oversight

Information Technology: Benefits Realized for Selected Health Care Functions

Published by the Government Accountability Office on 2003-10-31.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States General Accounting Office

GAO            Report to the Ranking Minority Member,
               Committee on Health, Education, Labor,
               and Pensions, U.S. Senate


October 2003
               INFORMATION 

               TECHNOLOGY

               Benefits Realized for
               Selected Health Care
               Functions




GAO-04-224

               a

                                                October 2003


                                                INFORMATION TECHNOLOGY

                                                Benefits Realized for Selected Health
Highlights of GAO-04-224 a report to the
Minority Member, Committee on Health,
                                                Care Functions
Education, Labor, and Pensions, U.S.
Senate




The rapidly rising costs of health              The 10 health care delivery organizations reported 13 examples of cost savings
care, along with an increasing                  resulting from the use of IT, including reduction of costs associated with
concern for the quality of care and             medication errors, communication and documentation of clinical care and test
the safety of patients, are driving             results, staffing and paper storage, and processing of information. Other
health care organizations to use                benefits included improved quality of care, more accurate and complete
information technology (IT) to
                                                medical documentation, more accurate capture of codes and charges, and
automate clinical care operations
and their associated administrative             improved communications among providers that enabled them to respond
functions. Among its other                      more quickly to patients’ needs. A few examples are noted in the chart below.
functions, IT is now being used for
electronic medical records, order               Examples of Cost-Related and Other Benefits Reported by Health Care Delivery
management and results reporting,               Organizations and Insurers
patient care management, and                                   Cost-Related Benefits                               Other Benefits
Internet access for patient and                                                        Clinical Care Functions
provider communications. It also                A teaching hospital reported that it realized      An integrated health care delivery system
provides automated billing and                  about $8.6 million in annual savings by            reported improvements in diabetes control for its
                                                replacing outpatient paper medical charts with members with the disease.
financial management.
                                                electronic medical records.

The Ranking Minority Member of                  A rural community hospital prevented the           A teaching hospital reported a decrease in
the Senate Committee on Health,                 administration of over 1,200 wrong drugs or        average length of stay from 7.3 to 5 days due to
Education, Labor, and Pensions                  dosages using bar code technology and              improvements in health care efficiency and
asked GAO to identify cost savings              wireless scanners to verify both the identities    practice changes.
                                                of patients and their correct medications.
and other benefits realized by
                                                                                      Administrative Functions
health care organizations that have
                                                An integrated health care delivery system          An insurer reported that it improved clinical care
implemented IT both in providing                reported a 53 percent decease in claims            to its members through its health screening
clinical health care and in the                 rejected due to eligibility checks during          reminders.
administrative functions associated             registration.
with health care delivery. GAO                  Source: GAO.
analyzed information from 10
private and public health care                  All three insurers reported examples of reduced costs and other benefits
delivery organizations, 3 health
                                                resulting from improvements in electronic claims processing and the use of
care insurers, and 1 community
data network.                                   technology to enhance customer service. Benefits included increased staff
                                                productivity, improved timeliness in processing claims, improved customer
                                                satisfaction, and improved clinical care to members.

                                                One community data network established a regional exchange of health care
                                                data among physicians, hospitals, insurers, and others in the community,
                                                demonstrating that information can be exchanged securely and affordably
                                                while improving the quality and reducing the cost of health care. It expects to
                                                realize over $7 million in benefits for participating organizations. Other
                                                expected benefits include fewer admissions to the emergency department,
                                                reductions in staff time spent handling test results, and avoidance of test
                                                duplication.

www.gao.gov/cgi-bin/getrpt?GAO-04-224

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact David Powner
at (202) 512-9286 or pownerd@gao.gov.
Contents




Letter                                                                                                             1



Appendix
           Appendix I:	 Use of Information Technology for Selected Health Care
                        Functions                                                                                  4




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                        Page i                                  GAO-04-224 IT for Selected Health Care Functions
A

