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The American Journal of Managed Care Special Issue: Health Information Technology - Guest Editor: Farzad Mostashari, MD, ScM
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Financial Effects of Health Information Technology: A Systematic Review
Alexander F. H. Low, MBA; Andrew B. Phillips, RN, PhD; Jessica S. Ancker, MPH, PhD; Ashwin R. Patel, MD, PhD; Lisa M. Kern, MD, MPH; and Rainu Kaushal, MD, MPH
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William E. Encinosa, PhD; and Jaeyong Bae, MA

Financial Effects of Health Information Technology: A Systematic Review

Alexander F. H. Low, MBA; Andrew B. Phillips, RN, PhD; Jessica S. Ancker, MPH, PhD; Ashwin R. Patel, MD, PhD; Lisa M. Kern, MD, MPH; and Rainu Kaushal, MD, MPH
Although health information technology interventions are associated with cost savings and revenue gains, there still are few articles on this topic.
As described above, it was not always explicitly stated which stakeholders benefited from the HIT implementation. Among the 43 articles reporting positive financial outcomes, providers benefited, or appeared to benefit, in 32 articles (74%); payers benefited in 12 articles (28%); society benefited in 5 articles (12%); and consumers benefited in 1 article (2%).

Among 17 outpatient EHR articles, 14 (82%) reported positive financial outcomes, all of which benefited providers. Of the 13 outpatient CPOE articles, 9 (69%) reported financial benefits, 6 to payers, 3 to providers, 2 to society, and 1 to consumers. The 10 inpatient CPOE articles included 6 (60%) reporting positive financial outcomes, all to the benefit of providers. Among the 4 ED HIE articles, 3 (75%) reported positive financial outcomes, all benefiting payers and 1 that also benefited society.

We reviewed the articles to identify any trends among the identified mechanisms of the financial effects. The most widely cited mechanism of the financial benefits was savings on administrative goods and/or personnel (cited by 20 articles), which was mostly driven by outpatient EHRs (Figure 4). A total of 17 articles reported savings on pharmaceuticals, mostly associated with CPOE/CDS (both inpatient and outpatient setting). A total of 14 articles reported provider revenue gains from improved billing coding accuracy, again associated with outpatient EHRs; and 10 articles reported savings associated with reduced adverse drug events mostly attributable to CPOE/CDS (again inpatient and outpatient). Notably, only 5 articles investigated the effect of HIT on costs related to chronic conditions, and only 1 of those 5 articles described financial benefits.

Sensitivity Analysis: Articles With High Study Design Ratings

We conducted a sensitivity analysis to assess whether our results would differ if we included only articles with study design ratings of 1, 2, or 3. The 34 articles meeting the criteria for this analysis included a majority of the inpatient CPOE/CDS articles (8/10 or 80%), outpatient CPOE/CDS articles (10/13 or 77%), and ED HIE articles (4/4 or 100%), but only a minority of the outpatient EHR articles (4/17 or 24%) (Table). A majority of articles (22/34 or 65%) still reported financial benefits (Figure 1). That group included 15 articles (44%) reporting cost savings, 5 articles (15%) reporting revenue gains, and 2 articles (6%) reporting a mixture of cost savings and revenue gains. A majority of articles within each setting category continued to report financial benefits. The most prevalent mechanisms of financial effect in this sensitivity analysis were reductions in pharmaceutical costs (9/34 or 26%) and reductions in costs for general acute or emergent care (7/34 or 21%).

Sensitivity Analysis: Articles Documenting Both Costs and Benefits

We conducted our second sensitivity analysis in which we included only articles with explicit costs and benefits. Twenty-one articles met the criteria for this analysis, including a majority of the articles on outpatient EHRs (12/17 or 71%), but a minority of the articles on outpatient CPOE/CDS (2/13 or 15%) and inpatient CPOE/CDS (2/10 or 20%) (Table). Compared with the original analysis, an even larger majority of articles (19/21 or 90%) reported financial benefits associated with HIT (Figure 1). Cost savings were reported by 10 articles (48%), 1 article (5%) reported revenue gains, and 8 articles (38%) reported both cost savings and revenue gains.

