Rand pegs health IT savings at $81B a year

Rand has weighed in on the debate over the costs and benefits of adopting electronic health records nationally, concluding that widespread adoption of health information technology could save more than $81 billion a year and improve the quality of patient care.

A Rand report published Wednesday in the journal Health Affairs says the federal government should do more to accelerate health IT adoption. “Actions now, in the early stages of adoption, would provide the most leverage,” the Rand team wrote.

If 90 percent of health care providers used health IT, the report states, efficiency gains would exceed $77 billion per year in the next 15 years. The greatest savings would come from shortening hospital stays, reducing the time nurses spend on paperwork and optimizing the accuracy of medications.

Hospitals and doctors would spend about $7.6 billion a year in a 15-year adoption period to deploy the systems, the Rand team said. They added that the net savings would be at least $81 billion annually at the end of the 15-year period.

Health benefits would include less employee absenteeism, fewer hospitalizations and visits to doctors’ offices, and lower mortality rates. The costs avoided from these outcomes would add up to another $40 billion a year, the report states.

Richard Hillestad, a senior systems analyst and head of the Management Sciences Group at Rand, led the two-year effort to evaluate the costs and benefits of health IT. “A national system of electronic medical recordkeeping could take a significant bite out of health care costs,” he said in a statement. “These systems are expensive, but it doesn’t take long before the benefits surpass the costs.”

However, companion papers in the same issue of Health Affairs questioned the Rand team’s findings. Dr. James Walker, chief medical information officer at Geisinger Health System in Danville, Pa., writes that too many unknowns exist to make accurate estimates of net savings. But he agreed that the benefits would outweigh the costs.

Two associate professors at Harvard Medical School, Drs. David Himmelstein and Steffie Woolhandler, criticized the “hope and hype” that they say has characterized the pro-health IT campaign in recent years.

Clifford Goodman, a vice president at the Lewin Group in Falls Church, Va., wrote that “none of the potential savings of widespread [health IT] adoption are likely to reach the bottom line of national health spending.”

Last year, the Center for Information Technology Leadership in Wellesley, Mass., reported that a national health information network could save the nation about $78 billion in health costs annually.