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Fact or Fiction: Electronic health records save money

Note by Brian Klepper: Today the actuarial consulting firm Milliman is convening a town hall meeting in Seattle focused generally on health care reform, but specifically on Electronic Health Records (EHRs). The larger Seattle metropolitan area is a hotbed of health care innovation, with Virginia Mason Health System, Costco, Starbucks, Boeing, Premera and other forward-thinking firms. The conference will have representatives from CMS, Microsoft, the VA, Group Health Cooperative, and Milliman, and is open to the public. Should be an interesting session.

To kick it off, here’s a little piece on EHRs by Jeremy Engdahl-Johnson, Managing Editor at Milliman.

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Of all the initiatives endorsed by outgoing Secretary of Health Mike
Leavitt, few are likely to be met with as much agreement by his likely
successor, Tom Daschle, as the need for wider adoption of electronic
health records (EHR). While there is general agreement on the need for
this technology investment—both presidential campaigns included EHR in
their health platforms—the cost ramifications are still up for debate.
Will electronic health records reduce costs? There are compelling
reasons to answer both “yes” and “no.”

“Yes, electronic records decrease costs”

Our system of care is fractured, and EHR is one way to tie it together. Doing this is more than just a convenience. It could save money. Why? For one, the cost of some conditions are compounded by the presence of other conditions, creating expensive co-morbidities that are not treated well in a fractured system.

On a monthly basis, asthma costs $390 per member per month, but in the company of depression it costs $940. This co-morbidity is not always diagnosed (only 16% of the time even though it is expected 45% of the time among asthma patients), and while the cost of treating the diagnosed comorbidity is high, the cost of the undiagnosed comorbidity is higher. When physicians use electronic records, they are more likely to provide effective treatment because they can coordinate care with other physicians and also with nurses, therapists, technicians, and other organizations, cutting across care silos for the good of the patient.

Furthermore, patients with chronic conditions have more to gain from a personal health record. Their treatment plan is often self-administered and reliant on the correct information. If they can facilitate the kinds of questions and discussions needed to properly care for their condition without office visits, they can reduce the cost of their care. That’s why the medical home model, of which EHR is a cornerstone, is receiving more and more attention.

But it’s not just about chronic conditions. Despite the common assumption, the cost trends for nonchronic care are actually rising faster than those for chronic care. All patients have something to gain by tapping into the growing body of medical science. Evidence-based guidelines—the best of which have some 15,000 scientific references and can chart better paths of care—can bring that science to the bedside and to the home health environment.

Why is this science important? Much has been said about healthcare consumerism, and the suggestion that being more responsible for your health will create an economic incentive for staying healthier, a seemingly important carrot in a country with a 35% (and rising) obesity rate. Does the consumer-driven theory work? Maybe. Like them or hate them, consumer-driven health plans are shown to save 4.8%. This is in spite of the relative scarcity of good consumer health information … which is where dispensing medical science comes in. Most people don’t even know what health consumer information looks like.

We’re only beginning to see health care equivalents of Consumer Reports. Many people know more about the different brands of canned goods available to them than they do about their different health care choices. Sources like WebMD have begun to change this, and health surveillance tools like Google Flu Trends are promising if unproven. Regardless of whether the consumer-driven model wins out, it seems likely that an information-driven approach can help improve care and perhaps reduce costs.

Throw in the most frequently cited virtue of EHR—a reduction in unnecessary administration—and you have a compelling case for the cost benefits of this technology.

“No, electronic records increase costs”

But there is cause for skepticism. From the small family business to the biggest multinational organization, technology deployments routinely cost more than anticipated. Going overscope and overbudget is almost a rite of passage. And now is seemingly a bad time for that kind of investment, when the country can scarcely pay off debts already incurred. Who picks up the tab for EHR during a recession?

Then comes the question of effecting change. Efforts to legislate IT have encountered mixed results. HIPAA implementations cost more and took longer than expected. They had the benefit of happening during a robust economy that was already investing heavily in technology. Today is different, and we’ve seen more resistance to legislated IT investments. Just look at ICD-10: The mainstream press poses questions about cost and doctor groups suggest this is one investment that can wait. The mandated 2011 conversion deadline is an interesting trial balloon for nationwide EHR requirements.

