A new study of cost data for 4,000 hospitals contends there is no evidence that computerization has lowered costs or streamlined administration. The study, published Nov. 20 and based on data from 2003 to 2007, also claims there is no strong evidence that increased computerization leads to increased quality.

Further, hospitals that increased their computerization more rapidly had larger increases in administrative costs, according to researchers from Cambridge Hospital/Harvard Medical School and Partners Healthcare System in Boston.

The report comes as federal officials prepare to implement rules to offer billions of dollars in Medicare and Medicaid incentive payments to providers that implement and "meaningfully use" electronic health records. The funds are authorized under the American Recovery and Reinvestment Act with the stated goal of reducing costs and improving quality.

"We used a variety of analytic strategies to search for evidence that computerization might be cost-saving," according to the report, published in the American Journal of Medicine. "In cross-sectional analyses, we examined whether more computerized hospitals had lower costs or more efficient administration in any of the five years. We also looked for lagged effects, that is, whether cost savings might emerge after the implementation of computerized systems. We looked for subgroups of computer applications, as well as individual applications, that might result in savings. None of these hypotheses were borne out. Even the select group of hospitals at the cutting edge of computerization showed neither cost nor efficiency advantages. Our longitudinal analysis suggests that computerization may actually increase administrative costs, at least in the near term."

The authors analyzed data from the HIMSS Analytics annual survey of hospitals' computerization; Medicare Cost Reports, submitted to the Centers for Medicare and Medicaid Services; and the 2008 Dartmouth Health Atlas, which compiles CMS data on the costs and quality of care that hospitals deliver to Medicare patients. HIMSS Analytics provided its data free of charge but played no role in analysis or interpretation of the data, according to the report.

The report also painted a spotty portrait of quality improvements associated with computerization, primarily by citing previously published studies. "Although optimal computerization probably improves quality, it remains unclear whether the systems currently deployed in most hospitals achieve such improvement."

The report gives three interpretations of why information technology has failed to decrease administrative or total costs:

Savings may be offset by the expenses of the computer systems;

Computerization may eventually yield cost and efficiency gains, but only at very advanced stages; or

The potential to improve efficiency is unrealized because the commercial marketplace does not favor optimal products. "Coding and other reimbursement-driven documentation might take precedence over efficiency and the encouragement of clinical parsimony."

The report concludes: "Whatever the explanation, as currently implemented, health information technology has a modest impact on process measures of quality, but no impact on administrative efficiency or overall costs. Predictions of cost-savings and efficiency improvements from the widespread adoption of computers are premature at best."

The report authors are David Himmelstein, M.D., associate professor at Harvard Medical School and former director of clinical computing at Cambridge (Mass.) Hospital; Steffie Woolhandler, M.D., professor of medicine at Harvard Medical School; and Adam Wright, PhD, of the Clinical Informatics Research and Development unit of Partners Healthcare System.

Himmelstein and Woolhandler are leaders of the Physicians for a National Health Program organization that supports a single-payer health care system. The organization issued a press release noting some report findings and including comments from Himmelstein and Woolhandler supportive of a single-payer plan. The organization also made embargoed copies of the report available to reporters before publication. A reading of the report found no advocacy for a single-payer plan.

The report, "Hospital Computing and the Costs and Quality of Care: A National Study," soon will be available at amjmed.com.

This article can also be found at HealthDataManagement.com.

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