VA information technology saves billions of dollars

by John Gever

The Department of Veterans Affairs’ long-term investment in healthcare information technology paid off at a rate of more than $500 million in net annual benefits from 2001 to 2007, researchers said.

That added up to more than $3 billion in benefits for the Department of Veterans Affairs (VA) during the study period, after an initial billion-dollar loss.

In particular, the department’s computerized patient record system “was the dominant contributor to both benefits and costs in our analysis,” wrote Colene M. Byrne, PhD, and colleagues at the Center for Information Technology Leadership in Charlestown, Mass., in the April issue of Health Affairs.

The researchers were commissioned by the VA to conduct a cost-benefit analysis of the department’s early and aggressive adoption of information technology.

They determined that the VA’s IT systems have produced gross savings of $7.16 billion since the late 1990s.

The major benefit was to prevent hospitalizations and outpatient visits related to adverse drug effects ($4.64 billion), followed by elimination of medication errors and redundancies such as duplicate lab tests ($1.92 billion), Byrne and colleagues reported.

Implementing these systems cost the VA an estimated $4.07 billion, nearly all of which ($3.6 billion) was attributed to the electronic patient records system.

Because the investment was concentrated up front, the costs outweighed benefits by $1 billion prior to 2001. But beginning that year, the VA garnered a steady and positive net gain, rising slowly from just under $500 million to nearly $700 million in 2007.

Byrne and colleagues also found that the VA’s early start has given it a huge lead over the private healthcare sector in implementing IT systems.

The VA’s systems now offer nearly every type of IT functionality, ranging from patients’ histories to electronic test and drug ordering, the researchers found.

The systems qualify for the highest levels of inpatient and outpatient IT capability according to six different sets of standards, established by the American Hospital Association, the Commonwealth Fund, the National Center for Health Statistics, and others.

In contrast, less than 20% of the private healthcare sector meets any of these standards, according to Byrne and colleagues. For three of these standards, less than 5% of facilities in the private sector qualify for ratings of “comprehensive” or “highest level” of IT functionality.

Perhaps as a result, healthcare quality measures in the VA system outpaced the private sector for managing diabetes, cardiovascular health, and eye health. VA patients were more likely to have timely eye exams and glycated hemoglobin measurements, as well as control of glycated hemoglobin and LDL cholesterol levels, Byrne and colleagues reported on the basis of government data.

The researchers argued that policymakers could benefit from the VA’s experience.

“At the VA, health IT development and implementation programs were part of systemwide quality improvement activities and organizational change,” they wrote. “The VA instituted a tightly controlled process for developing, rolling out, maintaining, and supporting the use of clinical applications.”

Byrne and colleagues suggested that the VA system’s integrated structure for both financing and healthcare delivery was probably a key factor in allowing the agency to achieve “streamlined” IT system development and broad adoption.

For other organizations, the lesson could be that “more tightly integrated systems may be better able to marshal the resources and leadership needed to respond to federal and state requirements for meaningful use of electronic health records, and therefore achieve higher levels of adoption, receive concomitantly greater financial incentive payments, and improve quality more than nonintegrated systems or freestanding small physician practices and hospitals,” the researchers wrote.

The researchers cautioned that, because most facilities and offices are structured differently from the VA, the government’s new push for IT use throughout the healthcare system may not produce “quality improvements and efficiency gains… to the same extent projected in our analysis of the VA system.”

John Gever is a MedPage Today Senior Editor.

Originally published in MedPage Today. Visit for more information technology news.