Centerpiece

Health Information Technology Savings Dwarf Costs over the First 15 Years, Then Keep Growing

Electronic medical record systems offer three kinds of potential benefits: efficiency savings, drug safety, and improved patient health. The charts below compare only the efficiency savings to the total costs of adoption and implementation of electronic medical record systems by 90 percent of U.S. physician offices and hospitals — a gradual process that would stretch over the next 15 years. All figures are in 2004 U.S. dollars.

The higher the adoption rate over time, the greater the savings, thanks to the growing ability of health care providers to connect to an expanding network of interoperable information systems that could support a patient's care wherever and whenever it is needed. At physician offices, annual efficiency savings would rise to $20 billion by year 15; the average annual efficiency savings over the full 15 years would be $11 billion, compared to average annual costs of $1 billion. At hospitals, annual efficiency savings would hit $57 billion by year 15; the average annual efficiency savings over the full 15 years would be $31 billion, compared to average annual costs of $7 billion. Overall, annual efficiency savings would climb to $77 billion by year 15, with average annual efficiency savings totaling $42 billion in comparison to average annual costs totaling $8 billion. While occurring at physician offices and hospitals, the savings would accrue primarily to the insurers that pay for health services.

In year 15, the net savings at physician offices would be $18 billion, and the net savings at hospitals would be $46 billion. The net cumulative savings nationwide over 15 years would be more than half a trillion dollars, or an average of $34 billion a year. Beyond year 15, at a nationwide adoption level of 90 percent or more, the annual efficiency savings would stabilize around $77 billion a year, while the costs of adoption would then decline.

SOURCES:

Extrapolating Evidence of Health Information Technology Savings and Costs, Federico Girosi, Robin C. Meili, Richard Scoville, RAND/MG-410-HLTH, 2005, 108 pp., ISBN 0-8330-3851-6.

Full Document

“Can Electronic Medical Record Systems Transform Healthcare? Potential Health Benefits, Savings, and Costs,” Health Affairs, Vol. 24, No. 5, September 14, 2005, pp. 1103–1117, Richard Hillestad, James Bigelow, Anthony Bower, Federico Girosi, Robin Meili, Richard Scoville, Roger Taylor.