The rush to digitize patient records has not cut costs

[xchrom]

http://www.washingtonpost.com/opinions/the-rush-to-digitize-patient-records-has-not-cut-costs/2013/01/14/09d90096-5c2d-11e2-beee-6e38f5215402_story.html

THERE IS GOOD NEWS on the health-care spending front. According to the federal Centers for Medicare and Medicaid Services, the nation’s health-care bill grew only 3.9?percent in 2011, the third straight year at that pace — which is about half the average annual rate between 2003 and 2007. Consequently, health care is no longer consuming a rising share of the overall economy; it’s held steady at 17.9 percent of gross domestic product since 2009.

Alas, no one knows exactly what caused this welcome trend, which almost none of the experts predicted. Therefore no one can be sure it’s permanent. Declining spending may reflect the pinch of recession on consumer pocketbooks. That’s good, to the extent that it proves cost pressure can make consumers forgo health care they don’t really need; but it’s not so good to the extent that cost pressure forced consumers to forgo care they did need. Either way, spending would rise as the economy continues to recover.

It’s easier to identify factors that did not contribute to the downward bending of the cost curve. Health information technology is a case in point. At one time, its cost-cutting promise seemed immense. A 2005 Rand Corp. analysis estimated that the nation could save up to $81?billion a year by digitizing patient records and other data; best of all, it was said, more accurate, accessible information would also help improve patient care. All that stood in the way was the fact that doctors and hospitals had no incentive to invest in equipment that would save other people money. So President Obama’s 2009 economic stimulus bill allotted $27?billion in incentives to health-care providers who adopted electronic health records and showed they’re being used to improve patient care.

But as an article released Monday by Rand researchers argues, the subsequent investment has bought very little in the way of either improved care or lower costs. It’s possible that computerization may actually have increased spending. Between 2006 and 2010, Medicare payment to hospitals receiving federal dollars for electronic records grew faster than payments to hospitals that did not take advantage of the incentives, according to a Sept. 21New York Times report cited in the new Rand article.

[Scuba]

1. Misleading headline, misleading article...

.... from the article: "It’s possible that computerization may actually have increased spending. "

Well, did it or didn't it? The headline asserts automation "has not cut costs", but the article uses "may have increased" without any data to back it up.

The only claim is that "a lot of money went toward automating billing offices, which made it easier for some providers to “upcode” — charge more for the same services." This is flatly untrue.

First of all, billing has been automated since the 1970's.

Secondly, "upcoding" is illegal. What is actually happening on the coding front is that automated systems have allowed hospitals to more accurately code patient diagnosis, complications and services received, resulting in more accurate claims. This is recovery of potential revenue that was missed before automation, not an increase in costs.

The article also claims that "Health care still runs overwhelmingly on the fee-for-service principle", another inaccuracy. Diagnostic Related Groups (DRG's) were adopted by Medicare in 1984 and insurance companies quickly jumped on that bandwagon. Under this model, hospitals are paid not for services provided, but receive a pre-defined reimbursement based on the patient's diagnosis and complications. Treat the patient for less and the hospital has some retained earnings to re-invest in plant and equipment (or pay shareholders in for-profit situations). Provide a bunch of unnecessary services and treat the patient for more than that pre-defined amount and the hospital loses money on that case. This, not fee-for-service, is the overwhelming model in healthcare today. (Note that private pay and some insurance companies are still billed on a fee-for-service basis, but that is the minority of claims.)

Electronic records alert physicians when they are ordering duplicate tests, drugs for which the patient is allergic, extended treatment with antibiotics (which causes diarrhea, dehydration and extended stays) and other contra-indications. This results in better care and lower costs.

There are of course many challenges to implementing these systems, not the least of which is that multiple vendors serve different niches of the market and each has their own proprietary (and secret) way of handling data. This make inter-operability very difficult. But to claim there are no cost savings - and no patient care quality improvements - is not accurate.

[Cooley Hurd]

2. I have to agree...

But interoperability is something that EHR vendors will have to achieve if they want CCHIT or MU certification. Certain standards have been developed (the CCD, C62, etc) and those standards have to be met if they want to be certified.