Harvard Researchers: IT Doesn't Reduce Healthcare Costs

President Obama has repeatedly proposed information technology (IT)—for example, the use of electronic medical records—to realize overall healthcare efficiency and savings. But the proposal just isn't true, say Harvard researchers. In fact, their study of computerization and administrative costs at US hospitals, published in today's online issue of The American Journal of Medicine, shows that "more wired" hospitals may have higher total costs than their lower-tech counterparts.

In a survey of 4000 US hospitals,* conducted from 2003 to 2007, the total costs of hospitals with higher calculated computerization scores (measured by the use of computer applications) were significantly greater, at least in one analysis. Hospitals that underwent computerization at a relatively rapid pace sustained particularly high administrative costs. And researchers did not discover delayed cost benefits from computerization—meaning, computerization costs in 2003 were not realized in savings 5 years later.

On the other hand, investigators found that a modest improvement in the quality of healthcare (and in particular, the management of acute MI) may correlate with hospital computerization.

Lead author of the study, David Himmelstein, MD, said in a press release: "Our study finds that hospital computerization hasn't saved a dime, nor has it improved administrative efficiency. Claims that health IT will slash costs and help pay for the reforms being debated in Congress are wishful thinking."

The researchers offer 3 reasons for why IT has failed to decrease hospital administrative costs.

• Potential savings are offset by the costs of purchasing, implementing, and maintaining computer systems.
• The current stage of hospital computerization is not advanced enough to realize healthcare savings.
• The available computer systems focus on coding and reimbursement rather than efficient clinical care.

To realize substantial healthcare savings and quality of care from IT, the authors propose a VA model of care—in which a single-payer program eliminates the need for billing and most internal accounting. Himmelstein and his coauthor Steffie Woolhandler, MD, are affiliated with Physicians for a National Health Program, an organization that supports a single-payer system. 

* Data were derived from the Healthcare Information and Management Systems Society (HIMSS) Analytics annual survey, hospital-submitted Medicare Cost Reports, and the 2008 Dartmouth Health Atlas.