Report: Electronic Health Records May Not Be Good Cost-Cutter

Published May 31, 2016

A report by the National Center for Policy Analysis, Health Information Technology: Benefits and Problems, questions the feasibility and purported advantages of a national electronic health record (EHR) system.

The paper focuses on the intended results of provisions in the American Recovery and Reinvestment Act (ARRA) signed by President Obama in February of 2009, which included guidelines for incentives starting in 2011 and penalties beginning in 2015 from Medicaid and Medicare for physicians, hospitals, and other providers for implementing or failing to implement EHR systems.

ARRA also instructed the Office of the National Coordinator for Health Information Technology within the Department of Health and Human Services to helm the creation of a nationwide Health Information Technology (HIT) system.

‘A Fundamental Tension’

The system was promoted as a method of increasing security of medical records, reducing health care costs, and improving quality and interoperability between medical establishments. But the study’s lead author, NCPA Senior Fellow Devon Herrick, expressed doubts.

“I don’t think the government has a good track record of imposing its will from the top down with systems that will meet the needs of those at the bottom that are expected to use it,” said Herrick. “Our conclusion is you have to get the incentives right, and that’s not always easy under our third-party payment system.”

Herrick and coauthor Linda Gorman, also a senior fellow at NCPA, found deeper flaws in the proposed system of health records which put it intrinsically at odds with some of the goals of HIT visionaries.

“The first thing we need to do is have a very clear notion of who owns these medical records and who has the right to make changes to them,” said Gorman. “Historically it has been physicians, because the records have existed only for physicians to make decisions about patient care. These records have historically been separate from billing records. With the advent of major government payments, there has been pressure to combine them.

“There’s a fundamental tension between records for patient care and records for billing, and that tension’s got to be resolved,” she added.

Savings Claims Disputed

The authors found claims of savings to be realized from a broad shift to HIT may have been greatly exaggerated. The Congressional Budget Office (CBO) found potential for savings of $78 billion annually, but Gorman sees these massive savings claims as baseless.

“Why is the government making these windy claims that if we let them run medicine we’ll reduce medical costs? There’s not a shred of evidence that indicates that is correct, and yet it’s the main reason everybody is pushing for these databases,” said Gorman.

The lack of an established model for large-scale implementation of HIT networks contributes to the uncertainty of perceived benefits. Herrick argues established HIT systems that function with any efficiency do so because they involve incentives outside the third-party payer model. Domestically Herrick notes, the Department of Veterans Affairs (VA) and Kaiser Permanente have established EHR and HIT systems.

“These [institutions] function as the insurer as well as the provider,” said Herrick. “For every dollar they save in treatment costs, it’s a dollar they don’t have to cough up, so there’s an incentive to be more efficient.”

Implementation Can Be Costly

Herrick stresses the important role incentives play, pointing to existing situations where there are incentives not to integrate an HIT system.

“If you go to a hospital and say you need to install this really complex health information system that stores records electronically and checks for redundant medical tests to make sure a test wasn’t done down the street at another doctor’s office, you’re basically asking a hospital to invest in a system that will take money out of its pocket,” said Herrick. “It’s pretty hard to browbeat institutions into doing things that are not in their best interest.”

Security Concerns Cited

Gorman believes security also will remain a concern under any system.

“The United Kingdom is the farthest along of anybody in advancing HIT, but somebody just stole the Prime Minister’s medical record from their emergency care database. It contains information about drug allergies and so forth,” said Gorman. “They don’t know how to secure the data despite having an advanced, nationalized HIT system.”

Calling for Frank Debate

While expressing significant reservations, the authors do cite examples of the benefits of an efficient HIT system. In the VA, doctors could not find patients’ records 40 percent of the time before the transition to EHRs, a problem that has virtually been eliminated.

But given the potential pitfalls, Gorman calls for debate and careful examination of potential drawbacks before the government moves forward with a massive overhaul.

“What we do know is that very large physician practices in hospitals are using HIT systems and they do work,” says Gorman. “But the new problems they generate are going to take time to figure out, and we must consider whether these new problems are worth it. If the government is putting its hands on the scale saying you have to do it, then those problems aren’t going to be looked at.

“We have to get away from repeating these mantras and look at real data,” she concluded.

Rob Goszkowski ([email protected]) writes from San Francisco, California.

Internet Resources

Health Information Technology: Benefits and Problems:

American Recovery and Reinvestment Act: Explanation of Health Information Technology (HIT) Provisions: