Healthcare Cost Cutting Hinges On IT - InformationWeek

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Government // Leadership
01:32 PM

Healthcare Cost Cutting Hinges On IT

Health IT will curb rising healthcare costs--even those related to malpractice suits--and increase efficiency, top healthcare experts say.

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Several of the nation's top healthcare experts, led by bioethicist Ezekiel Emanuel, believe that building an IT infrastructure that supports the electronic exchange of patient data and integrating administrative data with clinical information from electronic health records (EHRs) will cut the nation's healthcare costs and increase efficiency.

In a recent paper in the New England Journal of Medicine, Emanuel and his colleagues, supported by the Center for American Progress, an independent nonpartisan think tank, confront the issue of out-of-control healthcare spending which, in this election year, will reach $2.8 trillion or about 18% of U.S. gross domestic product (GDP).

The authors cite estimates suggesting that by 2037, national health spending will grow faster than the economy, increasing from 18% to about 25% of GDP. Federal health spending will also increase from 25% this year to approximately 40% of total federal spending by 2037.

[ Is it time to re-engineer your clinical decision support system? See 10 Innovative Clinical Decision Support Programs. ]

"These trends could squeeze out critical investments in education and infrastructure, contribute to unsustainable debt levels, and constrain wage increases for the middle class," the authors wrote.

The authors point out that the nation spends nearly $360 billion on healthcare-related administrative costs each year.

Although the Patient Protection and Affordable Care Act requires health plans and providers to adhere to uniform standards and operating rules for electronic transactions between these organizations, the authors lament that while "plans must comply with these standards and rules, the law does not require providers to exchange information electronically."

To create greater efficiency in the system, Emanuel and his colleagues recommend that payers and providers quickly adopt the practice of electronically exchanging eligibility, claims, and other administrative information among their respective organizations.

Additionally, the authors suggest that during the next five years providers use EHRs to integrate clinical and administrative functions such as billing, prior authorization, and payments.

By implementing business intelligence tools to collect actionable information from administrative systems, providers and health plans can discover inefficiencies within the system as they seek to improve their workflow while reducing administrative tasks and costs. For example, in one step a clinical service could be ordered electronically for a patient and automatically be billed to the payer.

Emanuel and associates also recommend establishing a task force comprised of payers, providers, and vendors to "set binding compliance targets, monitor use rates, and have broad authority to implement additional measures to achieve system-wide savings of $30 billion a year."

In an interview with InformationWeek Healthcare, Emanuel indicated that he sees the integration of physicians' EHRs with administrative data, as "a very good step in the right direction" and "one very important element" that can reduce healthcare costs.

The article also says technology can reduce the cost of defensive medicine, explaining that the risk of a malpractice suit causes physicians to order moretests and procedures. But implementing a strategy that imposes arbitrary caps on damages for patients who are injured as a result of malpractice would result in only a 0.5% reduction in national health spending.

"A more promising strategy would provide a so-called safe harbor, in which physicians would be presumed to have no liability if they used qualified health information technology systems and adhered to evidence-based clinical practice guidelines that did not reflect defensive medicine. Physicians could use clinical decision support systems that incorporate these guidelines," the authors said.

They added: "Under such a system, the physician could use the safe harbor as an affirmative defense at an early stage in the litigation and could introduce guidelines into evidence to avoid a courtroom battle of the experts."

According to Emanuel, using technology to provide evidence that a doctor followed the correct practices and procedures while attending to patients is a useful tool to defend against lawsuits.

"Part of what we are suggesting is that we use malpractice reform to incentivize better behavior in terms of installing electronic health records, installing decision supports, and following guidelines. That is a much more meaningful way of getting malpractice reform," Emanuel asserted.

InformationWeek Healthcare brought together eight top IT execs to discuss BYOD, Meaningful Use, accountable care, and other contentious issues. Also in the new, all-digital CIO Roundtable issue: Why use IT systems to help cut medical costs if physicians ignore the cost of the care they provide? (Free with registration.)

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User Rank: Apprentice
8/15/2012 | 5:58:04 PM
re: Healthcare Cost Cutting Hinges On IT
While I respect the opinions reflected here, I find them of no particular value: unhelpful and naive. Reflected here is another example of the penchant of such to ascribe the solution of a multifaceted problem (which all but defies solution) to be facilitated primarily or entirely by a single factor. IT is often this factor, claimed here as elsewhere. Besides, who will remember this in 2037?

IT will not be the savior (in cost-savings or otherwise) of healthcare. IT has not done that for any other sector of the economy-ever: if that were truly the case, there would be no such business as "IT Outsourcing", which most companies do to (in their financial imaginations) save money. I have been part of several such efforts - the largest savings is caused by a change in the tax treatment, which does not in reality means it actually costs less to the using entity, just that it is offset in some artificial way. Regardless, IT contributes to overhead in some form or fashion, and the consumer still pays the cost of it.

Automation is a commodity and an enabling technology. Healthcare is an expensive business to be in, full stop. It is better informed and more refined than 50 years ago, but it is still largely inexact. And because it deals with the possession and quality of human life (seen as priceless), no (ultimate) limit will be placed on the efforts to retain and improve and lengthen it. This is not a feature inherent in healthcare: it is a fact of human nature which effects the cost of healthcare.

The way to control the cost of healthcare is to get smarter and better at running those parts of this human HCO that can be run more effiiciently; to do a better job of reducing fraud by streamlining the processes (not by more regulation - which facilitates fraud by creating loopholes and complexity).

I have been in IT 35 years. I have never seen it "save" anything. It is not messianic, it is not miraculous, it is not benevolent or malevolent. It is a tool and an enabler. It can only do as well as those who employ it apply it correctly to problems understood well enough to know how. Otherwise it fails, as a sledgehammer fails when used to open a locked door. It may get the job done, but at what price?
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