can information technology transform health care? the rand study of potential costs and benefits of...
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![Page 1: Can Information Technology Transform Health Care? The RAND Study of Potential Costs and Benefits of Electronic Medical Record Systems Roger S. Taylor MD,](https://reader036.vdocuments.site/reader036/viewer/2022062619/5515949e550346486b8b5a15/html5/thumbnails/1.jpg)
Can Information TechnologyTransform Health Care?
The RAND Study of Potential Costs and Benefits of Electronic Medical Record Systems
Roger S. Taylor MD, MPARAND
October 20, 2005
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RAND’s Conclusions Regarding Electronic Medical Record Systems (EMR-S)
• At 90% adoption, potential EMR-S enabled efficiency savings are high (~$77B/yr)
• Costs are modest relative to savings (~$10B/yr)
• Potential health and safety benefits also large and could more than double the savings (to ~$162B/yr)
• Government should act now to:– Accelerate market forces– Selectively subsidize change
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2002 2004 2006 2008 2010 2012 2014 2016
Year
Annual healthexpenditures
(trillions)
Official CMS projectionof healthcare cost growth
Cost Growth Projections for US Health Care
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2002 2004 2006 2008 2010 2012 2014 2016
Year
Annual healthexpenditures
(trillions)
Official CMS projectionof healthcare cost growth
What If EMR-S Transformed Health Care as IT Did in the Retail Industry?
1.5% annual productivity improvement from IT (like retail industry)
Cumulative Savings of $5.2 Trillion over 15 Years
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1.0
1.5
2.0
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3.5
4.0
4.5
2002 2004 2006 2008 2010 2012 2014 2016
Year
Annual healthexpenditures
(trillions)
Official CMS projectionof healthcare cost growth
What If EMR-S Transformed Health Care asIT Has Done in Telecoms?
1.5% annual productivity improvement from IT (like retail industry)
4% annual productivity improvement from IT (1/2 of telecom industry increase)
Cumulative Savings of $5.2–$12.2 Trillion over 15 Years
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RAND Asked: How Much Value Could Widespread Use of EMR-S Deliver to US Healthcare System?
• Very limited published evidence of EMR-S benefits
• RAND developed models to estimate potential benefits, assuming:
– Widespread adoption of EMR-S (90%)– Effective connectivity
• Across providers• With patients
– Related EMR-S enabled changes, e.g.:• Team care for chronic disease management• Restructured processes and workflows• A focus on improving quality and efficiency
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What Is an EMR-S?
• EMR -- replaces the paper medical record
• EMR-System (EMR-S) adds functions:– Clinical decision support– Patient tracking and reminders– Personal health records– Computerized physician order entry– Interface with knowledge banks and regional
information exchange networks
• EMR, in some form, now in only 20-25% of hospitals and10-15% of physicians’ offices
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Major Conclusions
• At 90% adoption, potential EMR-S enabled efficiency savings are high (~$77B/yr)
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Data Suggest Potential Efficiency Savingsof ~$77B/yr After 90% Adoption
Outpatient$20.4B/yrInpatient
$57.1B/yr
Efficiency
• Length of stay• Nursing administrative time• Medical records administration
• Drug utilization• Lab and radiology utilization• Chart administration
• • •
• • •
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Major Conclusions
• At 90% adoption, potential EMR-S enabled efficiency savings are high (~$77B/yr)
• Costs are modest relative to savings (~$10B/yr)
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Although EMR-S Costs Are Substantial . . .