United States General Accounting Office
Washington, D.C. 20548



                                    October 31, 2003


                                    Senator Edward M. Kennedy

                                    Ranking Minority Member

                                    Committee on Health, Education, Labor, and Pensions

                                    United States Senate


                                    Dear Senator Kennedy:


                                    According to the Institute of Medicine and others, health care is an

                                    information-intensive industry that remains highly fragmented and 

                                    inefficient. Hence, the use of information technology (IT) in delivering 

                                    clinical care and performing administrative functions has the potential to 

                                    yield both cost savings and improvements in the care itself. You asked us to 

                                    identify cost savings and other benefits realized by health care 

                                    organizations that have implemented IT both in providing clinical health

                                    care and in the administrative functions associated with health care 

                                    delivery.


                                    To identify monetary and other benefits resulting from the use of IT, we 

                                    reviewed available literature and consulted with experts in the academic 

                                    and professional community about electronic medical records and about 

                                    cost savings and other benefits that have been reported by health care 

                                    organizations. We identified key clinical health care and administrative

                                    functions for which IT is used and then identified health care organizations 

                                    recognized in the health care community that could provide data to

                                    demonstrate cost savings and other benefits realized from implementing IT. 

                                    We obtained and analyzed data reported by 10 private and public health 

                                    care delivery organizations, 3 health care insurers, and 1 community data 

                                    network. We conducted our work from October 2002 through August 2003 

                                    in accordance with generally accepted government auditing standards.


                                    On October 8, 2003, we provided your office with a briefing on the results 

                                    of this review, which is included as appendix I. The purpose of this letter is 

                                    to provide the published briefing slides to you.


                                    In brief, we identified 20 examples of IT initiatives that resulted in reported 

                                    cost savings or other benefits—13 at health care delivery organizations, 6 at 

                                    insurers, and 1 at a community data network. The participating 

                                    organizations also discussed some important lessons they learned from 

                                    implementing IT solutions. For example, a 1,951-bed teaching hospital 

                                    serving urban, rural, and international populations reported that it realized 




                                    Page 1                              GAO-04-224 IT for Selected Health Care Functions
about $8.6 million in annual savings by replacing paper medical charts with
electronic medical records for outpatients. It also reported saving over $2.8
million annually by replacing its manual process for handling medical
records with electronic access to laboratory results and reports.
Additionally, a 350-bed community hospital serving a rural population
prevented the administration of over 1,200 wrong drugs or dosages and
almost 2,000 early or extra doses by using bar code technology and
wireless scanners to verify both the identities of patients and their correct
medications. The reported monetary value of the errors prevented was
almost $850,000.

IT also contributed to other benefits, such as shorter hospital stays, faster
communication of test results, improved management of chronic disease,
and improved accuracy in capturing charges associated with diagnostic
and procedure codes. For example, a large integrated health care delivery
system serving an urban population reported improvements in diabetes
control, decreases in upper gastrointestinal studies ordered, and increases
in Pap smears performed. Most organizations also reported lessons
learned, such as the importance of reengineering business processes,
gaining users’ acceptance of IT, providing adequate training, and making
systems secure.


We will send copies of this report to other congressional committees; to the
private sector organizations that participated in our review; and to the
Secretaries of Defense, Health and Human Services, and Veterans Affairs.
In addition, the report will be available at no charge on the GAO Web site at
http://www.gao.gov.




Page 2                             GAO-04-224 IT for Selected Health Care Functions
If you have any questions about this report, please contact me at (202) 512-

9286 or M. Yvonne Sanchez, Assistant Director, at (202) 512-6274. We can

also be reached by e-mail at pownerd@gao.gov or sanchezm@gao.gov. Niti 

Bery, Joanne Fiorino, Pamlutricia Greenleaf, M. Saad Khan, Jessica Steele,

and Teresa F. Tucker were major contributors to this report.


