CBO finds health IT unlikely to generate significant savings

Health information technology by itself is unlikely to produce the significant cost savings projected by economic analysts and policymakers, according to a Congressional Budget Office analysis released Tuesday, the Wall Street Journal reports.

The analysis particularly questioned a RAND report that estimated annual savings of about $77 billion from widespread adoption of health IT. According to the CBO analysis, adoption of health IT could generate savings under certain circumstances, such as if it is combined with broader health care measures. However, CBO Director Peter Orszag said, "By itself, it's generally not sufficient" to reduce costs.

The analysis states that since 2006, 12% of physicians and 11% of hospitals in the U.S. have adopted health IT systems. According to CBO, there could be some savings if the federal government would mandate some form of technology, such as electronic prescribing, and penalize providers that do not participate.

According to the Journal, the report "dealt a blow to the prospects for broad legislation to boost" the use of health IT and "is a challenge to advocates of [health IT] who have generally argued that it will improve patient safety and achieve significant efficiencies." However, health IT advocates said that the CBO analysis should not affect the prospects for passing health IT legislation and that the findings could encourage further efforts to adopt health IT.

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Richard Hillestad, a senior principal researcher at RAND and author of the company's report, defended the RAND findings, saying that its estimate could "actually be relatively conservative" because it did not include other possible benefits from health IT, such as billing efficiencies.

Sen. Mike Enzi (R-Wyo.), who along with Sen. Edward Kennedy (D-Mass.) introduced legislation for wider use of health IT, in a statement said, "We can squabble over the potential amount of savings, but we know health IT will save lives and money," adding, "The time to act is now."

National Coordinator for Health IT Robert Kolodner in a statement said that "cost savings is just one of the benefits of using health IT" and that the "magnitude of savings to be generated is yet to be determined" (Wilde Mathews, Wall Street Journal, 5/22).

The report is available online (.pdf).