The final verdict?

We can’t know for sure whether electronic records will increase or decrease costs. As a purely cost-based argument, the debate can go on indefinitely. Ultimately, the quality argument may win out for a reason independent of cost—because it is deemed the right thing to do. The idea that healthcare has grown too complicated, becoming “too much airplane for one man to fly,” is often invoked as justification for surgeons’ checklists and better use of tools built on evidence-based medicine. It’s not that our doctors aren’t good; it’s that there are too many details and too many scientific improvements to keep track of.

The quality imperative—now emboldened by an administration that claims to be intent on change—may clear the way for other changes, generating the will to make a pervasive electronic health environment a reality.

Find out more at www.healthcaretownhall.com.

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MD as HELLDonnaSteve FindlaySherry ReynoldsRBAR Recent comment authors
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MD as HELL
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MD as HELL

It has occurred to me that the institution of centralized EHR data that effects the outcome of caring for a patient is not the purvue of the physician. Neither is it the purvue of the hospital. There is a point in time where the curves of available time and record review time cross, beyond which the compensation for the effort is not included in the reimbursement for the encounter. If the doc has to capitalize the system with his/her time, it will fail to achieve the objective for the covered population. While it may work for a single patient, it… Read more »

MD as HELL
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MD as HELL

It has occurred to me that the institution of centralized EHR data that effects the outcome of caring for a patient is not the purvue of the physician. Neither is it the purvue of the hospital. There is a point in time where the curves of available time and record review time cross, beyond which the compensation for the effort is not included in the reimbursement for the encounter. If the doc has to capitalize the system with his/her time, it will fail to achieve the objective for the covered population. While it may work for a single patient, it… Read more »

Donna
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Donna

The cost in upgraded technology is surely less than the cost to our patient population if we continue to sit on our hands. Medical records are vitals to the care of a patient. Technology really boosted Medical science resulting in Food Supplements etc. Many people know that they are eating poorly which is probably contributing to their poor health. This is why we need a food supplement like Proleva! Visit http://www.proleva.com Proleva also contains superfruits such as acai, mangosteen, goji and noni which are known for their remedial properties.

Christine Gray
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Christine Gray

In Oregon when a number of hospitals were asked to join into a regional network they quickly discovered that they were being asked to pay for a system that would eliminate duplicate tests (ie profits) so opted out of it. // If I understand her argument correctly, Sherry Reynolds has hit the nail on the head. Profitable for whom? Costly for whom? In what terms? Again, it helps (me) to distinguish between profit and utility. Medical practices and technology and software companies engage in a negotiation over profit and loss. Saving their own lives may not be profitable for patients… Read more »

Steve Findlay
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I agree with others that there’s some confusion in this conversation. EHR software in docs’ offices un-linked to a wider “interoperable” (yes, I hate that word, too) national electronic information system is just another management tool for docs to track patient care – hopefully much better than in all those silly color-coded paper files. As such, EHRs are an upfront expense that takes years to recoup in efficiency gains. The clinical benefits usually flow pretty soon, but may be small at first. Even unlinked EHRs will absolutely yield clinical gains (e.g. – better preventive care reminders) and financial savings, but… Read more »

Sherry Reynolds
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Sherry Reynolds

One of the challenges I rarely hear discussed is the disconnect between who makes the investment in Health Information Technology (typically the hospitals, providers) and where the cost savings accrue. The VA, Kaiser and Group Health were early adopters because they are both the provider and the insurer so any ROI accrues back to their own system. The VA has some of the highest quality care in the US and some of the most cost effective care but at least on the West Coast neither Kaiser nor GHC are able to provider lower cost care then those without an EMR… Read more »

Christine Gray
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Christine Gray

RBAR //I personally don’t know of any such efforts. Every patient is entitled to get copies of their medical record. // Ah, but how hard can they make it? 1. At one major children’s hospital in California, the oncology team did not think to provide copies of reports or test results. The Records department was buried somewhere in the hospital. Very hard to think about your child’s cancer if you don’t have some document in hand to begin the learning curve. 2. At the second children’s hospital, other end of the state, the Records Department was in the basement. You… Read more »

Christine Gray
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Christine Gray

hi
Sorry to be late replying. This is an important point that need elaboration.
If you read my pieces here and on e-patients.net, you will get an idea of why getting reports and test results in hand was such a challenge.
More later. I will list the things I learned from test results in hand.

