Health IT experts urge investment
- By Bob Brewin
- Oct 15, 2004
It will take an investment of $500 billion to $700 billion in health care information technology systems during the next decade to meet President Bush's goal of using technology to wring some 20 percent out of the nation's annual $1.7 trillion health care bill.
That's the view of top executives of health care IT vendors and hospital chief information officers, who said the $500 billion figure represents a 3 percent investment of total industry revenues into IT and the $700 billion figure represents a 4 percent investment. Both figures are lower than in industries such as finance and manufacturing, which plow between 5 percent and 7 percent of their revenues into IT.
John Hummel, senior vice president of IT at Sutter Health in Sacramento, Calif., agreed with Bush's comments during the Oct. 13 presidential debate that health care IT is stuck in "the buggy and horse days" with much of the health care system running on paper in a digital era. The country will have to make multibillion-dollar investments in health care IT to meet the goal set by the Bush administration to create a national health information infrastructure, which includes developing an electronic health record for all Americans, Hummel said.
Sutter Health officials plan to invest more than $1 billion during the next decade to give the 41,000 employees and 34,400 doctors who work in its 27 northern California hospitals access to advanced IT systems, including electronic records. Infrastructure investments include installing PCs connected to wireless networks beside every one of Sutter Health's 5,800 hospital beds, Hummel said.
The equipment will be used to match bar codes on drugs with electronic prescriptions for patients, so the nurses can be certain the right patient gets the right drug at the right time, Hummel said. This technology has been used in many industries for decades, he added.
Mike Kappel, senior vice president of strategic planning at McKesson Corp., a San Francisco-based health care IT vendor, said the government must invest at least 3 percent of health care revenues in IT systems to meet Bush's goals. Although the investment is big, so are the potential payoffs, Kappel said. An integrated, national health care IT system can slash administrative costs and cut wasteful and duplicative practices.
Funding is just one issue for the health care system, Hummel said. Creating electronic databases to store the medical information of 300 million people and developing networks to link doctors and hospitals nationwide are tasks he views as more complex and challenging than NASA's efforts to put men on the moon in the 1960s.
In July, Tommy Thompson, secretary of the Department of Health and Human Services, estimated that nationwide adoption of electronic health records could cut 10 percent — or $170 billion a year — from the country's annual health care bill.
Officials at the United Kingdom's National Health Service have a 10-year plan to provide 50 million patients with electronic health records accessible by 30,000 doctors and 270 providers in England. Late last year, they awarded $11 billion in contracts to develop a health care IT infrastructure, and they said last week they anticipate spending up to 4 percent of their annual $162 billion budget on health care IT. That means the country will spend an additional $64 billion on a nationwide health IT system during the next decade.
David Sides, who manages United Kingdom operations for Cerner Corp., a Kansas City, Mo.-based health care IT vendor, believes the U.S. government must spend 4 percent of health care revenues to meet Bush's goals. But payoffs from automating paper processes can be realized quickly, he added.
Cerner is automating a paper- and mail-based patient referral system for the National Health Service, which mails millions of letters a year. The savings in postage alone will cover much of the cost of automation, Sides said.
Kappel said the health care industry — including insurers and the federal government — still need to decide who will pick up the nearly $1 trillion health IT tab. He anticipates substantial investment by the federal government, which has the most to gain because it pays 35 percent of the national health care bill. But, he added, insurers also need to help hospitals and doctors amortize their health IT spending through pay-for-performance incentives.
Pat Wise, director of electronic health record initiatives for the Healthcare Information and Management Systems Society in Chicago, said much of the payback from using advanced health IT systems cannot be measured in dollars but by the use of the technology to eliminate serious medical errors and improve patient care.
"You can't put a price tag on that," Wise said.