The Value of EHR and Healthcare Information Exchange

The Value of EHR and

Healthcare

Information Exchange

Blackford Middleton, MD, MPH, MSc

Chairman, Center for IT Leadership Director, Clinical Informatics R&D, Partners

Healthcare Assistant Professor of Medicine, Brigham & Women’s

Overview

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Philosophical Orientations on ROI

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Two Perspectives on IT Value

z ACPOE – Ambulatory CPOE

z HIEI – Healthcare Information Exchange and

Interoperability

Philosophical Orientations for

Value Assessment

z OLD: Myopic Views

z CPR as business requirement – infrastructure

z ROI on infrastructure is the same as ROI on business process itself

z CPR as optional business tool subject to ROI analysis

z ROI on every component of a CPR system, every step of the way

z NEW: Non-Myopic Views

z CPR in each local implementation a pre-requisite to

achieving network effects, the benefit of wiring healthcare as a whole

Commentary: David Brailer

z "It is not clear to me how I go forward.“

z "One person's waste is another person's revenue.“

z "We're going to support innovators, not bury them in

bureaucracy.“

z David W. Brailer, MD, PhD, National Healthcare Information Technology Coordinator, DHHS, 2004

How Does EMR Improve

Clinical Outcomes?

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Streamline, structure order process

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Ensure completeness, correctness

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Perform drug interaction checks

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Supply patient data

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Calculate and adjust doses based upon

How Does EMR Improve Lab

and Radiology Utilization?

z

Charge display

z

Redundant test reminders

z

Structured ordering with counter-detailing

z

Consequent or corollary orders

Other EMR Process Benefits

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Reduced transcription costs

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Reduced chart pulls

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Improved clinical messaging and workflow

z

Improved charge capture and accounts

receivable

z

Improved referral coordination

How Does EMR Improve

Medication Utilization?

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Eliminate over-use, under-use, and

misuse

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Check for duplicate medications

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Suggest

z Brand to generic substitutions

z Alternative cost-effective therapies z Formulary compliance

How does healthcare information

exchange impact the bottom line?

z

Largely, TBD

z

Expected effects

z Reduced healthcare information management

labor costs

z Reduced duplicative tests and procedures z Reduced fraud and abuse

z Improved service delivery efficiency z Improved patient convenience

CITL Research Team

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Julia Adler-Milstein, BA

z

David Bates, MD, MSc

z

Doug Johnston, MA

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Blackford Middleton, MD, MPH, MSc

z

Eric Pan, MD, MSc

z

Ellen Rosenblatt, BS

z

Jan Walker, RN, MBA

Two CITL Analyses of EHR

Value

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The Value of Ambulatory Computerized

Provider Order Entry (ACPOE)

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The Value of Healthcare Information

Scope of the Outpatient Care

Problem

z For Every:

z 1000 patients coming in for

outpatient care

z 1000 outpatients who are

taking a prescription drug

z 1000 prescriptions written z _{1000 women with a}

marginally abnormal mammogram

z 1000 referrals

z _{1000 patients who qualified}

for secondary prevention of high cholesterol

z There Appear to Be:

z 14 patients with life-threatening

or serious ADEs

z 90 who seek medical attention

because of drug complications

z 40 with medical errors z _{360 who will not receive}

appropriate follow-up care

z _{250 referring physicians who}

have not received follow-up information 4 weeks later

z 380 will not have a LDL-C,

ACPOE Expert Panelists

z Joseph Bisordi, MD, FACP

z Associate Chief Medical Officer, Geisinger Health System, Clinical Associate Professor, Thomas Jefferson Medical College

z John Janas, MD

z Cofounder and President, Clinical Content Consultants; Assistant Professor, Dartmouth Medical School

z Rainu Kaushal, MD, MPH

z Staff Physician, Brigham and Women's, Children’s, and Massachusetts General Hospitals; Instructor, Harvard Medical School

z Marc Overhage, MD, PhD

z Investigator, Regenstrief Institute for Health Care; Assistant Professor, Indiana University School of Medicine

z Tom Payne, MD

z Medical Director, Academic Medical Center Information Systems, Clinical Associate Professor, University of Washington

z Gordon Schiff, MD

CITL ACPOE Model – Top View

Outpatient Setting Characteristics Financial Value Data Clinical Value Data Organizational Value Data ACPOE System Features ACPOE System Cost ACPOE Value www.citl.org

ACPOE System Classification

Class Medication (Rx) OE Diagnostic (Dx) OE

1: Basic Rx-only

2: Basic Rx-Dx Record and print orders.

Passive medical references. 3: Intermediate Rx-only 4: Intermediate Rx-Dx Email or fax prescriptions. Order-specific decision

support. Email or fax orders. Order-_{specific decision-support} 5: Advanced EDI with pharmacy.

Patient-specific decision

EDI with laboratory/radiology. Patient-specific decision

Record and print prescriptions. Passive medical references.

