Will (and should) Healthcare IT Save Money?

There is some interesting debate in the Healthcare community about whether Healthcare IT (HIT) really does decrease costs. Below is a link to an article about a recent paper that shows that EMRs (meaning: electronic medical records software) does not, in fact, reduce
costs.

http://www.healthcare-informatics.com/news-item/study-ehrs-do-not-reduce-costs-additional-testing

In their study, the researchers show that physicians who have access to electronic medical records order more tests, which presumably increases costs. While there is some debate about this specific study (you can read some of that here: http://healthaffairs.org/blog/2012/03/12/the-effect-of-physicians-electronic-access-to-tests-a-response-to-farzad-mostashari/), it does bring up some interesting thoughts.


Will it get worse before it gets better?

One affect I have seen of implementing technology, whether in healthcare, or manufacturing, or professional services, or wherever, is that when you have the technology to track things better and to mine your data, you find missed opportunities. Professional services might offer the easiest example. Sometimes you forget to bill people for things. An attorney forgets to account for a phone call. A computer technician accidentally logs a service call at 2 hours instead of 2.5. With technology, you can find those things and correct them.

To me, that means we will see (and have seen) billings increase. Suddenly, we don't forget to bill procedures, equipment usage, services, meds, tests, etc... Everything is accounted for (pretty much) so we start billing more.


Will cost savings be offset by improved care?

Assuming we get some cost savings, will just just off-set them with more and better care? Will we spend the new influx of cash (see my previous point) on more expensive equipment, technology, and people with the intention of improving quality of care. In fact, in the study mentioned above, the researchers don't look at quality of care, improved outcomes, or even whether those "extra" tests were medically necessary. Could it be that the docs were able to identify and head off some extra problems leading to better care? We don't know, but those questions are foundational to the conversation so we're going to have to find out.


How long before the cost savings (if there are any) make it to the patients?

For now, let's continue to assume that eventually cost savings will happen. How? For one thing, billing more of what would previously have been "missed opportunities" will increase revenue. But costs for those missed opportunities are already built in to the price structure. So, same costs, more revenue (sounds nice, doesn't it?). Are we all optimistic enough to think that our altruistic hospital administrators will re-calculate the prices of services and lower the price? Or will the cost savings land in the pockets of the healthcare providers? Or will they be reinvested in improving care?

I expect that prices to consumers will be slow to decrease. That's largely because of the lack of transparency in healthcare pricing. That's a topic for a future post, but let's just say that people don't often shop for healthcare based on pricing. Without market drivers, it will be up to the primary payors (most often insurance companies and government agencies) and regulators to move prices down.


So, what does all that mean?

HIT brings with it a lot of potential for change, but the direction of that change may not be as predictable as we had all hoped. The best we can do as IT professionals is to set realistic expectations and to make sure that we're working to make incremental changes with a real end-goal in mind.