnosis or service level that will pay more money. A simple click of the button can blur a diagnosis from “urinary tract infection,” to “pyelonephritis,” for instance, increasing the complexity, and the subsequent reimbursement, of the visit.

Or, consider this example, where a patient can “go to the doctor with a sore knee and for some reason he is examining your ears. It might be that you have a very thorough doctor who is ruling out a rare ear-knee syndrome. More likely, the EMR program he bought is reminding him that notes on the chart about just few more body parts will kick your visit up into a higher-paying code.”

So, be careful when you hear that digital records can cut costs. With the current generation of systems geared towards gaming the flawed physician payment system, it’s unlikely that EMRs will save any money at all.