Structured data capture, passive references, no patient data, no EDI

Rx & Order-specific decision support, limited patient data, no EDI

The “Average” Outpatient

Provider

z Full-time ambulatory provider z Panel size: approximately 2,000 z Annual visits: 3,875

z Capitation rate: about 11.6%

z Total Rx, Lab, Radiology expenditures (almost

$1.2M):

z Rx: $650K z Lab: $166K

Cumulative Net Financial Benefit

for a 10 Provider Practice

($300) ($200) ($100) $0 $100 $200 $300 $400 $500 $600 $700 $800 Th ou sa nd s Basic Rx Basic Rx-Dx Int Rx Int Rx-Dx Adv Rx-Dx

Clinical Impact of ACPOE

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Per “average” provider, Advanced

ACPOE systems would prevent…

z

9 ADE/yr

z

6 ADE visit/yr

z

4 ADE admission/5yr

ACPOE Financial Benefits

z Cost Savings

z Using national average capitation rate of 11.6% z Save $28,000 per “average” provider per year z Revenue Enhancements

z Eliminate more than $10 in rejected claims per outpatient visit

z Address drug, procedure and coding issues through advanced clinical decision support

z Productivity Gains

z Neutral effect on provider time with improved staff productivity

Per “Average” Provider Annual

Cost Saving Projections

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000

Basic Rx Basic Rx-Dx Int Rx Int Rx-Dx Adv Rx-Dx

ADE Reductions Laboratory Radiology Medication $28K $16.6K $12.3K $2.5K $2.2K

5 Yr Net Cost-Benefit for 25

Providers

-$60 -$40 -$20$0 $20 $40 $60 $80 $100 $120 $140

Basic Basic Int Rx Int Rx- Adv

In Thousands

Costs Benefit

Advanced Systems Produce

Superior Returns

For example, Advanced ACPOE costs nearly 4x as much as Basic, but…

z Generates over 12x more financial returns

z Produces nearly ten-fold greater reduction in

number of ADEs

z Provides IT infrastructure for core clinical computing

– the outpatient EMR – which produces additional benefits

ACPOE Limitations

z Our model combines evidence from the academic

literature, experts, and market data

z We extrapolate to make national projections z The model may be incomplete and important

determinants missing

z There is no “average” provider

z Benefits accrual to providers most sensitive to: z Percent of capitation of patient panel

National Annual Cost Saving

Projections

$0 $5 $10 $15 $20 $25 $30 Billions

Basic Rx Basic Rx-Dx Int Rx Int Rx-Dx Adv Rx-Dx

ADE Reductions Laboratory Radiology Medication $44B $26.3B $19.5B $4B $3.5B

ACPOE Limitations

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National benefits may be difficult to

realize

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Provider adoption slowed by benefits

accruing to other healthcare stakeholders

z

Example: Drug substitution and lab

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000

ADE Laboratory Radiology Medication

All other

stakeholders Providers (11% capitation)

National Cost Savings to Providers

and Other Healthcare Stakeholders

US Healthcare System Will

Benefit

z

National adoption of Advanced ACPOE

systems would prevent…

z 2 million ADE/yr

z 190,000 ADE admission/yr

z 130,000 life-threatening ADE/yr

z

Nationwide implementation of advanced

ACPOE could:

z Save the US $44 billion annually z Cost approximately $14 billion

HIEI Motivation

z Medical error, patient safety, and quality issues

z 98,000 deaths related to medical error

z 40% of outpatient prescriptions unnecessary

z Patients receive only 54.9% of recommended care

z Fractured healthcare delivery system

z Medicare beneficiaries see 1.3 – 13.8 unique providers annually, on average 6.4 different providers/yr

z Patient’s multiple records do not interoperate

z _{Providers have incomplete knowledge of their patients}

z Patient data unavailable in 81% of cases in one clinic, with an average of 4 missing items per case.

z 18% of medical errors are estimated to be due to inadequate availability of patient information.

z An ‘unwired’ system

HIEI Expert Panelists

z David Brailer, MD, PhD

Santa Barbara County Care Data Exchange, Health Technology Center

z William Braithwaite, MD, PhD

Independent consultant, “Dr HIPAA”

z Paul Carpenter, MD

Associate Professor of Medicine, Endocrinology-Metabolism and Health Informatics Research, Mayo Clinic

z Daniel Friedman, PhD

Independent public health consultant

z Robert Miller, PhD

Associate Professor of Health

z Arnold Milstein, MD, MPH

Pacific Business Group on Health, Mercer Consulting, Leapfrog

Group

z J Marc Overhage, MD, PhD

Regenstrief Institute, Associate Professor of Medicine, Indiana University

z Scott Young, MD

Senior Clinical Advisor, Office of Clinical Standards and Quality, CMS

z Kepa Zubeldia, MD

Value of HIEI: Key Findings

z Standardized, encoded, electronic healthcare

information exchange would:

z Save the US healthcare system $337B over a 10-year implementation period, and $78B in each year thereafter z Total provider net benefit from all connections is $34B z Net benefits to other stakeholders:

