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Harvard study: Computers don't save hospitals money

Lucas Mearian | Dec. 1, 2009
Hospital computer systems are often built for administrators, not doctors

Himmelstein, who was once the director of clinical computing at Cambridge Hospital in Massachusetts, wrote that the misconception that computerization brings cost savings in hospitals is not new. He pointed to ads by IBM and Lockheed Corp. from the 1960s and 1970s touting computerization as a way to reduce paperwork and improve health care. In the 1990s, experts also espoused the benefits of computerized patient records, saying they would be adopted quickly and yield huge administrative savings.

In 2005, one analyst group projected annual savings of $77.8 billion through computerization; another predicted more than $81 billion in savings, as well as a big improvement in health. Today, the federal government's health information technology Web site proclaims that the "broad use of health IT will: improve health care quality; prevent medical errors; reduce health care costs; increase administrative efficiencies; decrease paperwork; and expand access to affordable care."

"Unfortunately," Himmelstein's report reads, "these attractive claims rest on scant data. A 2006 report prepared for the Agency for Healthcare Research and Quality, as well an exhaustive systematic review, found some evidence for cost and quality benefits of computerization at a few institutions, but little evidence of generalizability. Recent Congressional Budget Office reviews have been equally skeptical, citing the slim and inconsistent evidence base."

David Brailer, who served as the nation's first health information czar under President George W. Bush, noted in an interview with Computerworldearlier this year that 25 per cent to 35 per cent of the nation's 5,000 hospitals use or are in the process of rolling out computerized order-entry and medical records systems.

Brailer, now chairman of Health Evolution Partners, a San Francisco-based investment firm that specializes in funding health care providers, headed the Office of the National Coordinator for Health Information Technology from 2004 until 2006.

Implementing e-health records nationwide would cost between $75 billion and $100 billion, Brailer said, adding that individual hospitals "will have to make sizable, potentially multi-hundred-million-dollar budget commitments." Still, he said a fully functioning national electronic health system could reduce U.S. health care costs by $200 billion to $300 billion annually by cutting down on duplicate records, reducing record-keeping errors, avoiding fraudulent claims and better coordinating health care among providers.

Himmelstein called those claims "unsupported."

"For 45 years or so, people have been claiming computers are going to save vast amounts of money and that the payoff was just around the corner," he said. "So the first thing we need to do is stop claiming things there's no evidence for. It's based on vaporware and [hasn't been] shown to exist or shown to be true."


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