Why electronic health records failed

January 11, 2013

Back in 2005, researchers at the influential RAND Corp. made an optimistic prediction: Digitizing electronic medical records could save the health-care system at least $81 billion annually.

The savings were significant but not unreasonable: It would represent less than a 1 percent cut to health-care spending, much smaller than the 1.5 percent efficiency increase the retail sector saw when it went digital.

Seven years later, those savings have not materialized. Health-care costs have grown by $800 billion, tracking closely to projected increases, ones that did not account for increased adoption of electronic records. 

"Critics of the RAND team’s analysis can claim a measure of vindication," RAND's Arthur Kellerman and Spencer Jones write in a new Health Affairs article. "Although the use of health IT has increased the quality and efficiency of patient care are only marginally better. Research on the effectiveness of health IT has yielded mixed results." 

So, what went wrong? Kellerman and Jones highlight a few ways electronic medical records didn't play out as expected. 

To start, doctors didn't adopt electronic records as widely as expected. RAND researchers expected that about 90 percent of doctors would digitize their records, hitting levels seen in the United Kingdom and the Netherlands. But doctors have adopted at a much slower rate in the United States: Most recent research suggests about half of doctors have fully digitized their records. For hospitals, the number hovers below 30 percent.

Even for the doctors that did adopt electronic records, many have run into a huge stumbling block with interoperability. The records they use at their office may not connect to a different software used at a hospital. Seventy-percent of doctors cited the lack of interoperability as a frustration with electronic records in a recent Bipartisan Policy Center survey

"As a result, the current generation of electronic health records functions less as 'ATM cards,' allowing a patient or provider to access needed health information anywhere at any time, than as 'frequent flier cards' intended to enforce brand loyalty to a particular health care system," the RAND authors write.

Separate from this study, other research has raised questions about whether electronic records actually increase costs. By making ordering a test as easy as one click of the mouse, some expect that the technology might ultimately contribute to a higher volume of care than would be delivered in a non-digital environment. 

Others, however, think that cost savings are achievable. The Department of Veteran Affairs estimates it saved just over $3 billion in unnecessary health-care costs in the six years after it adopted electronic medical records system-wide. 

The larger American health-care system isn't even in a position yet to figure out whether cost savings are possible, as a good chunk still hasn't taken the first step of going digital. 

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Ezra Klein · January 11, 2013