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DHC 2007: Controlling health IT costs the key to capturing value

Madison, Wis. - Peter Strombom, the retired CIO of Meriter Hospital, believes healthcare might be the only industry where competition increases costs.

Why that distortion exists could be the subject of an entire conference, and it occupied a fair amount of time during Digital Healthcare Conference 2007.

The desire to keep up with the Joneses, and have the latest in health information technology, contributes to exploding health IT costs. As the industry moves toward greater adoption of electronic medical records and other health IT, American healthcare costs are estimated to be 16.5 percent of the Gross Domestic Product.

That could rise to a projected 26 to 28 percent in 10 years unless something is done to slam on the brakes. With one notable exception, conference speakers believe wider adoption of healthcare IT is a key to controlling costs long term, but that will require up-front investment.

The roll out of large clinical IT systems doesn't just impact the annual capital budget or the cost of implementation, but also the cost of ownership - ongoing maintenance, power, and cooling needs. Even if IT spending is as patient-centric as possible, and there is constant pressure to improve technology for everything that relates to the patient, the costs that occur after implementation must be factored into any ROI equation.
A PACS on your budget

Case in point: Picture Archiving and Communication Systems, or PACS, a technology that will be more widely adopted in conjunction with EMRs. From the current 64-slice systems to the 256-slice (and color) technology on the way, the projected data explosion associated with PACS would cause a great deal of stress on network support and storage needs.

Whereas EMRs manage clinical data, PACS manage images associated with clinical data.

Phil Loftus, vice president of information systems and CIO of Aurora Health Care, said 3 to 6 percent of the costs of Aurora's new Summit hospital are devoted to information technology systems, but only if it doesn't have a PACS. In that case, factor in another 3 to 6 percent.

“It adds a cost that is equal to all other traditional IT systems,” Loftus said.

PACs is not used simply to store images, but to manage image data from all areas of the enterprise, according to Gary Wendt, vice chairman of informatics for the University of Wisconsin-Madison. With PACS, it often takes three images from three different specialties to make a diagnosis, and at 200 frames per second, a 10-second viewing would require two gigabytes of data.

Ideally, the system would be linked through a portal in the EMR. While different types of care have different data needs, controlling the cost of PACS requires one “silo,” not multiple ones, or the risk of exponential cost increases is high, Wendt said. To maintain one archive alone could cost up to $100,000 annually.

Another cost danger to watch out for is the undue influence that radiology, a healthcare “cash cow,” can have in purchasing decisions.

“It's coming,” Wendt said of the deluge of PACS related costs pressures. “I don't think it's here now.”

IT cost cutting

According to Loftus, Aurora is contemplating investments in online bill-paying transactions that could save on back-office costs, and online scheduling that adds service value for patients.

Austin Park, vice president of infrastructure services with Paragon Development Systems, said the more healthcare organizations can invest their finite dollars in technology that saves on infrastructure and operational costs, the more resources they can devote to innovation that keeps them on the cutting edge.

Peter Christman, executive vice president of the UW Medical Foundation, said the organization's investment in electronic medical records has had a positive effect on ROI, but he acknowledged that not everyone is sold on its benefits.

Some projected savings did not accrue on the original timetable, some came earlier than expected, others are intangible, and still others are not entirely provable. “For us, it's been a process,” he said, “and a changing one.”

The barriers to EMR adoption and patient data exchange were spelled out in detail during the Digital Healthcare Conference, but most believe that investments in health IT will yield benefits. Nobody expressed a preference for going back to the pre-EMR days, but in many ways, today's technology pioneers are taking the arrows.

“We're changing from one paradigm to another,” Strombom said. “When we look back, I think we'll view EMR and health IT as the best things we ever did, but right now there are issues.”

Contrarian view

Not everyone believes that EMRs are the correct model. Bill Mortimore, managing director of Healthcare Growth Partners and founder of Merge Healthcare, made the case for Web-based clinical decision support. Within the IHE (Integrating the Healthcare Enterprise) movement, Mortimore said there is a healthcare IT group that is attacking the problem from this direction.

Just as healthcare often fails to take a systemic view of the human body, focusing instead on the body as a collection of individual parts, Mortimore said existing clinical IT solutions present a choice between best-in-breed solutions that share informatics poorly and single-vendor solutions that usually fall short of their promise to provide a unified view.

“We've decomposed the human body and we've built clinical healthcare IT along the same model,” he said.

As a result, caregivers are forced to make life-and-death decisions with inadequate information.

A more effective way to build a clinical support system, Mortimore said, would be to leverage the search and communication tools of the Internet. It would involve a simple implementation of things the Internet is already doing, and patients could control access with a “key.”

Mortimore said he's not talking about a MySpace approach to establishing a personal health record on the Internet and having patients control the access. “Probably not even that,” he said. “If everybody publishes, in other words if you look at the way the IHE profile works, effectively they say, `Hey, I've got this kind of report for whoever, if you want it, I'm going to let you have it. It could be that an economic transaction occurs then, but here I am, I've given you a pointer.

“And so based on that, all of it can be organized, and then when somebody wants to see the records, they pull them from the UW, from Milwaukee, the Medical College. If I had something done in Texas, they'd pull it from there if it were available. That's done on the Internet all the time.”

Are we too far down the road to EMRs to make such a transition? “It's not going to work anyway,” Mortimore said. “These things are going to fail. That's my opinion.”

Related stories

View from the outside: Top technologist says benefits of health IT are “unassailable”

DHC 2007: Barriers to electronic data exchange include the law

DHC 2007: Without fuller IT adoption, health costs might drain America's wealth

CIO Leadership Profile: Phil Loftus, Aurora Health Care

Hayden says technology creates magic moment for healthcare delivery

Digital Healthcare Conference 2007: Mounting obstacles for health IT

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