Health IT tools drive savings but interoperability must advance

Administrative expenses, redundant tests ordered by providers and generally uninformed choices contribute to costs

Key Points

NEW MEDICINES, procedures and treatments contribute to the high cost of healthcare. But administrative expenses, redundant tests ordered by providers and generally uninformed choices also contribute to the escalation.

But to succeed, the healthcare industry needs the right tools, and health plans are spearheading health information technology (IT) initiatives that they believe will deliver substantial qualitative benefits while significantly reducing the cost of care.

IT can be all-encompassing, including such technologies as computerized physician order entry systems, and electronic medical and personal health records. Further downstream, data resulting from IT systems can feed health plan-hosted solutions that allow members to not only see the cost of tests and procedures, but also see their costs at individual facilities.

Everyone agrees IT provides critical opportunities. The greatest benefits are realized, however, when systems are designed to be interoperable.

"The challenge for the industry is to connect all disparate pieces of information, so it is available to everyone," McCarthy says.


Some IT benefits include:

There are numerous studies that show the financial benefits of widespread adoption of IT. In 2005, a RAND Corp. study found that savings and efficiencies from the elimination of duplicate or unneeded lab tests and radiology screenings, better time management by healthcare professionals, the elimination of unnecessary drugs, and other inefficiencies totaled $81 billion a year. This translated to $670 per household per year.

For the median, this would represent 25 % of their total annual out-of-pocket expenses. With the benefits of improved health outcomes included, the total savings could be as much as $165 billion a year, according to the study.