Notably, only 6 articles overall (11%) used both an experimental study design and reported costs and benefits, thus meeting the criteria for both sensitivity analyses. This group included 2 articles on outpatient EHRs, 1 article on outpatient CPOE/CDS, 2 articles on inpatient CPOE/CDS, and 1 article on ED HIE. All 6 resulted in positive financial outcomes, including 4 reporting cost savings, 1 reporting revenue  gains, and 1 reporting both cost savings and revenue gains. Providers benefited in 5 articles (83%) and payers and society both benefited in the other article (17%).

DISCUSSION

The results of our literature review suggest that HIT interventions are associated with financial benefits including cost savings and revenue gains. The majority of articles  (75%) reported financial benefits associated with HIT, and those benefits were consistent across different settings and technologies. However, the current evidence might be best characterized as “incomplete,” because there was a general shortage of studies in this area. Among those articles that did merit inclusion, a large majority did not use either a rigorous study design or financial analysis. It is likely that publication bias played a significant role, limiting our ability to generalize based on available evidence. Few of the articles we found captured the full range of variables likely to be necessary to fully characterize and explain the financial effects of HIT.15 In general, there is a need for more research in this area.

These findings are consistent with previous research. Goldzweig and colleagues8 found a limited number of studies exploring the cost and cost-effectiveness effects of HIT. While there was “some empirical evidence to support the positive economic value of an EHR system,” the authors noted that  projections of large cost savings assume levels of HIT adoption and interoperability that we are nowhere near achieving.”8 Buntin and colleagues13 found that a large majority of the articles exploring efficiency outcomes had positive or mixed-positive results. However, they noted the limitations of publication bias.

Although it is too early to make reliable conclusions about the general effect of HIT, we can conclude that there is growing evidence that HIT applications can reap financial benefits for certain stakeholders when they are successfully deployed according to certain use cases. For example, outpatient providers have used EHRs to realize administrative savings and improve billing coding, and providers in inpatient and outpatient settings have used CPOE/CDS to reduce pharmaceutical costs. However, few studies have yet explored HIT’s longitudinal effect on overall patient-level utilization, such as its effect on patients with chronic disease.5

The major policy question is to what extent the use of HIT can affect general healthcare spending. Based on the evidence here, it is difficult to draw any clear conclusions, especially from a small, heterogeneous group of articles. While a majority of articles reported cost savings of some nature, it should be noted that cost savings to specific stakeholders may not transfer to societal cost savings. Further, only a minority of the articles reported the cost of the HIT intervention, complicating efforts to assess the net economic effect. In addition, several articles reported revenue gains, which at best would have no immediate effect on spending and at worst might increase it. In all, a slim majority of articles reported cost savings alone or in excess of revenue gains. It should also be noted that most of the evidence for significant savings was based on national projections, whose conclusions have been faulted for being based on optimistic assumptions.5

Of course, many experts including HIT advocates have argued that HIT’s potential will only be maximized through new payment and delivery models which encourage the use  of HIT tools to better document, measure, and potentially impact the cost and quality of care.16 At the time the results of this study were being written up, many providers and payers were testing new payment and delivery models, spurred in part by state and federal demonstration projects authorized by the Patient Protection and Affordable Care Act of 2010.17 Meanwhile, the federal government is promoting HIT adoption and use through the EHR Incentive Program, and has often cited HIT’s importance to delivery reform.13 Some research is emerging on the financial effects of these interventions. This is clearly an area that is ripe for research in the coming years.

