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More Compatible Health Care Information Systems Could Yield
$77.8 Billion In Savings Every Year, Health Affairs Article Says

Savings Result From Reduction In Redundant Tests, Automation Of
Administrative Tasks, Improved Information Exchange

BETHESDA, MD — Standardized electronic information exchange and interoperable information technology systems could yield a net value of $77.8 billion a year to the health care system, according to a new article published today on the Health Affairs Web site.

Jan Walker, executive director of the Center for Information Technology Leadership at Partners HealthCare System in Wellesley, Mass., and five colleagues attribute the projected savings to improved productivity and averted costs. An example of improved productivity includes the reduction in the number of medication-related phone calls between clinicians and pharmacists, while an example of averted costs includes the reduction of redundant tests.

Based on a review of literature, the conclusions of an expert panel, and computer modeling, Walker and colleagues write that an electronic information exchange system that features interoperable data formats and vocabularies would cost about $276.2 billion.

In yearly costs, such a system would require $16.5 billion in maintenance. But once it is fully operational and its users are proficient, the authors say that it will add $94.3 billion in value to the health care system, yielding a net annual value of $77.8 billion.

“Overall, we believe that a compelling business case exists for national implementation of fully standardized health care information exchange and interoperability,” Walker says.

“In addition, the model did not quantify many potentially important costs and benefits. We believe that their net value is largely positive; the value of standardized interoperability is likely to be higher than our quantified results suggest,” Walker adds. “We suspect that the clinical payoff in improved patient safety and quality of care could dwarf the financial benefits projected from our model, which are derived from redundancies that are avoided and administrative time saved.”

The researchers write that the highest level of interoperability would yield the following annual savings:

—Between clinicians and external laboratories, $31.8 billion because of reduction in delays and costs associated with paper-based ordering and reporting of results
—Between clinicians and external radiology facilities, $26.2 billion a year
—Between providers, the savings would be $13.2 billion a year in costs associated with chart requests and referrals
—Between clinicians and pharmacists, $2.7 billion a year associated with the number of medication-related phone calls
—Between providers and public health agencies, $195 million a year in improved efficiencies in reporting vital statistics and cases of certain diseases

Accompanying the article are perspectives by David Brailer, the national health information technology coordinator for the Department of Health and Human Services; Laurence Baker, associate professor and chief of health services research at the Stanford University Medical School’s Department of Health Research and Policy; and Brent James, vice president for medical research and executive director of Intermountain HealthCare’s Institute for Health Care Delivery Research.

Walker’s coauthors are Eric Pan, associate fellowship director and senior analyst with the Center for Information Technology Leadership; Douglas Johnston, a senior analyst with the center; Julia Adler-Milstein, a research analyst; Blackford Middleton; the center’s chairman; and David Bates, internal medicine chief at Brigham and Women’s Hospital and clinical quality analysis director for Partners HealthCare System.

The article by Walker and colleagues can be read at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.10.

Brailer’s article can be read at
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.19.

Baker’s article can be read at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.22.

James’ article can be read at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.26.


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Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.

©2005 Project HOPE–The People-to-People Health Foundation, Inc.