Wasting Money in Healthcare IT

David Wagner, Managing Editor | 2/21/2013 | 13 comments

David Wagner
From advanced surgical techniques to integrated care to EHR, CIOs are finding out that the technological revolution in healthcare is adding costs rather than delivering promised savings.

Now, the question remains: Is this because we're still trying to figure out all of this stuff or were we kidding ourselves?

First, let's look at some of the research. There is a study in the Journal of the American Medical Association (JAMA) that compared costs and outcomes of laparoscopic hysterectomies to those performed by the da Vinci robotic surgical system. The JAMA paper found that while hospital stays were shorter with the da Vinci system, complications were roughly the same. And the cost to patients was nearly double ($2,189 more) that of laproscopic surgery.

It should be noted that the original intent of the da Vinci system was to perform remote surgery so that remote patients could receive quality care from a distance. The solution's $1.8 million price tag forced the abandonment of that idea. It is, instead, being marketed as a less invasive medical procedure. Given the outcomes, however, the claim seems to be up in the air.

Another study came out in the JAMA Surgery Journal that looked at Integrated Delivery Systems (IDS) for operative and post-operative care. IDS uses a network of physicians, physical therapists, and tracking technology (EHR, remote monitoring, etc.) to build an integrated recovery plan for those with chronic or severe conditions. The idea is that integrated systems will reduce expensive re-admissions, shorten hospital stays, improve outcomes and -- by doing all of that -- save money for the patient.

The study tracked patient groups in and out of IDS care who had bypass surgery, back surgery, hip replacement, and other procedures with high "bounce back" rates and long-term recovery conditions. Costs and re-admissions were roughly the same (except small decreases for IDS in hip replacement and colectomy surgeries). The costs for patients with similar conditions were within 1 percent regardless whether or not IDS was used. There were no measurable differences in complications, mortality, or quality of care.

In other words, all of the information technology required to integrate the care and create the communication infrastructure along the entire network of care providers didn't help patients one bit.

Of course, the big doozy was when E2 wrote that Rand, which had previously predicted billions in savings through EHR, had to admit that EHR was costing us all lots of money in both tax payer money and insurance costs.

Healthcare technology prognosis is grim
All of these studies are starting to add up to the uncomfortable conclusion that we have spent the last decade or so investing in a technology infrastructure that was supposed to cut costs for patients and make them healthier. Instead, all we've done is added a bunch of expensive toys to the collection.

The question is: Are we still in the investment and consolidation phase when it comes to healthcare technology -- in which case we'll see the payoff in the future -- or have we gone down the wrong path to begin with?

If you're a healthcare CIO, you have to hope we're still getting around to the payoff point. Otherwise, not only have you spent your money very poorly, but you're also unlikely to be given another chance to "save" medicine from itself.

The big difference between the EHR cost savings discussion and these other "failures" is that with the former it was possible to continue to blame doctors by saying that EHR was encouraging unneeded tests and bill padding and all sorts of wrong activity.

It is harder to blame doctors for IDS not working as planned. It is harder to blame doctors for wanting the latest surgical equipment when the purchase of said equipment is usually approved by someone outside of medicine. The implementation and cost-effective deployment of technology falls squarely on the CIO's shoulders, even if this isn't 100 percent fair.

Right now, because of the US Government's rules around meaningful use, you can't stop your investments midstream, even if you think this all amounts to meaningless use of technology. What you can do, however, is start examining ROI on existing deployments. You can look more carefully the next time you're approached about a new technology to see if it fits the mission of improved patient care for less dollars.

The da Vinci system is a perfect example. It is reasonable that it would be re-tooled and sold as something else once it was realized that it would not be used for remote surgeries. It is not reasonable that everyone had to run out and buy something that was being re-jiggered when no one could prove that it was better than existing techniques. It doesn't take much hindsight to see the mistake there.

Of course, I'm not trying to criticize a specific piece of technology. The da Vinci system has a place in the modern operating room, particularly for very delicate operations. The problem is that we're not putting enough emphasis on who uses it, and when. "Because we bought it" isn't a good enough reason to use something. The CIO is the only one who has any chance of being able to demonstrate good and bad uses for a deployed technology.

So do it. Take your massive supply of data the government is asking you to create and check in on the stuff you bought. Find out if it is being used correctly. If you don't, you'll wait a long time to find out in the journals. That's not good business for anyone.

