Healthcare IT: No Quick Cure

Computerization is slowly improving the healthcare system, but it's a long way from living up to expectations.

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McNutt says her hospital's prescription bar-code system is an example of a cost-cutting technology. By eliminating drug errors, it cuts out the treatments that would have been needed if a patient had been given the wrong medicine. McNutt acknowledges that eliminating those treatments saves money for the insurer, not the hospital. But she also points out that the system helps the hospital avoid costly lawsuits stemming from drug errors.

As the government moves toward a new reimbursement model -- one that pushes the cost of treating problems caused by poor care, such as hospital-acquired infections, back onto the providers -- IT systems could deliver even bigger returns, McNutt says.

Still, there's a rub when it comes to calculating return on investment in healthcare IT. Often, the cost savings from the use of technology don't go to the owner of the technology but to another player in the healthcare system, like the insurers.

Stettheimer lays it out this way: A patient comes into the hospital at night with heart trouble. Rather than calling a local cardiologist and waiting for a response, the staff sends test results to offshore medical personnel for an immediate evaluation. That quicker response means treatment can start sooner, often leading to a better and less costly outcome. But in that case, the hospital doesn't necessarily see the financial benefit; the insurance company -- and the healthcare system as a whole -- does.

A CIO at a for-profit company would have a hard time getting approval for an IT investment that saves money for the industry but not for the company.

"The incentives [in healthcare] are not aligned at all. In fact, there are perverse incentives there," Stettheimer points out. "That's very simplified, but it's a problem we need to overcome."

New payment models will help healthcare facilities big and small see the financial rewards of investing in IT, he says. Medicaid and some other insurers are paying healthcare providers by the condition, rather than per treatment or per day in the hospital. Those payment arrangements give doctors and hospitals incentives to deliver the best, most efficient care.

The new payment schemes are more likely to save big bucks than IT advances alone would, Gabriel says. "I'm a big proponent of healthcare IT, but I don't see a lot of evidence that information technology will save the healthcare system money," he says.

The Affordability Factor

Many financially strapped medical facilities have a hard time generating the upfront capital required to invest in IT in the first place. The Harvard study found that small, rural and public hospitals have fallen behind larger, private and urban operations in adopting EHR systems, further widening the digital divide.

Even with the federal stimulus money -- which is just a fraction of what's needed nationwide -- access to capital for IT is a big concern for many medical providers, says Bobbie Wilbur, co-director of Social Interest Solutions, a nonprofit healthcare technology provider. "Affordability is complicated by so many factors. Some just don't have the money. Others might not make it a priority because other needs rank higher," Wilbur says.

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