Healthcare IT is expensive. Just for starters, consider that the per-bed cost to implement EHRs and CPOE runs between $14,000 and $65,000 in the US, according to the federal Office of Management and Budget. Even at the low end of the estimate, that's an astonishing amount of money, and it doesn't include higher-order IT systems such as clinical decision support.
The high cost of IT creates a catch-22 for healthcare leaders already strapped for cash and forecasting declining revenues in years to come. IT systems offer a way—perhaps the only way—to lower healthcare system cost in a sustainable manner. But where do you find the money to invest in IT?
A useful perspective comes from a US–European Union comparison. Jean-Pierre Thierry, MD, MPH, points out that the comparable cost for implementing EHR and CPOE is a magnitude lower in western European countries—under $6,000 per bed, on average, and as low as $3,000 per bed in Germany. Part of the discrepancy comes from higher administrative costs in the US due to the multiplicity of payer approaches and billing systems.
Put differently, it's bureaucracy, but not in the usual sense of the word. The state-organized payment systems in Europe run more efficiently than the maze of homegrown systems in the US.
So is US healthcare spending lacking in ROI? Thierry says there's more to the IT spending gap than simple overhead. "Everyone [in Europe] is looking at the US," he told me in a conversation at the HIMSS conference last week. "Innovation in healthcare is led by the US." Thierry had traveled from France to see some of the latest examples of innovative IT for improving quality and patient safety while controlling costs.
Yet not all healthcare IT has to cost a lot. I spoke with hospital CEO Tom Gregorio, head of Meadowlands Hospital Medical Center in Secaucus, NJ, about his turnaround story. Gregorio led an investor group that purchased Meadowlands in 2010 for $17.5 million from LibertyHealth, which was happy to shed a facility losing $1 million a month.
Technology investments helped Meadowlands turn a profit within a year, Gregorio says. Some of the spending has been on shiny, big-ticket items such as hyperbaric chambers to attract patients and physicians.
But some of the most effective technology investment has been on telemonitoring for population health management. Meadowlands has installed inexpensive monitoring devices in homes and apartments of the elderly and diabetics, among other high-risk populations.
Back to the US-EU comparison: Thierry observes that European health systems are typically fixated on a quick ROI for any technology investment, whereas in the US, "it's not there is no concern with ROI, but [healthcare leaders] are taking the bet to modernize healthcare." The different healthcare entities in the US are free to seek a variety of ways to do things better.
The ROI from telemonitoring is hard to calculate because it comes from so many sources: early warning of serious health problems, avoided readmissions, reduction in chronic health issues, word-of-mouth publicity from patients, and a sense that this hospital serves its community. Yet this relatively low-cost investment could be considered technological innovation of the highest order.
Healthcare organizations are desperately in need of innovative ways to work their way out of the bind of rising costs and decreasing revenues, while staying true to their mission of patient care. Technology investments alone won't solve all ills, but they can enable the solution. Innovation, not ROI, is the necessary benchmark.
Edward Prewitt is the Editorial Director of HealthLeaders Media.
