Can Information Technology Transform Health Care? Potential Health Benefits, Savings and Costs...
36
Can Information Technology Transform Health Care? Potential Health Benefits, Savings and Costs Richard Hillestad, Ph.D. Presented at HIT Symposium, Massachusetts Institute of Technology, July 17-20, 2
Transcript of Can Information Technology Transform Health Care? Potential Health Benefits, Savings and Costs...
Can Information TechnologyTransform Health Care?
Potential Health Benefits, Savings and Costs
Richard Hillestad, Ph.D.
Presented at The HIT Symposium, Massachusetts Institute of Technology, July 17-20, 2006
A6387b-2
Background
• A two year RAND Health study completed in Spring 05
• Results appear in 2 articles in September 05 Health Affairs and 4 RAND reports
• Funded by the private sector -- Cerner Corp., General Electric, Hewlett-Packard, Johnson & Johnson, and Xerox
• 14 member steering group headed by Dr. David Lawrence, former CEO of Kaiser
A6387b-3
The Problem in Context• U.S. health care is one of the largest and most
inefficient information enterprises because it still operates mostly with paper records
A6387b-4
• U.S. health care is one of the largest and most inefficient information enterprises because it still operates mostly with paper records
The Problem in Context
• Despite health spending of $1.7 trillion nationally and projected to grow to over $4 trillion in 10 years, it doesn’t provide the best care
– recommended care is provided only about 55% of the time
– and, by a number of measures, health in the U.S. is worse than OECD averages
A6387b-5
• U.S. health care is one of the largest and most inefficient information enterprises because it still operates mostly with paper records
The Problem in Context
• Despite health spending of $1.7 trillion nationally and projected to grow to over $4 trillion in 10 years, it doesn’t provide the best care
– recommended care is provided only about 55% of the time
– and, by a number of measures, health in the U.S. is worse than OECD averages
• How much could Electronic Medical Record Systems (EMR-S) help?
A6387b-6
What Is an Electronic Medical Record System?
• EMR -- replaces the paper medical record
• EMR-S adds functions:– Clinical decision support– Patient tracking and reminders– Personal health records– Computerized physician order entry– Regional health information networks
A6387b-7
Key Findings
• Efficiency savings enabled by EMR-S could reach ~$80B/year at 90% adoption
• Costs to achieve that in 15 years average ~$8B/yr
• Safety benefits include avoiding 2.2 million adverse drug events
• Health benefits from prevention and management of chronic diseases alone could be 400,000 deaths avoided and 40M added workdays
• The market is not leading to this result because of important barriers and disincentives
• Therefore, there is a clear role for government action
A6387b-8
EMR-S Now in Only 20-25% of Hospitals and10-15% of Physicians’ Offices
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Inpatient EMR-S
Outpatient EMR-S
Inpatient CPOE
Fraction ofhospitals or officesadopting
A6387b-9
Problem Is To Estimate Impact atFull Adoption
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Adoptionperiod15 yrs
“Full” adoption
Complex,networkedtechnology
Inpatient EMR-S
Outpatient EMR-S
Inpatient CPOE
Fraction ofhospitals or officesadopting
A6387b-10
The RAND Study of EMR-S• RAND study developed computer simulation models
to estimate potential benefits and costs, assuming– Widespread adoption (90%)– Interoperability (across providers)– Related health care process changes, for
example:• Restructured hospital and physician office
workflow• Increased preventative interventions• Team care for chronic disease
• Extrapolates limited published evidence of EMR-S benefits
A6387b-11
• Reduced waste, e.g., reduced duplication of tests
• Improved/changed processes, e.g., improved workflow and patient flow
• Fewer resources, e.g., reduced administration of paper records, better antibiotics usage
• Lower cost substitutions, e.g., generic drug utilization
Efficiency Savings Enabled by EMR-S
A6387b-12
Efficiency Savings in the Inpatient and Outpatient Settings
Outpatient$20B/yrInpatient
$60B/yr
• Length of stay• Nursing administrative time• Medical records administration• Lab and radiology utilization
• Drug utilization• Lab and radiology utilization• Chart administration• Efficient patient scheduling
• • •
• • •
$80B/yr at 90% Adoption
A6387b-13
It Will Take Some Time to RealizeSuch Savings
Savings/yr$B Fraction
adopting
Evidenceand scalinguncertainty
Adoptioncurve
$80B/yr
2004 2006 2008 2010 2012 2014 2016 2018
1.0
0.8
0.6
0.4
0.2
80
60
40
20
0 0
A6387b-14
• Costs include EMR-S software license, hardware and its maintenance
• As well as planning, training and implementation
• And reduced revenue or increased provider costs during implementation
Costs of EMR-S
A6387b-15
We Estimated the Cost of Adoption over Time by Simulating Adoption with Current Costs
Ambulatory EHR-S costs/yr Inpatient EHR-S costs/yr
$B
2.0
1.5
1.0
0.5
Cumulative cost: $97.4BOne-time cost: $30.4BMean yearly cost: $6.5B
Fractionadopting
2004 2006 2008 2010 2012 2014 2016 2018
1.0
0.8
0.6
0.4
0.2
0
$B
0
2
4
6
8
10
Cumulative cost: $17.2BOne-time cost: $7.3BMean yearly cost: $1.1B
Fractionadopting
2004 2006 2008 2010 2012 2014 2016 2018
1.0
0.8
0.6
0.4
0.2
00
A6387b-16
Although EMR-S Implementation Costs Are Substantial . . .
