For immediate release:
Tuesday, February 15, 2007
12:01 a.m. EDT


Christopher Fleming

Health Information Technology Will Enable Big Savings, But Much Work Remains To Be Done, Says Brailer

 In Health Affairs Interview, Former HIT Coordinator Predicts That It Will Take Ten Years, Even After Widespread Adoption And Other Key Changes, To Realize The Full Benefit Of HIT

Bethesda, MD -- Health information technology can help bring even more cost savings to the U.S. health care system than expected, but those benefits will take quite some time to mature. That’s the verdict delivered by David Brailer, the former national HIT coordinator, in a wide-ranging interview published today on the Health Affairs Web site.

President Bush has set a goal of widespread adoption of electronic health records by 2014. If extrapolated forward, current trends would take the nation to that goal and beyond, but Brailer warns that “there are barriers hidden behind this favorable trajectory. We are now in the period of adoption by the willing -- large hospitals or large physician groups -- organizations that have been planning this for some time or that have the native capacity to take on such a complicated project.”

In contrast, “small doctors’ offices, one- or two-person practices, safety-net clinics, and rural and underserved areas are not there yet,” Brailer tells Arnold Milstein, medical director for the Pacific Business Group on Health and chief physician at Mercer Health and Benefits in San Francisco. “One-third of providers will not be able to adopt [electronic health records] without policy intervention.”

But even meeting the president’s goal would not immediately signal a new era of increased productivity for the health system, warns Brailer, now an adviser to the Bush administration on health IT and consumer issues and vice chair of the American Health Information Community advisory committee. “We studied other U.S. industries that underwent substantial automation: manufacturing, retail, food preparation, insurance, financial services. It takes about a decade after the substantial majority of the players are automated for full benefit to be gleaned,” he explains.

“I think that health care won’t be much different,” Brailer continues. “That means that we’ll have a decade of HIT implementation before a decade of major yield. It’s not until the second decade that users say, ‘Now that we have the tools in place, let’s use them to redesign our fundamental processes’.”

Even the most advanced health systems won’t be able to leap too far ahead of this schedule, he argues: “If you look at other industries, major productivity gains flowed only after most other industry stakeholders also invested in automation tools. In health care, a hospital or physician can’t reap the full benefits of communicating electronically or of passing information back and forth, or of eliminating middle suppliers, until the other has also done so.”

Savings That HIT Could Eventually Help Make Possible
Are Even Bigger Than Prominent Estimates

Groups such as RAND and the Center for Information Technology Leadership at Partners Healthcare in Boston have forecast substantial savings from IT. Brailer suggests that “these studies overestimate near-term savings and underestimate long-term savings; this is because they didn’t take into account second-order effects such as elimination of excess hospital capacity or the market forces that currently enable medical specialists to protect their guilds. These second-order effects could be quite large and are comparable to customer gains in other industries in the decade following an initial decade of IT adoption.”

If interoperating HIT systems are combined with other needed reforms, how big could long-term savings be? “About a third of our spending and probably a third of our health care capacity are likely unnecessary,” Brailer says, although he warns that “provider-induced demand has traditionally filled any extra provider capacity.”

Beyond this, Brailer notes, in a previous stint as a hospital consultant he “found up to two-to-one variation in true production costs among hospitals where there were very good data. That supports a 50 percent estimated savings above and beyond the 33 percent savings from eliminating nonvaluable services and their associated unnecessary capacity.” In addition, “HIT could drive a radical disruption of what we consider to be hospitalizable diseases or what we consider to be necessary primary care interventions,” producing even more savings.

Who Should Own Health Information?
Payers And Providers Agree: Not Consumers

Brailer identifies key reforms that will be needed for the health care system to take full advantage of the potential offered by HIT. One such reform: “a regulatory schema that allows health care to be a marketplace,” such as the Federal Communications Commission provides in the telecommunications arena. This would entail reforming government regulations -- for example, the Stark rules against self-referral and “slow Medicare coverage of non-visit-based care, such as e-mail and telemedicine” -- that protect government programs at the expense of private-sector innovations.

Another needed health care reform identified by Brailer is consumer empowerment. We “lack a consumer that is holding the industry accountable and is accountable for his or her own decisions. This doesn’t require shifting big costs or risks onto consumers; it means helping consumers recognize their power to mold health care to address their individual clinical and financial needs,” he says.

Empowering consumers might be easier said than done, however. Asked by Milstein what important changes he was not able to bring about in his tenure as HIT coordinator, Brailer answers: “Building the capacity to make health information shared and portable. … There is a real debate over whether health information is owned by doctors and hospitals or by consumers. We advocated for more consumer ownership, but the question remains unsettled.”

Milstein follows up by asking: “Aren’t providers reluctant to give any more information to payers than they have to?” Brailer’s response: “Health plans and providers are certainly one example of long-standing polarity. But both stakeholders seem to agree that consumers should not predominantly control health information.”

You can read Milstein’s interview of Brailer at


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at


©2007 Project HOPE–The People-to-People Health Foundation, Inc.