EHRs Don't Provide Savings

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The report was widely praised by the technology industry and helped persuade the US government to invest billions in stimulus funds to help the healthcare industry move to EHRs. As a result, companies providing EHR solutions saw their revenues triple over the last five years.

When the report was published in 2005, RAND projected that EHRs would reduce healthcare spending by $81 billion per year. Now, RAND is admitting that their savings predictions for the healthcare industry were overly optimistic, and in reality, annual healthcare expenditures have increased by $800 billion. The new report from RAND Corporation claims that:

In our view, the disappointing performance of health IT to date can be largely attributed to several factors: sluggish adoption of health IT systems, coupled with the choice of systems that are neither interoperable nor easy to use; and the failure of health care providers and institutions to reengineer care processes to reap the full benefits of health IT.

"The failure of health information technology to quickly deliver on its promise is not caused by its lack of potential, but rather because of the shortcomings in the design of the IT systems that are currently in place," said Dr. Art Kellermann, the study's senior author and the Paul O'Neill Alcoa Chair in policy analysis at RAND.

Some voices claim that the amount of funding from the government in the form of stimulus money flowing into IT created a "race to adopt" mentality -- get the money now and make the system work later.

Probably the biggest part of the failure was the lack of CIOs' input. Purchasing decisions were made mostly to get the EHR funding, the biggest piece of the IT budget in the government Stimulus Package. And initial reports were giving the impression of substantial savings.

The fact that the 2005 report was originally funded by heavyweights in the healthcare IT industry -- including Cerner Corporation, General Electric, Hewlett-Packard, Johnson & Johnson, and Xerox -- raises some questions about the independence of the report and the methods RAND used to arrive at the forecast savings. Unfortunately for the American taxpayer, the money has been spent, and neither RAND nor their sponsors are going to be held responsible for missing the savings expectations.

Cerner Corporation, one of the original sponsors of the report, is expected to post revenues of up to $3 billion this year, up from $1 billion in 2005. But they are also facing several lawsuits from hospitals and other healthcare providers for not delivering integrated solutions and trying to raise prices. One example, featured last year in the Wall Street Journal, is Girard Medical Center, a rural hospital in Kansas that serves mainly uninsured patients and the elderly. From WSJ:

The 25-bed rural health-care provider claims in a lawsuit that despite paying Cerner more than $1.2 million in fees, it still has no electronic medical record system and still doesn't qualify for federal monies to pay for one.

The company is also facing lawsuits from Mayo Foundation for Medical Education & Research, Siemens Medical Solutions, and several patent disputes.

Not all the money spent should be considered a loss. There are many other reasons why the healthcare industry is expending more money and the move to EHR is already providing savings in other areas -- most notably, in medical research. Some scientists are eager to get their hands on healthcare data, to turn every patient into a participant in a vast, ongoing clinical trial.

Nevertheless, CIOs are now required to clean up the mess without the financial support of the original funding, which has already been spent. RAND Corporation includes some recommendations in their latest press release.

• Health information stored in one IT system must be retrievable by others, including doctors and hospitals that are a part of other health systems. This is particularly important in emergency situations.
• Patients should have ready access to their electronic health information, much as consumers now have access to their bank accounts. Patients should be able to view their own records and share them with health care providers of their choice.
• Health information technology systems must be engineered to aid the work of clinicians, not hinder it. Systems should be intuitive, so they can be used by busy health care providers without extensive training. Doctors and other health care providers should be able to easily use systems across different health care settings, much as consumers easily drive various makes and models of automobiles.

The task to make the systems work will require coordination between healthcare providers, vendors, and the rest of the industry. The question is: Will they be able to rework the existing systems already purchased or will hospitals and insurance companies need to invest in new systems? Healthcare CIOs, what do you think?