Researchers: Costs Of Electronic Health Records Could Hit $200 Billion
The administration disputes the estimates, but the question remains over
who will pay to create President Bush's proposed national e-health network.
By Kevin Freking
Associated Press
Aug. 2, 2005
http://www.informationweek.com/showArticle.jhtml;jsessionid=4YPSXTHBD3VLUQSNDBGCKHSCJUMEKJVN?articleID=167100029
WASHINGTON (AP)--President Bush's proposal to create a national network of
electronic health records could cost more than $200 billion initially to
build and operate, researchers said Monday.
The health care industry itself, based on current estimates, will cover
less than 20 percent of that amount.
"These findings suggest that policy initiatives are needed if we are to
close this gap," said a study published in the Annals of Internal Medicine.
The government doesn't necessarily have to come up with the difference, the
researchers said.
"I don't see them as having to foot the bill," said the lead author, Dr.
Rainu Kaushal. "They can create the incentives. Then the private sector can
run with it."
For example, the federal government could increase reimbursements for
doctors who use electronic record keeping for their Medicare and Medicaid
patients. That could prompt smaller physician groups to make the sizable
investment that is often required for computer systems.
In recent years, many in the health care industry have already made the
transition from record keeping systems based on paper files to ones based
on computers. Experts say the new electronic systems save lives and money.
Members of Congress and the Bush administration, urged on by the health
care sector, want to hasten that transition. So researchers tried to
project how much it would cost. Their work was jointly funded by the
Commonwealth Fund and the Harvard Interfaculty Program for Health Systems
Improvement.
The researchers estimated that it would cost $156 billion to build the
system and $48 billion annually to run it.
"We know it's expensive," said Dr. David Brailer, appointed by Bush to
coordinate the government's efforts for improved health information
technology.
"We know it's in the billions of dollars, perhaps in the tens of billions
of dollars, and possibly even the hundreds of billions," Brailer said. "But
the principle question is not how much it is. It's how do we create
incentives to involve the private sector and prevent the federal government
from financing it all. We want it to be market-driven."
The United Kingdom has allocated about $14 billion to build a health
information network. Canada has invested about $1.2 billion--an amount the
researchers said likely would have to be increased.
Because the United States may make a sizable investment, researchers sought
to flesh out the structure of a model system, as well as its costs.
First, the researchers relied on a panel of health care officials to give
them minimum standards that a model network must meet. For example, a
doctor in Denver should be able to load information into a computer that
could subsequently be viewed and updated by a nursing home in Orlando.
The researchers also determined the type of facilities that should have
access to the network. Those selected were doctor's offices, hospitals,
pharmacies, clinical labs, nursing homes, and home health agencies.
Then they projected what it would cost to make the network available to the
slew of providers around the country.
A major barrier to widespread implementation of a health information
network is that costs are incurred by a few, but the benefits are spread
out to the many.
"Institutions tend to invest in areas with direct financial benefits to
themselves, such as new equipment or facilities," the authors of the report
said. "It seems unlikely that the private sector will move forward rapidly
to adopt (information technology) without public sector investments or
incentives."
Brailer noted that the researchers relied on expert estimates--not primary
data.
He estimated that the current spending throughout the federal government on
health information networks totals about $4 billion a year. He believes the
estimate of $156 billion in startup costs and $48 billion in operating
costs to be on the high end of what the system would actually total.
Brailer and Kaushal said the investments in electronic record keeping are
occurring mostly with large hospital systems.
"It's not happening in small hospitals or small offices, which is the
majority of the market," Brailer said. "Adoption is heavily weighted toward
large organizations, and we want to see it made a more level playing field."
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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