Sincerely yours,





David A. Powner

Director, Information Technology Management Issues





Page 3                            GAO-04-224 IT for Selected Health Care Functions
Appendix I

Use of Information Technology for Selected
Health Care Functions




             Use of Information Technology for
              Selected Health Care Functions

                      Briefing for Minority Staff
                                of the
               Senate Committee on Health, Education,
                        Labor, and Pensions


                                October 8, 2003




                       Page 4                     GAO-04-224 IT for Selected Health Care Functions
                       Appendix I

                       Use of Information Technology for Selected 

                       Health Care Functions





                       Table of Contents

• Introduction
• Objective, Scope, and Methodology
• Results in Brief
• Background
• Benefits of Implementing Information Technology
    • Health Care Delivery Organizations
    • Insurers
    • Community Data Networks
• Summary
• Appendixes
    • Appendix 1: Benefits and Lessons Learned for Health Care Delivery Organizations
    • Appendix 2: Benefits and Lessons Learned for Insurers
    • Appendix 3: Benefits for Community Data Networks
    • Appendix 4: Related Health Care Information Technology Studies

                                                                                                         2




                       Page 5                                   GAO-04-224 IT for Selected Health Care Functions
                                                     Appendix I

                                                     Use of Information Technology for Selected 

                                                     Health Care Functions





                                                                  Introduction

• The Institute of Medicine, Deloitte Research, and others have reported that
  while health care is an information intensive industry, it remains highly
  fragmented and inefficient in comparison to other industries, but nevertheless,
  major change may be underway due to
    • rapidly rising health care costs
    • increasing concern for patient safety and the quality of care
• The use of information technology (IT) to address improvements in patient
  safety is currently driving health care organizations to automate clinical care
  operations and associated administrative functions
• HIPAA1 requirements to address administrative simplification are to provide
  for the exchange of health care clinical and administrative information to move
  the industry to use more efficient and standardized electronic communications
• Over the last decade, the percentage of health insurance claims received
  electronically has steadily increased to 44% in 2002
1   Health Insurance Portability and Accountability Act of 1996
                                                                                                                                       3




                                                     Page 6                                   GAO-04-224 IT for Selected Health Care Functions
                                                 Appendix I

                                                 Use of Information Technology for Selected 

                                                 Health Care Functions





           Objective, Scope, and Methodology

Objective
Identify cost savings and other benefits reported by health care organizations
that have implemented information technology both in providing clinical health
care and in the administrative functions associated with health care delivery


Scope
 • We conducted our work at:
            • 11 private and public health care delivery organizations
            • 3 health care insurers
            • 5 community data networks1
  • We selected these organizations based upon their reported success with
    implementing IT and sharing data
1 Community data networks are community-based organizations that are involved in collaborative efforts involving the exchange of electronic health

information among two or more organizations
                                                                                                                                                      4




                                                 Page 7                                                      GAO-04-224 IT for Selected Health Care Functions
                                             Appendix I

                                             Use of Information Technology for Selected 

                                             Health Care Functions





          Objective, Scope, and Methodology
                                           Organizations by Location
          S Premera Blue Cross
          „
          Community Health Information
          Technology Alliance
       z          WA
     Kaiser Permanente                                                     MN
     Northwest                                                  Blue Cross & Blue
                                                               Shield of Minnesota                                      Massachusetts Health „z Partners
               OR                                                               S                                       Data Consortium   MA HealthCare
                                                                                     z Mayo Clinic                                        NY
                                                                                                                                               z Maimonides Medical
                                                                                                                                                  Center
                                                                                                                              PA       z
                                                                                                                                       Geisinger Medical Center
                                  z Intermountain
                                     Health Care                                                                                       z VA Washington Medical Center
                       Utah Health „                                                                                                          (District of Columbia)
               Information Network                                                                                                VA
       CA
                                     UT                                                                                      z Danville Regional Medical Center
                                                                                                                                  NC    „
                                                                                                        z Vanderbilt University         North Carolina Healthcare
        „ Santa Barbara County                                          OK                      TN        Medical Center                Information & Communications
                                                                    z
          Care Data Exchange
                                                         Tinker Air Force Base
                                                         Medical Facility        St. Vincent’s zS Blue Cross & Blue
                                                                                 Hospital         Shield of Alabama
                                                                                                         AL




    z Health care delivery organizations
    S Insurers
    „ Community data networks


Source: GAO
                                                                                                                                                                  5




