Putting a Price Tag on a National Information Network
As Bush administration calls for national computerized health records, Harvard, BWH researchers estimate project to cost $156 billion, a price well above current funding
Boston - President George W. Bush has stated that electronic health records should be uniformly adopted by 2014. There is strong bi-partisan support for Congress and Senate legislation regarding health information technology. Leading researchers and a report from the Institute of Medicine agree, suggesting that a national health information network (NHIN) can help drive efficiency, reduce medical errors, even provide a platform for tracking disease outbreaks. However, if government and industry are going to make an investment in building a NHIN, a better understanding of what models work and how much they cost are important to moving the process forward. Now, researchers from Harvard University and Brigham and Women's Hospital (BWH) describe a realistic model that can be achieved in five years and estimate the capital cost to be approximately $156 billion, or about two percent of annual health care spending during that time.
The cost analysis portion of the research appears in the August 2, 2005 issue of the Annals of Internal Medicine.
According to lead author Rainu Kaushal, MD, MPH, a patient safety researcher at BWH, "Building on the ideas and recommendations of a diverse, expert panel as well as the available data, our research team performed an economic analysis of what it would cost to achieve widespread adoption of a national health information network. After creating a model of the necessary components, the bill for the national network reached a total cost well beyond the federal and health industry funds currently available. However, the $156 billion capital estimate and $48 billion in operating costs we project is actually moderate compared to overall health care expenditures, suggesting that the money is out there, but it may be a matter of prioritizing where it goes."
The purpose of this study was to add an important layer to the discussion in government and industry about a NHIN that has so far been missing - how much could this undertaking possibly cost?
"Now that we have identified one potential cost of building a NHIN, the next step is further understanding the financial and quality benefits of such a system," said Kaushal, also an assistant professor of Public Health and Medicine at New York Presbyterian HealthCare System/Weill Medical College. "As these data accumulate, government and the other stakeholders in the healthcare industry may want to define the funding sources. If a national network can save lives with financial benefits over time and it costs only a small fraction of total health spending, the return on investment should be clearer."
"Various stakeholders in health care are estimated to spend $24 billion in technology over the next five years," noted Kaushal. "This information, coupled with our NHIN cost analysis, should help key policy makers consider the gap that needs to be closed in terms of what is currently invested in a network and how much may need to be invested."
Mapping Out Costs of the NHIN
The vision for a NHIN described in this paper is to transfer all patient information to electronic systems and then build the infrastructure for this information to be shared by healthcare providers.
In this study, the researchers priced out two key components - the functionality of a NHIN as well as its interoperability. Functional costs are associated with features that will take patient information currently on paper and transition it to the computer, such as programs that allow physicians to receive test results electronically and order prescriptions via the computer instead of writing them by hand. Interoperability is the component of a national network that would permit different programs to seamlessly share information.
Given the variability between communities nationwide, as well as the lack of primary data about most of the technology costs, the research team faced several challenges when constructing these estimates. However, despite limited published data, Kaushal convened an expert panel that applied the best information available at the time of the analysis.
Based on a model network that will be described in the September 14, 2005 issue of the journal, Health Affairs*, Kaushal and colleagues performed detailed cost estimates piece by piece. Their estimates required pricing individual IT components of the system, such as software then determining the number of stakeholders who would be required to invest in these products over five years, as well as the cost of maintenance. To put a price tag on interoperability, the researchers replicated, on a national scale, the cost of building and maintaining a system similar to the Santa Barbara County Data Exchange, a network of providers who share information without a central host.
Hospitals will spend the most, $51 billion, on clinical functionalities whereas office practices will spend the most on interoperability.
The research was funded by the Commonwealth Fund and the Harvard Interfaculty Program for Health Systems Improvement.
Please contact BWH Media Relations for more information at (617) 534-1600 or BWHMediaRelations@partners.org.
BWH is a 747-bed nonprofit teaching affiliate of Harvard Medical School and a founding member of Partners HealthCare System, an integrated health care delivery network. BWH is committed to excellence in patient care with expertise in virtually every specialty of medicine and surgery. The BWH medical preeminence dates back to 1832 and today that rich history in clinical care is coupled with its national leadership in quality improvement and patient safety initiatives, dedication to educating and training health care professionals, and strength in biomedical research. With $370M in funding and more than 500 research scientists, BWH is an acclaimed leader in clinical, basic and epidemiological investigation - including the landmark Nurses Health Study, Physicians Health Studies, and the Women's Health Initiative. For more information visit www.brighamandwomens.org
Send Feedback to: 
