Working Out if Health IT is Worthwhile and Adds Value.

The following useful discussion appeared a few days ago

The quest for value

By Nancy Ferris

Peter Orszag, an economist and director of the Congressional Budget Office, has a high-deductible health insurance plan and a health savings account. But making those purchasing decisions wasn’t easy, he said.

“It is often difficult as a nonmedical professional to determine what is or is not valuable,” Orszag recently told the House Budget Committee.

Experts are struggling to make the same determinations about health information technology. As part of its mission to attach a dollar value to every bill Congress acts on, CBO issued a report in May questioning the value of health IT.

“No aspect of health IT entails as much uncertainty as the magnitude of its potential benefits,” the report states.

Although health IT could enable changes to U.S. health care, it has little value on its own, Orszag said. Without other reforms, “it doesn’t generate the kind of results many people would hope for,” he added.

CBO’s report questioned an often-quoted 2005 Rand study that estimated the value of health IT to be $80 billion in annual savings once 90 percent of hospitals and doctors adopt it. CBO took issue with Rand’s methodology and conclusions.

Lead researcher Richard Hillestad has appeared before Congress several times to defend the Rand study. He said the $80 billion savings level might be delayed for 10 to 15 years based on the slow rate of health IT adoption, but he stuck with the estimate.

However, he added, “the potential savings we calculate are spread among stakeholders — insurers or payers, providers, and individuals — so such savings are not necessarily savings the government might realize from programs to enhance the adoption” of health IT.

Orszag and Hillestad agreed on one thing: In Hillestad’s words, “The broad adoption of [health IT] systems and connectivity should be considered necessary but not sufficient steps toward real health care transformation that delivers efficient and effective care at the right time.”

In other words, health IT could be the basis for desired changes in health care.

A public good? That’s something many state and federal policy-makers have begun to recognize. Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, said last month, “Health IT adoption is likely to be a key component of health care reform.”

But he and others continue to wrestle with questions of who will benefit from health IT and who should pay for it. Some experts are urging them to view health IT as a public good, comparable to the interstate highway system or state universities.

“The financial benefits…may be very large, but many of the benefits may accrue to society,” said Dr. David Westfall Bates, medical director of clinical and quality analysis at Partners HealthCare System in Boston.

CBO endorsed the concept in its report, stating: “The technology has some characteristics of a public good — that is, a good that would be provided in a less-than-optimal amount by private markets if the government did not intervene.”

Much more here:

http://www.govhealthit.com/blogs/ghitnotebook/350530-1.html

Nancy Ferris also provides some useful additional information here with a range of sidebar lists.

http://www.govhealthit.com/print/4_20/features/350520-1.html

Peter Orszag from the Congressional Budget Office (CBO) has had a long interest in health care costs.

See:

http://aushealthit.blogspot.com/2008/02/useful-and-interesting-health-it-links_10.html

and

http://aushealthit.blogspot.com/2008/06/useful-and-interesting-health-it-links_22.html

The report being discussed is found here:

http://www.cbo.gov/ftpdocs/91xx/doc9168/HealthITTOC.2.1.htm

The core point in this discussion relates to the distribution of benefits when Health IT is purchased and implemented. Sadly those who incur most of the expenses are not those who receive direct benefits – hence the argument that Health IT does not provide good value.

However, if the total impact of Health IT is assessed that argument simply does not stack up. Read the long blog entry for the details. It is important to understand the value linkages in this domain to put coherent arguments for adoption.

The following paragraphs from late in the second Ferris article make this point clearly.

“That failure to get the ROI relates very clearly to my losing my job,” Mingle said. Officials reorganized the IT staff and eliminated his position, and though they offered him another job, he chose not to accept it.

“There’s a belief that you install a system like this and the ROI accrues to you passively,” Mingle said. “It doesn’t. It’s not a passive thing.”

“To really make it work, you have to start handling your patients differently, start handing off your work to one another differently, and even redistributing the work among the people there and building new skills in the people there,” he said. “And if you don’t do that, those key returns on investment become elusive.”

Orszag made a similar point, although he was speaking as an economist assessing the big picture. “If you just plop a health IT system down in the middle of a fragmented [health care] system, with financial incentives that encourage more care rather than better care and without a system for using the information that is coming out of the health IT structure to improve quality, you are not going to get very much,” he said.”

The basic truth is that pure cash based ROI is not the way to think of health IT. It is the process, quality and safety benefits – which are non-cash – that really matter and which save lives. The mix of cash neutral and additional quality and safety makes Health IT a no-brainer.

The concept of a ‘value case’ rather than a pure business case is where our thinking now needs to be!

Two useful efforts indeed!

David.