COMMENTARY
William A. Hyman
Professor Emeritus, Biomedical Engineering
Texas A&M University, w-hyman@tamu.edu
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A persistent theme in EHR adoption is that the use of EHRs will save money. What often goes unsaid is how exactly money will be saved, whose money was it, and who didn’t get the money they would have gotten if it hadn’t been saved by someone else. Savings discussions also gloss over the upfront spending by the U.S. Government (that’s you and me) in incentive payments in order to enable future possible savings among other benefits. Added to that cost is whatever providers have spent above their incentive payments, and will continue to spend to adopt and support their EHRs. The ongoing discussion of the need for new HIT personnel also reflects a cost in salaries for all those folks, assuming that they will not all be volunteers or unemployed.
One element of savings cited for physicians is that they and their practices may become more efficient. Efficiency is a fine thing in the sense of reduced labor, but it doesn’t save any money unless you then need fewer people to do the work, i.e. you reduce your work force or their paid hours. Or everyone might go home early and save a little on utility bills. It has also been suggested that a more efficient practice could take on more patients. This might allow an increased income, but it isn’t a savings. Similarly it has been reported that some providers had increased their income by using the EHR to “improve” coding—which surely isn’t a savings to anyone. However one real savings for providers is protecting themselves from future Medicare payment cuts.
It has also been suggested that patients might spend less time waiting in an efficient office. This might save the patient money if their pay is being docked. Otherwise it isn’t a savings, no matter how nice it is. A possible exception is that an employer as third party payer might reduce lost time if their employees spend less time seeking healthcare. But unless temporary workers were hired to replace them, or fill-in overtime of others reduced, they didn’t save any actual money. And in neither case do such savings offset the provider’s investment in the EHR.
What about reduced duplication of testing? This would in some cases save money for third party payers and some patients. Or, depending on the payment model it might save the provider money if the cost of duplicate tests was being borne by them. However money saved by third party payers and patients represents reduced income for the purveyors of the tests. Assuming the purveyor made a profit on each test performed, their profit then goes down, and given their fixed overhead, the costs of each test might eventually be raised to try to offset the lost income.
Reducing errors as a result of EHR use is also clearly a good thing. And since treating errors, or compensating people for them, is an expense, then someone will save money if errors are reduced. But who saves money depends on who it was that would actually be carrying the cost of the errors. In the case of never events the provider saves money by not having to absorb the cost of further treatment. However for non-never events the provider may be giving up further payments for further care.
Improved health can be a saving for third party payers and/or some patients in that they will require less healthcare. Here too this savings for payers is a reduced income for providers. In fact helping people to be healthier overall is contrary to the business model of hospitals since they primarily depend on people needing their services, i.e. people who are unhealthy. Of course you could try to assign monetary value to health and well being, and then compute a savings based on that value. But this isn’t actually a real money savings, and in most cases the savings will accrue to someone other than the entity that spent the money that enabled the improved health.
Next time you hear about EHRs saving money ask the following questions: How exactly did it save money?; Was it actual money or some other attributed value?; If actual money, who spent less?; and Who didn’t get what they would have gotten if the money had been spent rather than saved?