It's time to lay to rest the myth that spending billions on more high tech is the salvation for rising healthcare costs. Some people will peddle any notion to avoid addressing the best way to rein in costs, pushing the insurance companies out of the way with a single payer system.

It's become an article of faith that a national system of electronic medical records would produce huge savings.  President Obama made it a centerpiece of his healthcare plan during the campaign (as did Sen. John McCain), and has emphasized it repeatedly in legislation and speeches.

As a first step, the stimulus bill allotted $17 billion in incentives to prod doctors and hospitals to get on board during a five year period beginning in 2011, along with financial penalties if they don't.

 

The administration has relied in large part on a RAND study claiming savings of $80 billion a year through the nirvana of what Wall Street Journal reporter Anna Wilde Mathews caustically referred to as “whizbang computer systems.” The President cited the $80 billion figure again during the White House health-care summit last week. Or, as White House press secretary Robert Gibbs asserted, “The health IT in the economic recovery plan will make health care more affordable, will save patients' lives, and increase the quality and the outcome of the health care that millions of people are provided.” He might want to take a mulligan. As a series of reports this week make clear, the bloom is coming off the rose. Writing in the Wall Street Journal, Harvard Medical School faculty Jerome Groopman and Pamela Hartzband debunk the received wisdom, noting:

Following his announcement, we spoke with fellow physicians at the Harvard teaching hospitals, where electronic medical records have been in use for years. All of us were dumbfounded, wondering how such dramatic claims of cost-saving and quality improvement could be true.

It's not, they conclude. And they are not alone. The RAND study has been sliced and diced fairly regularly now by, among others, one Peter Orszag, now the White House budget director.

Last May, when Orzag was director of the Congressional Budget Office, CBO examined the Rand report and a parallel study concluding they “appear to significantly overstate the savings for the health care system as a whole — and, by extension, for the federal budget.” Summing it the CBO findings, Orzag concluded that while the technology, in combination with other moves, may help reduce expenses, “by itself it typically does not produce a reduction in costs.”

Another report from Avalere Health, quoted by the Associated Press this week, concludes it will cost providers far more to implement the golden goose systems than they will get back in return.

Using government cost estimates, Avalere researchers found that it would cost about $124,000 for a single doctor or small practice to upgrade to electronic health records over the five year period from 2011-2015 when the stimulus bill offers incentives to do so.

But the total incentive payments a doctor could get over that time period only add up to $44,000. In 2015, penalties start to kick in for doctors who haven't switched to electronic record-keeping. But in one scenario mapped by Avalere, the starting penalty would be $5,100 a year — far less than how much it would cost to install and maintain an electronic health system.

In other words, a pig in a poke. And, that's just the supposed financial benefits. Registered nurses have long raised alarms that some of the technology may be intended to displace staff or an RN's professional judgment, which is especially critical with the complex medical conditions seen in the patients who get through the hospital doors these days, and said those billions could be better spent on actual care delivery. Many doctors, like those in the Journal report, are speaking out now as well. Groopman and Hartzband note “there is no evidence that electronic medical records lower the chances of diagnostic error.” And they point to studies that raise further doubts. For example:

A 2008 study published in Circulation, a premier cardiology journal, assessed the influence of electronic medical records on the quality of care of more than 15,000 patients with heart failure. It concluded that “current use of electronic health records results in little improvement in the quality of heart failure care compared with paper-based systems.”

Another such warning came from MD Scott Haig this week in Time who describes the frustrations of doctors who are forced to use such systems “or risk losing our hospital privileges” if they don't. Yet some big hospital chains are spending billions of dollars for the high tech hype with despite the lack of evidence it will produce either cost savings or improved healthcare. Haig wonders who is really behind it and concludes:

Not surprisingly, nationwide adoption of Electronic Medical Records is being pushed hardest by those who would profit financially from it. The slightly embarrassing financial reality of EMR is that large, mechanized medical operations like hospitals, clinics and big multi-doctor practices stand to make quite a bit of money by adopting them — given our current convoluted system of paying for health care. Two clear factors make EMR a money-winner: improved billing and internal cost control.

And, there's another hook for the insurers here, Haig notes:

Computerized medicine means both more information — and less medicine. Less therapy, less surgery and less testing too. That's how it saves money. A variety of promising terms describe it — terms like targeted treatment, algorithmic patient-care, fiscally responsible medicine and evidence-based practice — but for doctors treating patients, one word describes how computerized records save money. Denial. EMR has the potential to greatly increase insurance company denials of the tests and treatments that doctors order.

Big profits, for the tech corporations that manufacture them, and the software companies that design them. Better bill collection for the hospitals. Improved billing, and fewer nettlesome claims for the insurers whose first priority is always receiving payment, not actually paying for care. Who would have guessed? A boondoggle for some, it looks like, and misplaced priorities for the rest of us.