RBAR
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RBAR

Christine, “Physicians and health administrators commonly use HIPPA to block patient access to records. This of course keeps the patients ril dumb, the physicians, ril smart.” I personally don’t know of any such efforts. Every patient is entitled to get copies of their medical record. That does not change at all with the EHR, as I know from my own experience. With a paper chart, you get paper photocopies, with EHR – a chart printout. It is true that you simply cannot grab the chart and read, but I don’t think there are systematic efforts to block chart access …… Read more »

Tom Leith
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Tom Leith

> Tom, you appear to have turned bitter > based on your sarcasm re. Cerner I have been exasperated that chart-replacement offerings relying on scanned paper and unstructured text have managed to pass for EHRs. I want a lot more than this, but practitioners don’t and they drive the decisions (at least for now). Cerner have the attitude that people should just buy everything from them, interoperability isn’t necessary. Well, OK, it is necessary: their products have to interoperate with their other products. To be fair, all the “big” vendors are like this, but my dealings with Cerner left me… Read more »

Christine Gray
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Christine Gray

So rbar, treading carefully as you do re: lawsuits, what’s your position on patient- and care-centered IT systems versus billing- and coding-centered IT systems? I posed the question about apologies and second opinions to underscore what it’s like being a patientin the current medical climate and to drive home the broader point about IT innovation (or lack thereof), transparency and accountability. If even first-rate physicians think they are committing legal suicide if they apologize for medical error or even a poor outcome despite good medical care, why would they support greater transparency in record sharing? Ergo the point to David… Read more »

rbar
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rbar

Christine, I communicate openly what I do and why, but apologizing for someting nontrivial is a different manner … I would gladly admit/discuss my mistakes if there wasn’t the threat of litigation (even for a competent, good willed – but mistaken – effort). I don’t buy into the studies suggesting that openness may have a protective effect (that may apply to some patients, maybe even the majority). Almost any patient can become disgruntled despite all my efforts, and my admission of a mistake would be used by the plaintiff’s lawyer. But re. a second opinion: many patients go for 2nd… Read more »

Christine Gray
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Christine Gray

Debate about HIT that foregrounds profit and focuses primarily on the insurance/physician nexus (coding, billing) with the patient as afterthought is like a dog chasing its tail. See “The Great Kibbe Debate” on thcb… [upper right] Physicians cannot be innovators for reasons listed in TGKD. The insurance/physician/technology cluster is incapable of innovation: 1) insurance companies have a stranglehold on billing; 2) physicians cannot ASSURE themselves of a profit; 3)HIT is both about sharing information (and information is power), which does not profit technology companies; and 4) HIT innovation is about transparency/physician accountability. Why would a physician group risk its profits… Read more »

Tom Leith
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Tom Leith

dr. rbar writes: > I wonder, Tom, whether you make it > more complicated than it ought to be. Well, in a former life I worked quite a lot on this problem — maybe everyone’s making it more complicated than it ought to be. Except Cerner. Everyone knows that Cerner is the last word in medical informatics. Just ask them. > If you can scan the docs not only > photographically, but in the manner > that the words are computer readable A great big “if”, and “not even close”. But even if we could, unless we solve the (non-trivial)… Read more »

rbar
Guest
rbar

I wonder, Tom, whether you make it more complicated than it ought to be. When I referred to scanned documents, I meant that they need to be put into a useful filing system (this is actually the case in the system that I happened to use at 2 different institutions, Cerner powerchart, but probably the other EHRs have similar functions). The scanned docs can be sorted by 1) specialty and date, 2)date only and 3) provider name. If a doctor wants to read the out of state hospital discharge summary from 6 mos ago – go to hospital docs, subsection… Read more »