U.S. companies are starting to use I.T. more effectively to monitor their health-care spending and help people make better choices. But the biggest bang is likely to come from the health-care industry itself embracing IT.

If 90% of U.S. doctors and hospitals successfully adopt health-information technologies, such as standardized systems for electronic medical records, the health-care system would save $77 billion annually through improved efficiencies, the think tank Rand Corp. estimated in a study released in September. The biggest savings would come from shorter hospital stays resulting from better-coordinated care, less nursing time spent on administrative tasks, better use of medications in hospitals, and better utilization of drugs, labs, and radiology services in outpatient settings, Rand says.

An additional $4 billion would be saved each year because of improved safety, Rand estimates, primarily by reducing prescription errors as computerized systems warn doctors and pharmacists of potential mistakes.

With this in mind, many of the biggest buyers of health care have taken on the role of IT advocate when it comes health-care providers using technology. Employers have joined national and regional nonprofit groups, including Leapfrog and Bridges to Excellence, to push for widespread clinical IT adoption by hospitals and doctor's practices. The U.S. government also is pressuring health-care providers to use IT to achieve a goal President Bush set last year for most Americans to have digitized health records by 2014.

"Everyone agrees that computerized health records [and] electronic prescriptions are a great idea," says Michael Taylor, a principal analyst at Towers Perrin. "Employers are collectively pushing for the mainstream adoption [by hospitals and doctors] of that technology that already exists and offers the biggest promise of making a difference."

Leapfrog members, as well as members of other business-group health groups, are developing and implementing pay-for-performance programs that would have health-insurance payers financially reward hospitals and providers that improve the quality of care through a number of initiatives, including the deployment of clinical IT. The U.S. government, through Medicare, also is piloting pay-for-performance incentives for health-care providers that meet higher-quality benchmarks through initiatives that include the use of IT.

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