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Numbers Get Bigger and Bigger

How much is healthcare connectivity worth? Plenty, according to some calculations. HealthAffairs put the nationwide value of “fully standardized” health information exchange at some $77.8 billion annually—much of it from avoiding unnecessary testing. Building on that princely sum, the Rand Corp. said a wired healthcare industry could save a whopping $162 billion annually by wringing out excess costs and improving disease management.

Both studies acknowledge their conclusions are largely theoretical. “Given the lack of real-world implementation of interoperable systems in healthcare, we found few sources targeting [information exchange] specifically,” note the HealthAffairs authors, from Partners HealthCare System, Boston. But connectivity champions—and vendors—trumpet these studies as though technology were the keys to a magic kingdom of fiscal responsibility in an industry that has ballooned to $1.7 trillion.

I don’t challenge the underlying premise. Clearly the amount of waste and error in the industry that could be eliminated through IT is substantial. During my last X-ray, I wanted to say, “Well, why don’t you just call my chiropractor? He has a whole series.” But it’s not my duty to tell physicians how to run their business.

Nonetheless, I have serious reservations about these presumed Goliath savings. While IT can slash redundant work, it can also reveal work that was previously undocumented and unbilled. Physician practices that implement EMRs often say the technology enables them to justify higher billing levels—and avoid previously missed charges. After it automated, Winona (Minn.) Family Medicine, for one, boosted net income by nearly $250,000 annually among three physicians, noted William Davis, M.D., during the spring 2006 TEPR conference.

On the expense side, IT can clearly reduce overhead—ask a busy radiology unit that has eliminated transcription services by using voice recognition. But where do the savings go? Not back to patients, or to health plans. More likely, they will be reinvested in the newest imaging technology—or perhaps leaky roof repair.

My biggest question is this: Given the inevitable proliferation of healthcare IT, what will the economic landscape of the industry look like? The answer is not yet clear. But watchful waiting—and tabulating—are definitely in order. Those numbers are bound to get even bigger.

—Gary Baldwin