-Payers $22B -Pharmacies $1B

-Laboratories $13B -Public Health $0.1B

-Radiology centers $8B

z Dramatically reduce the administrative burden

associated with manual data exchange

HIEI Definition

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Provider-centric encounter-based model of

clinical information exchange

Provider Public Health Pharmacy Payer Radiology Other Provider

z Clinical and administrative

transactions and data exchange

z Between providers and

other providers

z Between providers and labs, pharmacies, payers, radiology centers, and public health

Flow of Healthcare Information

Clinical Encounter Diagnosis Treatment Other Referral Request Chart Request Prescription Pharmacy Order Results Imaging Center Order Results Lab Local Public Health Dept. Disease Reports, Vital Statistics Claims and Billing Public Health Remittance advice Eligi bility , Refe rrals, CSI Claims attachments, Claims submission, Coordination of benefits

HIEI Taxonomy

Level Description Examples

1 Non-electronic data Mail, phone

2 Machine-transportable data

PC-based and manual fax, e-mail, or scanned documents

3 Machine-organizable data

Secure e-mail of free text and incompatible/proprietary

structured messages, HL-7 msgs

4 Machine-interpretable EDI of structured messages with No PC/information technology

Fax/Email

Structured messages, non-standard content/data

Principal Cost Model

Components

z For providers: z Number of interfaces z Interface costs z System costs z For stakeholders: z Number of interfaces z Interface costs Provider Public Health Laboratory Pharmacy _Payer Radiology Other Provider

HIEI Cost

10 yr Rollout Annual Thereafter

Level 3 Level 4 $162.9 B $27.1 B $123.9 B $75.7 B $9.9 B $6.4 B Level 3 Level 4 Office systems $9.1 B Hospital systems $1.6 B Office and hospital interfaces $9.0 B $5.4 B Stakeholder interfaces $0.5 B $0.5 B

National Implementation

Schedule

z Assume a 10-year technology rollout and usage schedule z Ramp up the adoption of systems and interfaces over the

first five years, with 20% adoption per year

z Ramp up the benefit from technology over five years,

beginning with 50% benefit in the first year of adoption and increasing by 10% each year

z On a national basis, the return is then realized as follows:

Year 1 2 3 4 7 8 88% 94% 52% 36% 22% 10% 5 6 70% 80% 9 10 Percent of potential return realized 98% 100%

HIEI National Net Cost-Benefit

$141B

-$34B

$337B

Net Return over 10-year Implementation

$22B

$24B

$78B

Annual Net Return after Implementation

Level 2

Level 3

Level 4

$(200) $(100) $-$100 $200 $300 $400 0 1 2 3 4 5 6 7 8 9 10 Years

10-Year Cumulative Net Return

by HIEI Level

Level 1 Level 2 in billion s Level 3

US Would Benefit from Healthcare

Information Exchange

z Nationwide implementation of standardized

healthcare information exchange would:

z Save $337B over 10 years

z Save the US $78B annually at steady state

z Cumulative breakeven during year five of implementation z There is a business case for standardized

Limitations

z

Our model combines evidence from the

academic literature, experts, and market data

z

We extrapolate to make national projections

z

The model may be incomplete and important

Limitations

z Benefit from secondary transactions beyond provider-centric,

encounter-based model not included

z Secondary benefit from enhanced data integration not

included

z Costs not included:

z Stakeholder system cost (other than Providers and Hospitals) z Cost to develop, implement, and maintain standards

z Volume discount associated with a national roll-out

z Revenue loss to labs and radiology from reduction in tests z Conversion of legacy data

For More Information

z

See

www.citl.org

z

CITL Value of ACPOE Full Report

z Available from www.CITL.org and

www.HIMSS.org

z

The Value of Healthcare Information

Exchange and Interoperability Full Report

z Available now for pre-order through

Conclusions

z

ROI analyses of ACPOE suggest

z $28K savings per provider

z 12x greater ROI with advanced systems

z Basic ACPOE systems do not produce positive

returns

z

Value of Healthcare Information Exchange

z A ‘wired’ system could save an additional $78B

Conclusions

z National implementation of HIEI is a good

investment.

z Standardized Level 4 HIEI is by far the best

investment for the nation and for individual

providers, and probably for labs, radiology centers, payers, and the public health system

z Non-standardized HIEI is not a good investment. z Interfaces are expensive

z We will have to do it twice… z We must set standards

Summary

z

“Unless interoperability is achieved,

physicians will still defer IT investments,

potential clinical and economic benefits won’t

be realized, and we will not move closer to

badly needed healthcare reform in the US.”

z Dr. David Brailer, press conference May 21,

Thank you!

Blackford Middleton, MD

bmiddleton1@partners.org