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EHRs Associated with an Increase and Decrease in Costs. Surprised?

A study reported in Medicare and Medicaid Research & Review and written by Julia Adler-Milstein, Claudia Salzberg, Calvin Franz, E. John Orav, and David Westfall Bates, examined the impact of ambulatory EHRs on the cost of care for patients (as assessed by Medicaid claims) in three communities involved in the Massachusetts eHealth Collaborative pilot communities. The researchers compared pre- and post-implementation costs in these three communities to matched controls. The full paper is available online. Here’s the summary of their results:

We found evidence that EHR adoption impacted ambulatory medical cost in two of the three communities, but the effects were in opposite directions.

… and the conclusion:

As a stand-alone approach, adoption of commercially-available EHRs in community practices did not consistently impact Medicaid costs in the short-run. This suggests that future meaningful use criteria may need to specifically target cost savings and coordinate with payment reform efforts.

So… this evaluation demonstrated that the cost of ambulatory care in two of the three communities went in almost equal yet opposite directions. Further analysis showed that the direction of the ambulatory costs was unrelated to laboratory or radiology costs. In one of the groups, there was modest savings in radiology costs, but the percentage of costs associated with radiology was a small fraction of the total costs; therefore, it did not have a significant effect. It turns out that visit rates drove costs more than radiology or laboratory services.

Should we be surprised? Hardly. While the practices in the Massachusetts eHealth Collaborative may be further along in leveraging their EHRs, the authors point out that payment models to incentivize appropriate utilization and high value care, good clinical decision support, and the availability of health information exchange are all necessary to, “… deliver most of the financial benefit from EHRs.” Earlier this year, I blogged about the Health Affairs article, “What It Will Take To Achieve The As-Yet-Unfulfilled Promises of Health Information Technology” and questioned whether the EHR Incentive Program (aka Meaningful Use) was pushing the right levers in order to improve quality and reduce cost. The authors of this article raise the same point in concluding, “… more robust meaningful use criteria in these domains, as well as broader efforts to incentivize reductions in healthcare costs, will likely be essential if the EHR adoption resulting from the recent federal initiatives is to produce cost savings in the Medicaid population.”

What do you think it will take before we see solid evidence that the EHR Incentive Program is moving U.S. healthcare closer to the three-part aim of better care for individuals, better health for populations, and reduced expenditures (aka Triple Aim)?

This post is the personal opinion of the author and does not necessarily reflect the official policy or position of the American College of Physicians (ACP).

Comments:

4 responses to "EHRs Associated with an Increase and Decrease in Costs. Surprised?"
  • June 30, 2013
    healthcare software
    said:

    I am not surprised at all. I quite expected this to happen. I just hope that it gets better after the implementation. I am still giving it a chance though.

  • July 19, 2013
    Joe Heyman
    said:

    I am from one of the three communities that was fortunate enough to have been selected but unfortunate enough not to have been able to accomplish the real goal of the project, a community wide health information exchange. My hope and dream is that once we have our physician owned HIE up and running, we will see some more savings.

    I think one of the problems with the study is that it based the measurements on cost rather than volume. Cost in Massachusetts is largely based on contracting rates of several large networks that cut across different communities in different amounts.

    I personally feel that the more prescriptive the MU program gets, the less likely we are to have innovation and progress, especially as the incentives get smaller. Perhaps a better direction would have been for direct government payments to organizations that set up robust (not just DIRECT) HIEs. MU requirements by necessity increasingly interfere with workflow and usability. My personal opinion is that the program has definitely hastened adoption of EMRs but has made them less pleasant to use. I think adoption would have happened inevitably but it might have taken a longer time. The more flexible the program is, the more likely innovation will improve progress to its final goals of the triple aim.

  • July 19, 2013
    John Bowery, DO
    said:

    Far from decreasing costs, EHR’s will inevitably increase the cost of health care as the escalating requirements of “meaningful use” criteria force the round peg of clinical practice into the square hole of software designed to meet a politically driven schedule.

  • July 19, 2013
    KC
    said:

    I agree with Dr. Bowery, and I would add that, as the EHR is not a creative idea crafted by practitioners, is but another means by which CMS will justify (by better tracking of numbers) to take back payments and to penalize practitioners in general!

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