Total cost (15 years)
Hospitals 97.4
Physician offices 17.2
Connectivity 6.0
Total $120.6B
Costs
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. . . Costs Are Modest Compared to Potential Efficiency Savings
Total savings(15 years)
Hospitals 468.5
Physician offices 159.0
Total $627.5B
Efficiency Savings
Total cost (15 years)
Hospitals 97.4
Physician offices 17.2
Connectivity 6.0
Total $120.6B
Costs
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Major Conclusions
• At 90% adoption, potential EMR-S enabled efficiency savings are high (~$77B/yr)
• Costs are modest relative to savings (~$10B/yr)
• Potential health and safety benefits also large and could more than double the savings (to ~$162B/yr)
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Major Conclusions
• At 90% adoption, potential EMR-S enabled efficiency savings are high (~$77B/yr)
• Costs are modest relative to savings (~$10B/yr)
• Potential health and safety benefits also large and could more than double the savings (to ~$162B/yr) Safety benefits include:
• Fewer errors from illegible handwriting• Reduced adverse events from dosage,
drug-drug interaction, allergies
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Significant Savings from Increased Safety -- Medicare Share ~40%
Safety
$3.1B
65+
0–6465+
65+
0–640–64
$0.9B
Thousandsof
events
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Major Conclusions
• At 90% adoption, potential EMR-S enabled efficiency savings are high (~$77B/yr)
• Costs are modest relative to savings (~$10B/yr)
• Potential health and safety benefits also large and could more than double the savings (to ~$162B/yr)
– Health benefits include:• Better delivery of preventive care, self-care• Better management of chronic diseases
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EMR-S Can Promote Prevention with Guidelines, Reminders, and Outreach
Targetpopulation
% Populationnot now
compliant
Cost/yr for100%
compliance
Health benefitswith 100%
compliance
Breast cancerscreening
Women40 andolder
30% $1.5B
50K cancersdetected early,
4K fewer deaths/yr
Colorectalcancerscreening
50 andolder
66% $4.0B 23.5K fewer deaths
Influenzavaccination
65 andolder
37% $0.2B7.5K fewerdeaths/yr
Pneumococcalvaccination
65 andolder
47% –$0.1B21K fewerdeaths/yr
Prevention
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Better Disease Management CanReduce Acute Episodes
Chronic Disease Management
Reduced ER visits and hospital stays
0
2
4
6
8
10
12
14
Inpatient stays ER visits
% reduction
Note:This slide assumes 100% participationin management ofemphysema, asthma, CHF, and diabetes.
Study Assumptions:Study’s savings projections based on compliance rates of 50% in prevention and 80% in disease mgt.
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Net Result Is a Savingsbut Hospitals Lose Revenue
Chronic Disease Management
Revenue and Savings
-40
-30
-20
-10
0
10
20
30
40
Total savingsPhysicianrevenue Drug costs
Hospitalrevenue
$B
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Major Conclusions
• At 90% adoption, potential EMR-S enabled efficiency savings are high (~$77B/yr)
• Costs are modest relative to savings (~$10B/yr)
• Potential health and safety benefits also large and could more than double the savings (to ~$162B/yr)
• Government should act now
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Why Should the Government Intervene?
• EMR-S enabled changes could moderate unsustainable health care cost inflation and improve quality
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Why Should the Government Intervene?• EMR-S enabled changes could moderate unsustainable
health care cost inflation and improve quality
• The market is not working well – Providers have little incentive or capability to:
• Institute standards-based EMR Systems• Exchange electronic patient information• Restructure to optimize quality or efficiency
– Current adoption process may lead to:• 2-tiered health care system • Islands of isolated adopters resistant to change• $ Billions invested without much societal benefit
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Why Should the Government Intervene?
• EMR-S enabled changes could moderate unsustainable health care cost inflation and improve quality
• The market is not working well
• The government is America’s largest health care payer and biggest employer, with:
– Direct interest in quality and efficiency– Market clout to change provider behavior– Strong influence on other payors’ policies
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What Should the Government Do?
• Stay the courseContinue implementing current policy directions
• Accelerate market forcesAddresses key market failures through incentives to:– Adopt and use standard-based EMRs – Build a foundation for value-based competition
3. Subsidize changeAdd targeted subsidies to develop: – Regional health information exchange networks – Initiatives to decrease the risk of HIT adoption and networking– Monitoring system to assess adoption patterns and needs
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Stay The Course-Any combination of policies that reduce the risks or effective
cost of adoption speeds change-
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Accelerate Market Forces-A modest per-encounter incentive would accelerate standard-
based EMR adoption in physicians’ offices-
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Subsidize Change-If needed, targeted subsides would speed hospital adoption-
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