                                             Page 8                                                  GAO-04-224 IT for Selected Health Care Functions
                                                  Appendix I

                                                  Use of Information Technology for Selected 

                                                  Health Care Functions





           Objective, Scope, and Methodology

Methodology
• Reviewed available literature and consulted with experts in the academic and
  professional community about electronic medical records and reported cost
  savings and other benefits by health care organizations
   • Identified key clinical health care and administrative functions that
     incorporate the use of IT for health care delivery organizations (e.g.,
     medical record documentation, order management and results reporting,
     etc.), insurers (e.g., claims processing and customer service), and
     community data networks
   • Identified health care organizations recognized in the health care
     community for their use of IT and had data available that demonstrate
     cost savings and other benefits
• Obtained and analyzed information from 10 of 11 health care delivery
  organizations, 3 insurers, and 1 of 5 community data network on functions
  that support clinical care delivery and administrative operations1
1 One of the health care delivery organizations reported success with the implementation of IT but did not provide data; only one of the

community data networks provided data on a demonstration project for establishing a regional network for sharing medical information
                                                                                                                                                         6




                                                  Page 9                                                        GAO-04-224 IT for Selected Health Care Functions
                      Appendix I

                      Use of Information Technology for Selected 

                      Health Care Functions





     Objective, Scope, and Methodology

Methodology (continued)
• Data analyzed included:
   • organizational profile information
   • description of the IT environment
   • cost and cost-related benefits
   • other benefits
   • lessons learned
• Provided participating organizations with the opportunity to comment and
  verify the accuracy of the material presented
   • All 14 organizations for which we have highlighted specific examples
      verified the accuracy of their data
• Conducted our work from October 2002 through August 2003 in
  accordance with generally accepted government auditing standards
   • We did not independently verify the data provided to us
                                                                                                        7




                      Page 10                                  GAO-04-224 IT for Selected Health Care Functions
                      Appendix I

                      Use of Information Technology for Selected 

                      Health Care Functions





     Objective, Scope, and Methodology
                                Data Limitations
• The organizations in our review do not represent a statistically valid sample
  of health care delivery organizations and insurers
• Data from the health care delivery organizations are unique to their specific
  settings and processes and are not necessarily consistent or comparable
  from organization to organization




                                                                                                        8




                      Page 11                                  GAO-04-224 IT for Selected Health Care Functions
                          Appendix I

                          Use of Information Technology for Selected 

                          Health Care Functions





     Objective, Scope, and Methodology
                       Description of Terms Used
• For health care delivery organizations, based on our review of literature and
  consultation with experts, we considered clinical care and administrative
  functions to be:
  Clinical Care                                      Administrative
  • Electronic medical records (EMR)                 • Automated billing and financial management
    management                                       • Patient admission, discharge, transfers and
  • Order management and results reporting             registration
  • Patient care management                          • Coordination of communications infrastructure
  • Internet access for patient and provider
    communications
  • Decision support tools

• For insurers, we considered administrative functions to consist of claims
  processing and customer service
• For community data networks, we considered information exchange to
  consist of electronic data sharing of health information


                                                                                                            9




                          Page 12                                  GAO-04-224 IT for Selected Health Care Functions
                          Appendix I

                          Use of Information Technology for Selected 

                          Health Care Functions





                             Results in Brief

• We identified 20 IT initiatives associated with health care organizations that resulted in
  reported cost savings or other benefits
      • 13 examples of IT initiatives at health care delivery organizations
      • 6 examples of IT initiatives at insurers
      • 1 example of an IT initiative at a community data network
• Examples of reported cost and cost-related benefits varied, such as
      • reduction of 28 staff positions needed to handle paper records, with over $700,000
         in associated cost savings
      • 40% decrease in new orders for portable chest x-rays, with over $1 million saved in
         associated costs
      • 10% increase, or $4 million saved, in the number of claims processed without
         human intervention
• Examples of other benefits included
      • increased patient safety
      • improved communications and documentation
• Organizations also identified several lessons learned from implementing IT