Total cost (15 years)
Hospitals 97
Physician offices 17
Connectivity 6
Total $120B
Costs
A6387b-17
. . . Costs Are Modest Compared to Potential Savings, Even During Implementation
Total savings(15 years)
Hospitals 470
Physician offices 160
Total $630B
Efficiency Savings
Total cost (15 years)
Hospitals 97
Physician offices 17
Connectivity 6
Total $120B
Costs
A6387b-18
Safety Benefits of EMR-S
• Reduced errors from handwriting
• Allergy warnings
• Warnings of drug-drug interactions
• Dosage monitoring
A6387b-19
EMR-S with Computerized Physician Order Entry Can Increase Safety -- Medicare Share ~40% --
$3.1B
65+
0–6465+
65+
0–640–64
$0.9B
Thousandsof
events
A6387b-20
Health Benefits Enabled by EMR-S
• Improved compliance with prevention activities
• Better management and prevention of chronic diseases
• Coordination of care across providers
• Patient involvement in care and healthy life style
A6387b-21
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
A6387b-22
Chronic Disease Management Is a High Leverage Application of EMR-S
• The chronically ill absorb about 75% of national health expenditure
• Chronic disease management requires– Community support and team care– Coordination and communication across
providers– Patient monitoring and involvement
• Regional demonstration projects with EMR-S often focus on chronic disease management
A6387b-23
Targetdiagnoses
Analysis Process for Disease ManagementICD9 and
CCC codes
Clinical judgment
MEPS
Partitionfile
MEPS subjectswithout target
diagnoses
MEPS subjectswith targetdiagnoses
Summarize by sex, age, eth., event type.Re-weight without file to match with pop.
Disease pop - Utilization* - Expenditures* - Outcomes
Control pop - Utilization - Expenditures - Outcomes
* Differentiate between events associated vs. unassociated with a target diagnosis
Disease managementliterature
Clinical judgment
% change inutilization byseverity - IP stays - ED visits - Oth Amb - Rx use
Selectparticipation
rates
Calculate system-widebenefits & costs
System-wide benefits & costs(includes utilization & cost ofdisease management program) - Utilization - Expenditure - Outcome
Activities &resourcesper patientby severity - MD hrs - RN hrs - Oth hrs
A6387b-24
Disease Management Attempts to Reduce Acute Episodes
Reduced ER visits and hospital stays
0
2
4
6
8
10
12
14
Inpatient stays ER visits
% reduction
Upper Bound:Assumes 100%participation in management ofemphysema, asthma, CHF, and diabetes.
