National survey of U.S. hospitals shows information technology has
yielded neither administrative efficiencies nor cost savings
The increased computerization in U.S. hospitals hasn’t made them cheaper
or more efficient, Harvard researchers say, although it may have modestly
improved the quality of care for heart attacks.
The findings, published in today’s [Friday’s] online edition of The
American Journal of Medicine, contradict claims by President Obama and
many lawmakers that health information technology (health IT), including
electronic medical records, will save billions and help make reform
“Our study finds that hospital computerization hasn’t saved a dime, nor
has it improved administrative efficiency,” said lead author Dr. David
Himmelstein, associate professor at Harvard Medical School and former
director of clinical computing at Cambridge Hospital in Massachusetts.
“Claims that health IT will slash costs and help pay for the reforms being
debated in Congress are wishful thinking.”
The study uses data from the most extensive survey ever undertaken of
hospital computerization. Data from approximately 4,000 hospitals for the
years 2003 to 2007, including those on a list of the “100 Most Wired,”
were analyzed for evidence of increased quality, cost savings or
improvements in administrative efficiency.
The data came from the authoritative Healthcare Information and Management
Systems Society (HIMSS) Analytics annual survey of hospital
computerization; Medicare Cost Reports that virtually all hospitals submit
annually to the Centers for Medicare and Medicaid Services (CMS); and the
2008 Dartmouth Health Atlas, which compiles CMS data on costs and quality
Although the researchers found that U.S. hospitals increased their
computerization between 2003 and 2007, they found no indication that
health IT lowered costs or streamlined administration, even in the “most
wired” institutions. While U.S. hospital administrative costs increased
slightly, from 24.4 percent in 2003 to 24.9 percent in 2007, hospitals
that computerized most rapidly actually had the largest increases in
administrative costs. (By way of comparison, older studies have estimated
administrative costs in Canadian hospitals at 12.9 percent).
The study found no evidence of lagged effects, e.g. lower costs in 2007
resulting from information technology introduced in 2003.
Modest quality gains were noted in the treatment of heart attacks (acute
myocardial infarction) in more-computerized hospitals, but even these
small improvements may merely represent better documentation rather than
actual gains to patients.
Himmelstein said a report from the Congressional Budget Office in 2008
signed by Peter Orszag, now Obama’s budget director, expressed skepticism
about claims by the RAND Corp. and others that health IT could generate
$80 billion annually in savings.
“Part of the CBO’s skepticism was based on the limited information
available to the RAND study and similar studies,” Himmelstein said. “But
this new, detailed, national survey of diverse hospitals shows such doubts
are well-founded. Information technology can’t rescue us from our national
health care crisis.”
Dr. Steffie Woolhandler, professor of medicine at Harvard and study
co-author, said several factors may explain why health IT has failed to
reduce administrative costs.
“Any savings may have been offset by the costs of purchasing and running
new computer systems,” she said. “In addition, most software is designed
around the accounting and billing needs of hospitals, not the clinical
She noted that a computer success story in recent years has been at the
Veterans Administration, where global budgets eliminate most billing and
internal cost accounting, allowing physicians to focus instead on
“The VA system now has our nation’s highest quality and patient approval
ratings,” Woolhandler said. “Congress should take note: to get the most
benefit from our health care dollars and from health IT, we should adopt a
single-payer, Medicare-for-all program. Nothing short of that will allow
us to reap the full potential of computerization or to provide
comprehensive, quality and affordable care to all.”
Obtain Medical Specialty Own-Occupation Disability Insurance On-line