Evidence on the Costs and Benefits of Health Information Technology
May 2008
Preface
Many people believe that health information technology (health IT) has the potential to transform the practice of health care by reducing costs and improving quality. In this paper, prepared at the request of the Chairman of the Senate Budget Committee, the Congressional Budget Office (CBO) examines the evidence on the costs and benefits of health information technology, possible barriers to a broader distribution and use of it in hospitals and clinicians’ offices, and possible options for the federal government to promote use of health IT. In keeping with CBO’s mandate to provide objective, impartial analysis, the paper makes no policy recommendations.
Stuart Hagen of CBO’s Health and Human Resources Division and Peter Richmond, formerly of CBO, prepared the report under the supervision of Bruce Vavrichek and James Baumgardner. Keisuke Nakagawa provided able research assistance. The report benefited from comments by Tom Bradley, Robert Dennis, Keith Fontenot, Holly Harvey, David Moore, Robert Nguyen, Allison Percy, William Randolph, and Philip Webre, all of CBO. In addition, several briefings organized by the Health Information Management Systems Society provided helpful data. A number of outside reviewers also provided comments: Laura Adams of the Rhode Island Quality Institute, Mark Leavitt of the Certification Commission for Health Information Technology, David Cutler of Harvard University, Richard Hillestad of the RAND Corporation, and Douglas Johnston and Eric Pan of the Center for Information Technology Leadership. (The assistance of external reviewers implies neither responsibility for the final product, which rests solely with CBO, nor endorsement of the conclusions of CBO’s analysis.)
Leah Mazade edited the report, and John Skeen proofread it. Maureen Costantino designed and produced the cover and prepared the report for publication. Lenny Skutnik produced the printed copies, Linda Schimmel coordinated the print distribution, and Simone Thomas prepared the electronic version for CBO’s Web site.
Contents
Evidence on the Adoption of Health Information Technology
Evidence on the Benefits of Adopting Health Information Technology
Estimates of the Potential National Savings from Widespread Adoption of Health IT
Evidence on Improvements in Efficiency from Adoption of Health IT
Evidence on Improvements in the Quality of Care from Adoption of Health IT
The Costs of Implementing Health Information Technology
The Cost of Health IT Systems for Physicians’ Offices
The Cost of EHR and CPOE Systems for Hospitals
Possible Factors to Explain the Low Rates of Adoption of Health IT
Challenges in Implementing Health IT Systems
Providers’ Inability to Capture Financial Returns from Health IT
Competition Among Health Insurance Plans
The Federal Role in Implementing Health Information Technology
Options for Federal Efforts to Promote Adoption of Health IT
Appendix: Common Terms in Health Information Technology
1. The Office of the National Coordinator of Health Information Technology
2. The Federal Government’s Activities as a Payer
3. The Federal Government’s Activities as a Regulator and Funder