A6387b-25
EMR-S Enabled Prevention and Disease Management Can Reduce Mortality and the
Economic Impact of Chronic Illnesses
Participation Rates
Disease Management
Lifestyle Change
80%
50%
50%
20%
Days Affected (millions)
School days lost
Work days lost
Total days in bed
-11
-39
-270
-7
-21
-160
Mortality (thousands of deaths) -400 -250
Results for emphysema, asthma, CHF and diabetes
A6387b-26
Other Industries Health Care Industry
Champion Firm No
Integrated System Disaggregate System
Standards Low Implementation
High IT Investment Low EMR-S Investment
Market Forces Market Failure
Consumer Involvement No Consumer Involvement
Barriers to Adoption of EMR-S in Health Care
A6387b-27
The Most Significant Barrier: Physicians and Hospitals Do Not See Most
Savings from EMR-S Investments
-40
-30
-20
-10
0
10
20
30
40
Social savingsPhysicianrevenue
Hospitalrevenue
Pharmarevenue
$B
EMR-S Purchasers
Revenue and Savings From Chronic Disease Management
A6387b-28
The Government Should Intervene Now
• The market is not working well – Providers have little incentive or capability to
institute standards-based, interconnected EMR systems
– Current adoption process may lead to a 2-tiered health care system and inhibit future change
• The government is the largest employer and health care payer (and has considerable leverage on the industry)
• EMR-S enabled changes could moderate unsustainable health care cost growth and improve quality
A6387b-29
Key Government Actions
• Promote standards and EMR-S certification
• Implementation support
• Promote interoperability and regional connectivity
• Medicare leadership with incentives– Pay for use of EMR-S– Pay for quality measured by EMR-S
A6387b-30
Per Encounter Pay-for-Use Incentive
With incentive
Without incentive
Value of incentive: $16.2 BCost of incentive: $2 BPer-encounter payment: $1.5Duration: 3 yearsDemand elasticity: -.5Adoption period: 15 years
Fractionadopting
1.0
0.8
0.6
0.4
0.2
02004 2006 2008 2010 2012 2014 2016 2018
A6387b-31
Can Information Technology Transform Health Care?
• Yes, but --– not without much wider adoption– not without standards and interoperability– not without associated process and health care
system changes– not without measurement of quality and
efficiency
• And, probably not without government intervention
A6387b-33
Dissemination of These Findings• Publications for multiple audiences
– 2 peer reviewed articles in Health Affairs– 4 RAND monographs– RAND Research Brief and Congressional Newsletter
• Widespread media coverage with press releases by both Health Affairs and RAND
• Briefings for congressional and committee staff– Alliance for Health Reform (Frist-Rockefeller Group) briefing (300+ attendees, 60
Congressional)– RAND Congressional briefing cosponsored by 21st Century Health Care Caucus (Reps.
Murphy and Kennedy), 26 attendees
• Meetings with key committee staff– Senate Finance Committee– Senate LHHS Appropriations Subcommittee– House Energy & Commerce Health Subcommittee– House Ways & Means Subcommittee– House LHHS Appropriations Subcommittee– House Armed Service Committee
A6387b-34
Dissemination (2)• Meetings with Senators and staff
– Senator Max Baucus (D-MT)– Senator Pat Roberts’ Staff (R-KS)– Senator Michael Enzi (R-WY)– Senator Orrin Hatch’s Staff (R-UT)
• Workshop on “Economic Impact of EHR Adoption Gap” with David Brailer, National Coordinator, Health Information Technology, HHS, at RAND, Santa Monica
• Briefings at private sector activities– Hewlett-Packard Worldwide Health Symposium, Las Vegas– Cerner Health Care Leadership Forum, Orlando– Xerox Health Care Forum, Rochester (in December)
• Briefings for other interest groups– Institute for Behavioral Health Informatics
A6387b-35
U.S. Health Expenditures Per Capita Are the Highest Among OECD Countries
Source: OECD Health Data 2004, 1st Edition, Table 9
Note: The presented countries represent the range of expenditures for OECD countries. Due to space limitations, all OECD countries are not presented, however the average was calculated from 29 countries. Turkey’s data was not available.
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Un
ited
Sta
tes
Sw
itze
rlan
d
No
rway
Can
ad
a
Ger
ma
ny
Fra
nce
Au
stra
lia
Sw
ed
en
Ital
y
Ave
rag
e
Jap
an
Un
ited
Kin
gd
om
Sp
ain
Hu
ng
ary
Ko
rea
Po
lan
d
Mex
ico
2001 healthexpenditures
per Capita(US$ PPP)
A6387b-36
U.S. Life Expectancy IsSlightly Below the OECD Average
60
65
70
75
80
85
90
Icel
and
Jap
an
Sw
ed
en
Can
ad
a
Au
stra
lia
Ital
y
Un
ited
Kin
gd
om
Ger
ma
ny
Sp
ain
Fra
nce
Fin
lan
d
Ave
rag
e
Un
ited
Sta
tes
Mex
ico
Po
lan
d
Hu
ng
ary
Tu
rkey
Years
Males at birth (2001) Females at birth (2001)
Source: OECD Health Data 2004, 1st Edition, Table 1
Note: The presented countries represent the range of life expectancies for OECD countries. Due to space limitations, all OECD countries are not presented, however the average was calculated from all OECD countries.
