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Inside the Democrats' HIT Savings Claims

August 28, 2008
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The following will be included in the next issue of my bi-weekly Healthcare IT Value Digest (let me know if you'd like a free subscription):

The Democratic National Platform committee says that cutting costs and eliminating waste in the healthcare system would save the average family "up to $2,500 per year". These savings would come from “…state of the art health IT systems, privacy protected electronic medical records, reimbursement incentives and an independent organization that reviews drugs, devices and procedures to ensure that people get the right care at the right time."

Our Take

Next week the Republicans will raise the savings estimate to $3,000 per year ;^).

But seriously, where did the Democratic figure come from? The first two items on their list are health IT, although more privacy protection could actually increase costs. Reimbursement incentives could certainly help cut costs, and it sounds like the independent review organization would determine which therapies were most cost-effective and encourage their use.

We searched for but did not find any details to back up the Democratic cost savings calculations. That may mean that there aren't any, or that they don't want to be held to the specifics, but here are two likely sources for their health IT-related cost savings estimates:

The Center for Information Technology Leadership has done several studies of the value of health IT, including:

Ambulatory CPOE: "Nationwide adoption of advanced ACPOE systems will save the US healthcare system approximately $44 billion per year in reduced medication, radiology, laboratory, and ADE-related expenditures."


Healthcare Information Exchange and Interoperability: "...standardized HIEI would deliver $77.8 billion in annual savings in the United States...Providers would realize annual new returns of $33.5 billion with full implementation of standardized HIEI. Other stakeholders...would also benefit..."

IT Enabled Diabetes Management: "Electronic diabetes registries used in physician offices can save a net of $14.5 billion in diabetes-related costs over 10 years."

Provider to Provider Telehealth Technologies: A hybrid telehealth model that combines store-and-forward and real-time video can save $3.61 billion annually. "In addition...a reduction in patient travel from mileage costs alone could save $912 million."

The RAND Corporation has authored several high-profile studies on the value of health IT, including:

Richard Hillestad, J. Bigelow, A. Bower, F. Girosi, Robin Meili, Richard Scoville, and Roger Taylor, "Can Electronic Medical Record Systems Transform Health Care? Potential Health Benefits, Savings, and Costs," Health Affairs, Volume 24, Number 5, September/ October 2005. "Annual savings from efficiency alone could be $77 billion or more. Health and safety benefits could double the savings... Implementation would cost around $8 billion per year, assuming adoption by 90 percent of hospitals and doctors' offices over 15 years."


Anthony Bower, The Diffusion and Value of Healthcare Information Technology, MG-272-1-HLTH, Santa Monica, CA: RAND, 2004.


James H, Bigelow et al., Analysis of Healthcare Interventions That Change Patient Trajectories, MG-408-HLTH, Santa Monica, CA:

RAND, 2005.


Katya Fonkych and Roger Taylor, The State and Pattern of Health Information Technology Adoption, MG-409-HLTH, Santa Monica, CA: RAND, 2005.


Federico Girosi, Robin Meili, Richard Scoville, Extrapolating Evidence of Health Information Technology Savings and Costs, MG-410-HLTH, Santa Monica, CA: RAND, 2005.

In addition, the author of the first of these reports, Richard Hillestad, recently testified before the Senate Finance Committee (see the transcript).




You're very respectful to look for the basis of the dems claims. 

Following your leadership, I looked here: ( ) and concluded that they simply estimated that 20% of healthcare costs are waste that can be eliminated. Their reference to IT is interesting.

Per your research, was there any reference to NHIN, CCHIT, AHIC, or any of the other thoughtful work to improve healthcare delivery through IT?

You've done some great research on this. Personally, I have an issue with the dems promising "privacy protected electronic medical records". If they're going to tout something like that, I want to how that's going to happen. One of the biggest concerns the public seems to have about EMRs is the privacy component (and who can blame them with what's happening in California).
So I'd like to see a proposal for how EMRs can be protected. Thoughts, Barack? Joe?

In response to Kate's point, I've raised the privacy issue here, in a blog post "Privacy is an illusion, you have none, get over it," earlier this week.  If we're going to protect privacy, we have to define what that means, in comparison with the general consumer view of privacy.  That's unlikely to be a political attractive thing to do in this election season.
We need to develop language for this.  What's different about EMR privacy protection from lay public's notion of privacy (largely based on general commerce, health care is more nuanced as follows):
Privacy for Conditions:
-infectious disease (especially sexually transmitted disease),
-behavior issues like substance abuse, and more
-pure psychiatric issues, have privacy implications that go well beyond the consumer view of privacy.
Conditions have tell-tales throughout an EMR, including tell-tale medications, lab results, referals, and, heaven-forbid, free-text comments!
Privacy for Trust:  privacy protected EMRs, in the age of PHR's and "trusted third parites" and their transactions again raise language requirements to talk in the public forum (e.g. political) about privacy, and trust concerns.  What do we have today? auditing, HIPAA imposed sanctions, employer sanctions, etc.
Thirdly, there are Privacy-related policy issues.  Does a care provider have a right to know that there is privacy-protected information that is not being disclosed in the EMR?  Is there a 'break the glass' provision for ERs using EMRs?  Can we provide public health bio-surveillance view of information while simultaneously assuring anonymization?  And, can we assure that we can break the anonymization?  Are the later two actually mutually exclusive, despite assurances otherwise?
I know that HCI blog readers are already familiar with these issues.

This month's issue of Scientific American (September 2008) is devoted to privacy, including some healthcare issues and genomics.  There's a lot there on privacy.  Esther Dyson's article is a great, high-level, 'break the code' piece.
We spend nearly a half day at AMDIS recently (July 2008), with about two dozen, highly accomplished CIOs, CMIOs, and others looking at what will be required to assure privacy protected EMRs, in an era of PHRs (tethered and otherwise). 
Dr. Howard Landa (Kaiser) facilitated the session.  To my knowledge, as of 2008, there is no imminent concensus to be released from this discussion. 
Society as a whole has just become aware of the issues, to the extent they're tracking on MicroSoft and Google's recent moves, and their partnering relationships with providers, insurers, and ecosystem implications.  Given the US healthcare and payment model, this impacts employers, immigration, government, military, religious, and many other institutions and stakeholders. 
If you're point, Kate, is that privacy protection of EMRs should not be a political topic, I hope I've further validated that in a substantive way! 
So, Doug, Kate and Anthony, any political party looking to differentiate themselves on HIT Savings Claims, or broader healthcare issues is unlikely to be able to use 'privacy' to do so.   
Kate already said it best [paraphrasing]: As leaders, we owe the debate a little heat for [our] smaller fish!

let's give credit where credit is due -- Vince Ciotti took the Dems to task on this on August 19 -- though Doug, you've done much more homework
let me try and keep my political opinions under wraps and just say I agree with everyone's skepticism -- this is right up there with planning to spend $150 billion over 10 years on ANYTHING --- how does one actually come up with a number like that -- why not $100 billion, why not $200 billion? When I tell my boss that I'd like to do a business trip for $2000, I'm asked for my "build" on that number -- Doug -- I think you rightly question the "build" on the $2500.
Maybe I've let my political bais come through ... oh well. It's a political season.


What I originally set out to do was to critique the details of the savings estimates. I read the platform, and I googled a few different word combinations to try to find an explanation of how the figures were estimated. I couldn't find anything. That doesn't mean it's not there somewhere, but it doesn't seem like the Dems are trying to start a conversation about the details. This isn't political - I doubt the Republicans have anything better in their platform. But that would be another article.