View Comments: Newest First | Oldest First | Threaded View
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batye   Wasting Money in Healthcare IT   3/5/2013 11:29:51 PM
Re: healthcare IT cuts cost, may be an illusion
it sad... as Hospitals should be gospitals not money machine...
Susan Nunziata   Wasting Money in Healthcare IT   3/5/2013 8:30:10 PM
Re: healthcare IT cuts cost, may be an illusion
@Batye: yes, this is espeically a problem in the for-profit healthcare sector. It's a little hard to believe that any hospital is actually allowed to be run as a for-profit organization, and yet such is the case. 
batye   Wasting Money in Healthcare IT   3/3/2013 8:41:05 PM
Re: healthcare IT cuts cost, may be an illusion
yes, Susan you are right... this days any Co. including healthcare thinking only about bottom line- forget about most important thing Patient and the quality of service for Patient... "but the real test is in whether or not we are improving patrient outcomes." - you said it right...
Susan Nunziata   Wasting Money in Healthcare IT   2/24/2013 11:56:53 PM
Re: healthcare IT cuts cost, may be an illusion
@Pedro: You are asking all the right questions here, though I think the most important goal for healthcare IT should be to improve quality of care for patients. EHR vendors may have had to sell their solutions to healthcare providers on the premise that they would save the organizations money, but the real test is in whether or not we are improving patrient outcomes. This is what I find most discouraging about the situation. 
David Wagner   Wasting Money in Healthcare IT   2/24/2013 11:43:58 PM
Re: two sides
@Pablo- A CIO I spoke to (and I don't know if I have permission to say who) told me that Cerner was the best choice despite the cost because EHR is so complicated that the full-service model of EHR was the best choice. Basically, yo pay to take the hard work out of your hands.

Do you think that this is a good strategy? Do you think EHR will streamline and companies like Cerner will get beat by easier systems?

Because if not, it seems to me that we're doomed.
David Wagner   Wasting Money in Healthcare IT   2/24/2013 11:41:11 PM
Re: Patience
@Taimoor- I'm all for patience. Out of curiosity, how long do you think we should be patient? Another year? Five? ten?
Taimoor Zubair   Wasting Money in Healthcare IT   2/22/2013 11:55:46 PM
Patience
It will take a while for techonology to make its tremendous impact we are probably expecting of it in the healthcare field. I think this is the trial period where we are looking for the best solutions, and technology is coming in handy, if costly.
Obviously, its not beneficial for the patients in the trial period if it costs them double the amount of money they'd normally pay. But science is always experimental in the start..and costly.
Real use of technology lies in improving / introducing new trends in diagnostic technique. i guess we should all be a little patient.
Taimoor Zubair   Wasting Money in Healthcare IT   2/22/2013 11:55:45 PM
Patience
It will take a while for techonology to make its tremendous impact we are probably expecting of it in the healthcare field. I think this is the trial period where we are looking for the best solutions, and technology is coming in handy, if costly.
Obviously, its not beneficial for the patients in the trial period if it costs them double the amount of money they'd normally pay. But science is always experimental in the start..and costly.
Real use of technology lies in improving / introducing new trends in diagnostic technique. i guess we should all be a little patient.
CurtisFranklin   Wasting Money in Healthcare IT   2/22/2013 10:53:01 AM
Re: The thing is: how do you use it?
@Zaius, I think you've nailed the critical issue: Using technology in the appropriate way. I think it might well turn out that the greatest benefit of EHR is the ability to let us quickly discover whether new technologies and procedures are providing the advantages advertised. This could be a huge "win" if used by more healthcare organizations.
Pablo Valerio   Wasting Money in Healthcare IT   2/22/2013 6:05:34 AM
two sides
@Dave, some interesting excerpts from a NYT article about the "profits" of the EHR industry:

"While proponents say new record-keeping technologies will one day reduce costs and improve care, profits and sales are soaring now across the records industry. At Allscripts, annual sales have more than doubled from $548 million in 2009 to an estimated $1.44 billion last year, partly reflecting daring acquisitions made on the bet that the legislation would be a boon for the industry. At the Cerner Corporation of Kansas City, Mo., sales rose 60 percent during that period. With money pouring in, top executives are enjoying Wall Street-style paydays.

The records systems sold by the biggest vendors have their fans, who argue that, among other things, the systems ease prescribing medications electronically. But these systems also have many critics, who contend that they can be difficult to use, cannot share patient information with other systems and are sometimes adding hours to the time physicians spend documenting patient care."

http://www.nytimes.com/2013/02/20/business/a-digital-shift-on-health-data-swells-profits.html
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