As these types of payment and delivery models emerge, there clearly needs to be more primary research into the effect of HIT on healthcare spending. This research must take a holistic, objective look at the financial effects not only for providers but also for payers and society as a whole. In addition, there is a need for more research with a strong study design and strong financial analysis to give us more confidence in the findings. For example, few articles used rigorous financial analyses (eg, return on investment, net present value), considered competing investment opportunities, reviewed primary data over multiple years to allow for “lag effects,” or even noted the providers’ reimbursement methods. At a minimum, future articles should clearly state which stakeholders make the investment in the HIT application and enumerate the benefits or losses to that stakeholder and any other stakeholder likely to be impacted.18 

Our study had several limitations. As noted above, it is likely that in some cases, investigators focused on only those outcomes which they anticipated might lead to positive results. In addition, few studies rigorously described their HIT systems, and those that did described heterogeneous applications even within the same HIT application category. It should also be noted that the success of an HIT system can depend on several environmental variables such as provider work flow, availability of support services, and the  level of institutional HIT infrastructure and expertise. Some of our data depended on interpretation, most specifically the classification as to which stakeholder accrued the benefit or loss. Finally, we intentionally focused on financial outcomes, and thus omitted a body of research that investigated HIT’s impact on other efficiency outcomes or other measures of value.19

In summary, this literature review suggests that there is growing evidence that HIT applications can realize financial benefits. However, more research is required, especially regarding HIT’s effect on specific types of healthcare utilization and in concert with new delivery and payment models. In addition,  future research needs to assess costs and benefits from societal, payers’, and/or patients’ perspectives.

Author Affiliations: From NewYork-Presbyterian Hospital (RK), New York, NY; MGH Institute of Health Professions (ABP), School of Nursing,Boston, MA; Department of Public Health (JSA, LMK, RK), Department of Medicine (LMK, RK), Center for Healthcare Informatics and Policy (AFHL, JSA, LMK, RK), Department of Pediatrics (JSA, RK), Weill Cornell Medical College, New York, NY; Robert F. Wagner Graduate School of Public Service (ARP), New York University, New York, NY.

Funding Source: None.

Author Disclosures: The authors (AFHL, ABP, JSA, ARP, LMK, RK) report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (AFHL, ABP, ARP, JSA, LMK, RK); acquisition of data (AFHL, ABP, ARP, JSA); analysis and interpretation of data (AFHL, ABP, ARP, JSA, LMK); drafting of the manuscript (AFHL, ABP, JSA); critical revision of the manuscript for important intellectual content (AFHL, ABP, JSA, LMK, RK); and statistical analysis (AFHL, ABP)

Address correspondence to: Alexander F. H. Low, MBA, Director, Strategy and Development, Center for Healthcare Informatics and Policy, Weill Cornell Medical College, 425 E 61st St, Ste 301, New York, NY 10065. Email: all9050@med.cornell.edu.
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2. Centers for Medicare & Medicaid Services, HHS. Medicare and Medicaid programs: electronic health record incentive program: final rule. Fed Regist. 2010;75(144):44313-44588.

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5. Congressional Budget Office. Evidence on the Costs and Benefits of Health Information Technology: a CBO paper. http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/91xx/doc9168/05-20-healthit.pdf. Published May 2008. Accessed September 5, 2013.

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15. Ancker JS, Kern LM, Abramson E, Kaushal R. The Triangle Model for evaluating the effect of health information technology on healthcare quality and safety. J Am Med Inform Assoc. 2012;19(1):61-65.

16. DesRoches CM, Painter MW, Jha AK. Health Information Technology in the United States: Driving Toward Delivery System Change, 2012. Robert Wood Johnson Foundation. http://www.rwjf.org/en/research-publications/find-rwjf-research/2012/04/health-informationtechnology-in-the-united-states0.html. Published April 2012. Accessed September 5, 2013.

17. 111th United States Congress. The Patient Protection and Affordable Care Act. H.R. 3590. http://www.gpo.gov/fdsys/pkg/BILLS-111hr3590enr/pdf/BILLS-111hr3590enr.pdf. Accessed September 5, 2013.

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