The return on investment of health care information technology isn’t uniformly positive, according to a recent analysis from the Congressional Budget Office titled, Evidence on the Costs and Benefits of Health Information Technology.
The underlying rationale for the report, which was requested by the Senate Budget Committee, is to sort out the federal government’s role in health IT. The report asks, "Whether — and if the answer is yes, how — the federal government should stimulate and guide the adoption of health IT."
The federal government is already in the health care IT fray. President Bush set the goal in 2004 that every American have an electronic health record by 2014. This was a vision, however, without a funding source. There are also several proposals in Congress that would expand the federal government’s role in health IT by mandating the use of electronic prescribing, provide financial incentives to providers who use health IT, and offer grants to purchase systems for providers.
The CBO report points out a major benefit of health IT that has been largely overlooked: IT’s role in research on the comparative effectiveness of medical treatments and practices. When individuals’ health data is in electronic format, it can be depersonalized, aggregated, and analyzed for a range of uses, such as medical effectiveness, quality, and system efficiency, among other research questions.
One sentence in the 48-page report encapsulates the Mother of All Barriers to Health IT Adoption: "How well health IT lives up to its potential depends in part on how effectively financial incentives can be realigned to encourage the optimal use of the technology’s capabilities."
Jane’s Hot Points: The ROI-rationale for the widespread
adoption of health IT in the U.S. is a macro, national one. It’s a
public health calculation that’s been mired in commercial/private
health arithmetic. The denominator of these wrong-headed ROI
calculations has been wrong-chosen: it’s been the individual physician
practice, or the hospital, or the single health plan. The denominator
is the public’s health.
One provider’s cost is another stakeholder’s benefit, in most
instances. Yet en masse, the public-at-large reaps the benefits of
health IT diffusion and effective use, in the forms of improved
clinical practices and efficiencies that ultimately benefit the overall
That’s the argument for the federal government to consider in perhaps
what could become a new era of U.S. public health after November’s
elections. As the report says health IT, "has some characteristics of a
public good—that is, a good that would be provided in a less than
optimal amount by private markets if the government did not intervene."
The authors point out the free-rider problem that happens when benefits
do not accrue to the purchasers of the good (in this case, health IT
The CBO recognizes that mass adoption of health IT achieves network
effects: the more users on the system, the greater the benefits
achieved. That’s the opportunity that the private sector cannot achieve
on its own. Unless perhaps the federal government is relying on Google
as implicit subcontractor for the job.