September 19, 2009

Electronic Health Records 'Savings'

By Gerald T. Riess

Electronic Health Records (EHR) have been touted as a means of lowering health care costs. Although EHR can save money, the way this will happen has not been honestly explained. It is just assumed that using computers is more efficient and costs less. The savings which could be made in reduced use of paper, document storage, and transcription costs are trivial. The real savings in EHR comes from the government or private insurers deciding which care best fits their model of cost efficiency.

It is standard procedure for a patient to grant insurers (including Medicare) access to their health information that can then be used to approve or deny claims*. The logistics of reviewing paper records has limited this practice until now. In an EHR system all patient information is stored in a computer file. The government (in the case of Medicare/Medicaid) or private insurers have full access to these files electronically. They can use patient information such as age, prognosis, diagnosis, and genetics to decide if a treatment or test ordered by a doctor will be approved. Algorithms based on health outcomes research and evidence-based medicine are loaded into computers which then assess every treatment and test for cost efficiency.

Proponents of EHR point to savings obtained from decreased use of paper, transcription costs, and document storage. Hhowever these savings are trivial in 2.4 trillion dollar health care system. For example, in order to save 500 billion dollars (as President Obama has claimed as part of his health care reform legislation) in paper we would have to currently be collecting 114 pages of medical text on each person in the United States every day. 500 billion dollars in transcription cost savings would be obtained if we laid off every transcriptionist in the country and their average annual salaries were 2.8 million dollars. Each doctor would have to have about 8,200 square feet of medical records stored in their offices in order to save 500 billion dollars (a typical doctor's office has a total of 2000-3000 square feet). These numbers all come in at about a thousandth or less of the cost savings we are told will be needed. Clearly any meaningful savings will come elsewhere.

EHR saves money by using computer algorithms to override the medical decisions of doctors in favor of less expensive alternatives. A patient will be asked to trust the government or insurance company (more than the judgment of their own doctor) to know what is best for them. This is an intrusion into the doctor-patient relationship that most people will find unacceptable.

Politicians pushing the use of EHR must be asked to explain how the system will save money and specifically what criteria the algorithms will use for denying care. A thorough understanding of the details of EHR is essential to making informed decisions about proposed health care reform.

*Medicare & You Handbook 2009, Centers For Medicare and Medicaid Services, p.92