Health and Human Services' Estimate of Health Care Cost Savings Resulting from the Use of Information Technology Page: 4 of 11
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studies reported savings based on (1) electronically sharing health care data between
providers and stakeholders,'0 which resulted in saving time and avoiding duplicate
tests, and (2) avoiding unnecessary outpatient visits and hospital admissions, as well
as more cost-effective medication, radiology, and lab ordering. Net savings estimated
nationwide are summarized in table 2.
Table 2: Potential Annual Cost Savings from Nationwide Adoption of IT
Category of IT adopted Potential cost savings
Ambulatory electronic health records $78 billion
Ambulatory computerized provider order entryd' b $44 billion
aStudy limitations: (1) the analysis was focused on provider-centric (i.e., no secondary transactions considered) and encounter-
specific transactions between providers and their stakeholders; (2) financial value was based on information exchange and
interoperability between entities, not within entities; (3) model does not take into account the financial impact of avoided tests
and other changes in utilization that flow from improved information exchange; (4) model does not address the costs of
developing relevant standards to support health care information exchange and interoperability; and (5) estimate of cost
savings assumes widespread adoption of IT in order to achieve financial savings within 10 years, with 50% of benefits accruing
in the first year of adoption and increasing by 10% each year.
bStudy limitations: (1) projections are based on a small number of studies, sometimes extrapolating to national figures from a
single data point; (2) CITL did not incorporate any assumptions about volume pricing discounts; (3) CITL did not project any
savings for pharmacies, laboratories, or other affiliated providers who would presumable benefit from improved efficiencies with
better orders; and (4) CITL makes projections for an "average" provider as defined by available national statistics.
eComputerized provider order entry is a software application that supports the ordering of medications, diagnostic tests,
interventions, and referrals by outpatient providers.
Although HHS had originally given us estimated annual federal savings of $30 billion
associated with the Medicare program, in its comments HHS stated that it is unable to
reliably quantify savings. HHS also stated that it is actively working to determine
what the savings will be and expects them to be substantial. Although the available
data make estimating cost savings difficult, according to HHS Medicare would likely
save a proportionate amount from reduced utilization of services for Medicare-
funded office visits (because the program uses volume-based payments for
ambulatory and inpatient care) and from reduced use of medications given
inappropriately or unnecessarily.
The annual cost savings shown above assumes fairly high IT adoption rates, whereas
the current rates are low. According to HHS documents, these savings estimates are
based on the assumption that more than half of all physician practices 11 and hospitals
would use EHRs that are connected to a national health information network.
Therefore, increasing the rates of IT adoption is critical to achieving the benefits
cited. However, the results of the surveys and analyses of adoption rates are varied.
Respondents to two recent surveys reported that only 31 percent of physician group
practices2 and 19 percent of hospitals13 use fully operational EHRs. According to a
iCITL defines providers as hospitals and medical group practices and stakeholders as independent
laboratories, radiology centers, pharmacies, payers, and public health departments.
" According to CMS, in 1999, out of 763,519 physicians in the United States, physicians in solo
practices represented 25 percent, group practices represented 33 percent, and salaried physicians
represented 41 percent.
12 According to the Medical Group Management Association.
'3 According to the 15t Annual Leadership Survey of the Healthcare Information and Management
Systems Society. The respondents to this survey consisted of 86 percent that worked for a hospital
organization and 14 percent that worked in other types of health care delivery organizations.
GAO-05-309R HHS's Estimate of Savings from Health IT
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United States. Government Accountability Office. Health and Human Services' Estimate of Health Care Cost Savings Resulting from the Use of Information Technology, text, February 17, 2005; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc302865/m1/4/: accessed December 15, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.