Harvard study says computerization costs hospitals more than it saves

New study of 4,000 hospitals finds that IT systems have driven up administrative costs, with minimal gains in healthcare processes or quality. But is technology meant to be the cure-all for underlying ailments in these organizations?
Written by Joe McKendrick, Contributing Writer on

A new study of 4,000 hospitals by Harvard Medical School concludes that IT systems actually are costing healthcare institutions more money than they save. And any improvements in healthcare processes or quality have been minimal.

The report, Hospital Computing and the Costs and Quality of Care: A National Study, makes the following conclusion:

"As currently implemented, health information technology has a modest impact on process measures of quality, but no impact on administrative efficiency or overall costs. Predictions of cost-savings and efficiency improvements from the widespread adoption of computers are premature at best."

Dr. David Himmelstein, an associate professor at Harvard Medical School and lead author of the study, says computing tends to drive up administrative costs, but only has a mild impact on productivity and quality. The study also did a comparison of hospitals at the cutting edge of computerization (as indicated by their inclusion on the “100 Most Wired List” compiled by Hospital and Health Networks magazine for 2005 and 2007) with those of other hospitals.

"First, you spend $25 million dollars on the system itself and hire anywhere from a couple-dozen to a thousand people to run the system," he said in a Network World interview. "And for doctors, generally, it increases time they spend [inputting data]."

The problem "is mainly that computer systems are built for the accountants and managers and not built to help doctors, nurses and patients," he is quoted as saying.

While there have been many promises over the years that IT in healthcare settings would cut paperwork and speed up or improve processes, there has been little documentable evidence so far to back up such claims, Himmelstein says. "For 45 years or so, people have been claiming computers are going to save vast amounts of money and that the payoff was just around the corner," he said. "So the first thing we need to do is stop claiming things there's no evidence for. It's based on vaporware and [hasn't been] shown to exist or shown to be true."

As stated in the report, the data just isn't there yet:

"Unfortunately, these attractive claims rest on scant data. A 2006 report prepared for the Agency for Healthcare Research and Quality, as well an exhaustive systematic review, found some evidence for cost and quality benefits of computerization at a few institutions, but little evidence of generalizability. Recent Congressional Budget Office reviews have been equally skeptical, citing the slim and inconsistent evidence base. As these reviews note, no previous studies have examined the cost and quality impacts of computerization at a diverse national sample of hospitals."

There's no question that the healthcare system is broken -- it's overloaded, overburdened, over-administered, over-litigated, and way more costly than it should be. When it comes to adding IT, there's an old maxim that comes into play: "When you automate a mess, you get an automated mess."  As with automation in any industry, organizations need to first clear up and address underlying processes and issues before throwing software and systems at them.

All too often, executives think if they throw enough technology at a problem, it will somehow turn their organizations into shining beacons of success. But in the end, technology is rarely the cure, it simply amplifies the existing organizational culture.

This post was originally published on Smartplanet.com

Editorial standards