                                                                                                           10




                          Page 13                                  GAO-04-224 IT for Selected Health Care Functions
                           Appendix I

                           Use of Information Technology for Selected 

                           Health Care Functions





                                     Background
          Key Participants in the Health Care System
                      in the United States
• As the graphic illustrates,
  the health care system in
  the United States is complex
• Health care is a large
  sector of the economy that
  involves multiple provider
  associations, health care
  delivery organizations,
  insurers, consumers, and
  local, state, and federal
  agencies; including the
  emergence of community
  data networks
• According to Centers for
  Medicare and Medicaid,
  national health expenditures
  are projected to be about
  $1.78 trillion by 2004
                                 Source: Financing Health Care, Volume II; Hoffmeyer et al., 1994
                                                                                                                           11




                           Page 14                                                 GAO-04-224 IT for Selected Health Care Functions
                                                   Appendix I

                                                   Use of Information Technology for Selected 

                                                   Health Care Functions





                                                              Background
                                               Status of IT in Health Care

• The Department of Health and Human Services (HHS) reports that:
   • IT is expensive and it is difficult for organizations to generate the capital
     needed for IT investment, which is often regarded as an add-on cost
   • Currently, there is fragmented use of electronic connectivity to exchange
     health data among all providers
   • Standards for content (how the meanings of medical terms are
     represented) are not yet agreed upon, nor are there standards for how
     messages are to be sent and received
   • Security, and thus privacy, has not yet been assured—authentication of
     users and data encryption need to be more effectively implemented
• Despite the $20 billion in health care-related IT expenditures in the United
  States in 2001, less than 10% of US hospitals had adopted electronic
  medical records1
                           Appendix 4 contains summaries of selected studies on health care IT benefits

1   Goldsmith, J; Blumenthal, D; Rishel, W, Federal Health Information Policy: A Case of Arrested Development, Health Affairs (July/August 2003)
                                                                                                                                                       12




                                                   Page 15                                                     GAO-04-224 IT for Selected Health Care Functions
                                                 Appendix I

                                                 Use of Information Technology for Selected 

                                                 Health Care Functions





                                                            Background
                                Current Federal IT-Related Efforts
• To encourage improvements in patient safety and information sharing, for fiscal year
  2004, the President requested $50 million for projects related to the use of IT for
  patient safety and $12 million to support development of standards
• FDA has proposed a new rule for bar coding medications to improve patient safety by
  allowing the use of information systems to reduce preventable medication errors
• HHS has licensed SNOMED1 clinical terms for $32.4 million over 5 years to be
  available at no charge throughout the United States in order to provide a common
  vocabulary standard needed for the exchange of health care information
• GAO recently reported on opportunities to improve health care standards initiatives
  and made several recommendations to further these efforts2
   • define activities for ensuring that the various standards-setting organizations
      coordinate their efforts and reach further consensus on the definition and use of
      standards
   • establish milestones for defining and implementing all standards
   • create a mechanism to monitor the implementation of standards throughout the
      health care industry
1Systematized Nomenclature of Medicine
2U.S. General Accounting Office, Bioterrorism: Information Technology Strategy Could Strengthen Federal Agencies’ Abilities to Respond to Public
Health Emergencies, GAO-03-139 (Washington, DC: May 30, 2003)
                                                                                                                                                    13




                                                 Page 16                                                    GAO-04-224 IT for Selected Health Care Functions
                                               Appendix I

                                               Use of Information Technology for Selected 

                                               Health Care Functions





                                                            Background
                         14th Annual HIMSS Leadership Survey1
In February 2003, HIMSS reported the results of its annual survey of 287
health care IT executives and other respondents
         • 52% of the responses identified the top IT priority as implementing IT to reduce
           medical errors and promote patient safety
         • 23% named the lack of financial support as the biggest barrier to implementing IT at
           health care organizations
         • IT applications identified to be the most important in the next 2 years include
           computerized provider order entry (64%), clinical information systems (53%), and bar
           coded medication management (46%)
         • 68% reported that their IT operating budgets will increase, although projected
           increases are small—10% or less
         • 55% identified internal breaches of security as the problem of most concern, while 33%
           named the limits of existing security technology as a concern
         • 95% cited high-speed networks as the technology used most frequently by health care
           organizations, followed by intranets and client/server systems, 87% and 85%
           respectively
         • Web site functionality for patients—including access to clinical information—is
           expected to increase in the next 2 years; current access is reported at 44%
1   Health Information Management Systems Society (HIMSS)
                                                                                                                                14




