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Hospital IT ‘does not cut costs’


30 November, 2009  

Computerising hospitals delivers a small improvement in quality but does not cut costs

According to a study published in the American Journal of Medicine computerising hospitals does not reduce any costs.

Indeed, the detailed correlation of data from a hospital computerisation survey, cost reports and quality scores, shows that the hospitals that have computerised fastest in the past decade have also seen their costs rise fastest.

The researchers from Harvard Medical School and the Partners Healthcare System in Boston put forward a number of explanations, including the idea that the US commercial market favours coding and billing systems, rather than systems that encourage efficiency and “clinical parsimony.”

However, they argue the Obama administration’s enthusiasm for electronic medical records – and the belief of reformers on both sides of the Atlantic – that they will deliver significant quality improvement and cost reduction “is premature at best.”

The study took data the Healthcare Information and Management Systems Society (HIMMS) annual survey of hospital computerisation from 2003-7, which covers 4,000 hospitals.

They assigned each hospital a score for its level of computerisation and use of clinical, patient administration and general administration systems.

The researchers then compared these scores with Medicare and Medicaid cost data and the Dartmouth Atlas, which assigns hospitals a score for quality based on scores for their treatment of pneumonia, congestive heart failure, and acute myocardial infarction.

The results showed that hospital computerisation increased between 2003 and 2007, while administrative costs “increased slightly but steadily.”

Higher administration costs were associated with for-profit ownership, smaller size, non-teaching status and urban location.

Teaching hospitals and larger urban hospitals were more likely to be computerised than public and smaller hospitals.

Perhaps for this reason, a simple analysis found that the hospitals that computerised most rapidly also saw their administrative costs rise most rapidly.

However, a full ‘multivariate’ analysis found no link between administrative costs and computerisation and “there was no evidence of lagged effects; computerisation in 2003 did not predict administrative costs in 2007.”

Higher quality scores were associated with larger hospitals and those with teaching programmes, while lower scores were associated with for-profit status.

Hospitals with higher computerisation scores had “slightly better composite quality” while the use of electronic medical records and computerised order entry systems produced higher quality scores for heart attacks, but not the other two clinical measures.

“Even a select group of hospitals at the cutting edge of computerisation showed neither cost nor efficiency savings,” the authors concluded, adding that even the quality findings should be interpreted with caution, since they might reflect better documented processes than actual improvements in care.

Musing on their findings, the researchers speculate that IT may have failed to decrease costs because “any savings are offset by the expense of purchasing and maintaining the computer system itself” or because it takes more than four years to pick up real savings.

However, they appear to favour the idea that the American healthcare market “does not deliver optimal products”, noting that “the largest computer success story has occurred at Veterans Administration hospitals, where global budgets obviate the need for most billing and internal cost accounting and minimise commercial pressures.”