Healthcare Cost Cutting Hinges On IT

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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.

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"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.)