                                               Page 17                                  GAO-04-224 IT for Selected Health Care Functions
                       Appendix I

                       Use of Information Technology for Selected 

                       Health Care Functions





              Benefits of Implementing IT
      Overview of Health Care Delivery Organizations

• We identified 13 reported examples of IT used to support functions
  associated with clinical care and administrative operations at 10 health care
  delivery organizations—see appendix 1 for details
• Examples include public and private medical centers of various sizes, both
  rural and urban, which are taking steps to improve clinical care and patient
  safety through the use of IT for inpatient and outpatient health care delivery
   • successfully implementing EMRs that integrate information—from
      physician orders, results reporting, medication administration, and clinical
      encounter documentation—to provide better decision support capabilities
   • making improvements in electronic communications and documentation
   • establishing IT architectures and standardizing formats for exchanging
      data
   • addressing issues related to security, and thus privacy, introduced by the
      use of wireless networks and devices
                                                                                                        15




                       Page 18                                  GAO-04-224 IT for Selected Health Care Functions
                            Appendix I

                            Use of Information Technology for Selected 

                            Health Care Functions





                Benefits of Implementing IT
       Examples of Cost-Related and Other Benefits
      Reported by Health Care Delivery Organizations
                                   Clinical Care Functions
Cost and Cost-Related Examples:                        Other Examples:
• Fewer medication errors (e.g., wrong                 • Improved quality of care
  drugs or dosages, fewer adverse drug                    • 48% increase in the number of
  reactions)                                                members with diabetes in good or
   • Prevented 1,241 wrong drugs or                         excellent control
     dosages, amounting to a $732,909                  • More accurate and complete medical
     value of prevented errors                           documentation
• Faster communication of clinical care                   • Increase in documentation of pain
  and test results                                          assessment from 0% to 95%
   • Decrease in time from 180 to 14                   • Reductions in length of hospital stay
     hours in radiology, from receiving an                • 47% decrease in average length of
     order to issuing a final report                        stay from 7.3 to 5 days because of
• Lower costs to document clinical care                     improvements in health care efficiency
   • $1,167,317 saved in transcription                      and practice changes
     costs

                                                                                                             16




                            Page 19                                  GAO-04-224 IT for Selected Health Care Functions
                                                      Appendix I

                                                      Use of Information Technology for Selected 

                                                      Health Care Functions





                               Benefits of Implementing IT
             Examples of Cost-Related and Other Benefits
            Reported by Health Care Delivery Organizations
                                                            Administrative Functions
Cost and Cost-Related Examples:                                                  Other Examples:
• Decrease in staffing and other costs                                           • More accurate capture of diagnostic
   • Two-year total net savings of                                                 and procedure codes and charges
     $483,000 resulting from reduction in                                           • Since physicians are directly
     staff, paper, storage facilities, and                                            entering ICD-91 codes, it has
     postage                                                                          created opportunities to enhance
• Streamlined processing of information                                               the quality of care by enabling “real
   • 53% decrease in claim rejection due                                              time” disease management
     to eligibility checks during                                                • Improved communications
     registration                                                                   • Installation of a wireless phone
• Improved financial management                                                       system eliminated paging over
   • Decreased average days in                                                        speaker system, improving
     accounts receivable from 74 to 35                                                communications between providers
     days, saving $2.9 million                                                        and other associates, enabling staff
                                                                                      to respond to patient needs in a
                                                                                      more timely manner
1   International Classification of Diseases, 9th edition
                                                                                                                                       17




                                                      Page 20                                  GAO-04-224 IT for Selected Health Care Functions
                      Appendix I

