CBO report questions cost savings of healthcare IT adoption

Health IT cost-effectiveness questioned. Source: Healthcare IT 2003

The Congressional Budget Office (CBO) has released an analysis discounting previous projections by policymakers and economic analysts of significant cost savings from adopting healthcare IT, such as EHRs.

The office particularly questioned an estimate of $77 billion a year that appeared in a widely cited RAND analysis, according to the Wall Street Journal (WSJ).

Although the CBO found the potential for savings under certain circumstances – particularly when IT was combined with broader reforms – it found that the technology by itself was typically unlikely to generate sizable financial benefits, the WSJ reported. “By itself, it's generally not sufficient” to reduce costs, said Peter Orszag, CBO director.

The WSJ said that the findings are a challenge to advocates of health IT, who have generally argued that it will improve patient safety and achieve significant efficiencies, cutting down fast-growing healthcare expenses.

Secretary of Health and Human Services Michael Leavitt has also pushed for greater use of technology in the health sector. The Bush administration’s National Coordinator for Health IT (ONCHIT), Robert Kolodner, stated that “cost savings is just one of the benefits of using health IT,” and the “magnitude of savings to be generated is yet to be determined,” the WSJ reported.

According to the budget office report, as of 2006, only 12 percent of doctors and 11 percent of hospitals had adopted healthcare technologies, according to the WSJ.

Richard Hillestad, a senior principal researcher at RAND who was an author of the original analysis, told the WSJ that he disagreed with CBO’s argument that his group overstated the likely savings tied to health IT. Hillestad said he stood by the RAND projections, and indeed feels they may “actually be relatively conservative” because they didn't take into account some potential benefits such as billing efficiencies, the WSJ said.

The WSJ reported that the CBO analysis did not focus on particular bills, and noted how one piece of health IT legislation that has a chance of passing this year is expected to be associated with Medicare savings in the office’s scoring.