Electronic Medical Records Don't Save Money, Says Study

Cheryl Clark, for HealthLeaders Media , November 20, 2009

Researchers affiliated with Harvard institutions are reporting a variation on the theme "the emperor has no clothes" regarding benefits from health information technology, the second such report to become public this week.

The latest study, published today in The American Journal of Medicine, says that despite Congressional support to the tune of $19 billion, claims of efficiencies from computerizing hospital system records "rest on scant data."

Even "the 100 banner hospitals that are the most wired" are not seeing any cost savings nor do their electronic medical record systems make the administration of healthcare more efficient, says author David U. Himmelstein, MD., associate professor at Harvard Medical School and former director of clinical computing at Cambridge Hospital.

His study was based on a review of 4,000 hospitals over a five-year period that had implemented various levels of electronic records.

"The idea from this administration that we're going to pay for health reform out of savings from electronic medical records is baseless propaganda," Himmelstein tells HealthLeaders Media. "It may be politically attractive, but it's nonsense."

He and co-author, Harvard professor of medicine Steffie Woolhandler, MD, are both affiliated with Physicians for a National Health Program, which advocates for a single-payer system. Adam Wright, also of Harvard, is another listed author.

Their report said that the Veterans Administration hospitals, which function as a single-payer system "have improved quality and decreased use (mostly of diagnostic tests)" because of their electronic record system, but that is a rare exception. The VA system's success is because "global budgets obviate the need for most billing and internal cost accounting, and minimize commercial pressures," according to the report.

The authors speculated that physicians and hospitals that are implementing electronic record systems are doing so to raise revenue rather than to improve quality or efficiency.

"Coding and other reimbursement-driven documentation might take precedence over efficiency and the encouragement of clinical parsimony," the authors wrote.

In an interview about the study, Himmelstein was asked why hospitals that have implemented EMR have not found savings. He replied: "What kind of an idiot hospital administrator would buy a system that will actually decrease what you can bill to payers? These systems help them extract more money."

He explained that electronic medical records have the capability of allowing billers to scan patient histories for items that might result in justifiable reimbursement.

"Hospital information systems help you do this, to find every co-morbidity that helps you jack up the charges," he says.

Hospital officials who advocate for the use of health information technologies heatedly dispute the researchers' findings.

"In my experience, some of the most wired hospitals in America are here in California, and they have the most opposite reaction," says Pam Lane, vice president of health informatics for the California Hospital Association.

"They would never go back," she says. "They've seen gains in patient safety and the ability to provide quality care across the continuum."

Himmelstein's report linked an annual survey of computerization at about 4,000 hospitals from 2003 to 2007 with cost data from Medicare Cost Reports and cost and quality data from the Dartmouth Health Atlas in 2008.

They then calculated an overall computerization score and three subscores based on 24 individual computer applications, including practitioner order entry and electronic medical records.

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