                      Use of Information Technology for Selected 

                      Health Care Functions





             Benefits of Implementing IT
         Examples of Lessons Learned Reported by
            Health Care Delivery Organizations
The following examples were cited by two or more organizations:
 • Investments are needed in change management and training to ensure
   successful implementation of IT
    • Devote training to work flow changes as well as process changes
    • Social engineering is 75% to 90% of the effort to implement technology
       solutions; technical implementation is 20% to 25% of the effort
 • A major portion of the quantifiable benefit is related to process improvement
   and reduction of manual effort
 • Provider and customer satisfaction are crucial to successful IT
   implementation
 • Involve providers in design, development, and implementation
 • Recognize the importance of managing security issues
    • For user acceptance, a robust and secure system and infrastructure are
       needed
    • Identify web-based access authorization and control issues
                                                                                                       18




                      Page 21                                  GAO-04-224 IT for Selected Health Care Functions
                     Appendix I

                     Use of Information Technology for Selected 

                     Health Care Functions





            Benefits of Implementing IT
                       Overview of Insurers
• We identified 6 reported examples of IT used for claims processing and
  customer service at 3 health care insurers—see appendix 2 for details
• Examples of benefits include the use of IT to improve electronic claims
  processing and improvements in customer service through the use of the
  Internet and other technologies
   • Reduced claims processing costs with increasing claims volume
   • Improved quality of claims data
   • Improved staff productivity
   • Increased provider and customer satisfaction
   • Adoption of technologies such as speech recognition, intelligent
      character recognition, and imaging




                                                                                                      19




                     Page 22                                  GAO-04-224 IT for Selected Health Care Functions
                            Appendix I

                            Use of Information Technology for Selected 

                            Health Care Functions





                Benefits of Implementing IT
        Examples of Cost-Related and Other Benefits
                   Reported by Insurers
                              Claims Processing Functions
Cost and Cost-Related Examples:                        Other Examples:
• Increased percentage of claims                       • Improved quality of claims submission
  processed electronically, reducing                     data
  processing costs
    • Pass rates have increased by 6%                     • Fewer claims require manual
      since 2002, with 1% improvement in                     corrections
      the pass rate translating into                   • Improved staff productivity
      administrative savings of $400,000                  • Data entry rates for optical
• Better timeliness in processing claims                     character recognition are about 95
    • Timeliness improved from 90% in 30                     pages per hour, while manual entry
      days to 99% in 30 days                                 ranges from 22-45 pages per hour
• Enhanced staff productivity                          • Customer and provider satisfaction
    • Inventory levels of claims dropped
      from 275,000 to 180,000 (or from                    • Increased customer satisfaction as
      4.5-5 days work-on-hand to 1.3 days                    a result of improved claims
      work-on hand)                                          turnaround


                                                                                                             20




                            Page 23                                  GAO-04-224 IT for Selected Health Care Functions
                            Appendix I

                            Use of Information Technology for Selected 

                            Health Care Functions





                Benefits of Implementing IT
        Examples of Cost-Related and Other Benefits
                   Reported by Insurers
                                  Customer Service Functions
Cost and Cost-Related Examples:                         Other Examples:
• Lower costs to deliver services, while                • Improved customer services
  increasing customer satisfaction                         • Customer retention due to service
    • Using speech recognition                               delivery capabilities
      technology, lowered cost, with per
                                                           • Decreased customer hold time on
      call costs 10-30% of vendor service
      for call campaigns                                     the telephone from 180 seconds to
                                                             no delay
• Lower costs associated with the
  handling of customer phone calls                      • Improved clinical care to members
    • Decrease in cost of handling annual                  • Diabetic retinal exams increased
      call volume from $22 million to less                   from 71% to 93%
      than $18 million                                     • Rate of adolescents receiving full
• Decrease in staffing                                       vaccinations increased from 29% to
    • 50% decrease in temporary nursing                      43%
      staff required to review medical                  • Marketing tool for the acquisition of new
      records                                             accounts

                                                                                                             21




                            Page 24                                  GAO-04-224 IT for Selected Health Care Functions
                      Appendix I

                      Use of Information Technology for Selected 

                      Health Care Functions





             Benefits of Implementing IT
                 Examples of Lessons Learned
                    Reported by Insurers
The following examples were cited by at least two of the three organizations:
   • Continued improvements to electronic claims are needed to ensure
     provider satisfaction and meet customer demands
       • Continue making enhancements to allow all types of claims and to
         provide products that will reach all providers, while ensuring that
         processes are HIPAA compliant
       • Continue to leverage technology to increase capacity
   • Transformation from legacy systems and processes to a more customer-
     focused entity is a challenge
       • Server and mainframe technologies require complex interfaces
       • Transition to a new platform takes time and requires retraining
       • Procedures and workflows need to be revamped
   • Collaborative relationships and good communications are important for
     successful implementation of IT
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            Benefits of Implementing IT
           Overview of Community Data Networks
• For one of the five community data networks, we identified an example of IT
  used for the regional exchange of health care data among physicians,
  hospitals, payers, and ancillary services (e.g., laboratories and radiology)—
  see appendix 3 for details
   • The organization expects annual benefits to include, among others:
        • annual total benefits of $7.3 million
        • savings in laboratory and radiology labor costs
        • enhanced revenue resulting from proper coding
   • This initiative demonstrates that information can be exchanged securely
     and affordably in a manner that improves the quality and reduces the
     costs of health care
• The four other networks are working to ensure secure standard transactions
  and improve the speed and reliability of secure electronic communications
  containing health data

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                                 Summary

• Selected health care organizations have reportedly benefited from the
  implementation of IT initiatives that have resulted in associated cost savings
  and other benefits
• The range of reported cost and cost-related benefits varied from reductions
  in staff and supplies, to savings from reductions in transcription services
• Other benefits realized also addressed a wide range of improvements
  related to increases in patient safety measures and improvements in
  communications and documentation, among others
• Lessons learned reported by these organizations include the need to
  redesign business processes and workflows, ensure “ownership” of IT
  initiatives to facilitate adoption of technology and its benefits, and ensure
  that staff are adequately trained



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                                Appendix 1
    Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 1 (Clinical Care)
Organizational Overview
• Danville Regional Medical Center is a 350-bed, private, not-for-profit
  community hospital serving a rural population
   • IT budget was $2.7 million (3% of total budget) for 2002, including 28 staff
Description of the IT Environment
• Danville provided data on the use of their medical administration check
  (MAC) application, which is one component of their EMR system
   • MAC utilizes bar code technology and wireless scanners to provide
     positive identification of drugs and patients at the point of care
   • Patients’ bracelets, medications, and nurse IDs are bar coded; no
     inpatient receives medication without bar code verification technology
   • Bar code technology is integrated into a wireless network and EMR;
     patients’ charts are updated when medication is administered

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                                                           Appendix 1
        Benefits and Lessons Learned for Health Care
      Delivery Organizations – Example 1 (Clinical Care)
Reported Cost and Cost-Related Benefits
• Prevented 1,241 wrong drugs or dosages, amounting to a $732,909 value
  in errors prevented1 (2002)
• Prevented 1,968 early or extra doses, amounting to a $116,226 value in
  prevented errors (i.e., potential overdoses)(2002)

Other Reported Benefits
• 50% decrease in phone calls to the pharmacy per day
• Increased patient safety
• Decreased medication errors
• Improved communication and documentation
• No paper charting required when medications are administered



1Value computations based upon The Costs of Adverse Drug Events in Hospitalize Patients, Bates, David, JAMA, 1997, Vol 277 No 4 and,
Adverse Drug Events in Hospitalized Patients, Classen, David, JAMA, 1997 Vol 277 No 4                                                           26




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                                Appendix 1
    Benefits and Lessons Learned for Health Care
  Delivery Organizations – Example 1 (Clinical Care)
Lessons Learned
• Ensure that the configuration of hardware and equipment (scanners,
  batteries, bar code placement) is conducive to performing the manual
  tasks associated with the process (i.e., scanning, charging batteries, etc.)
• Devote training to work flow changes as well as process changes




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                               Appendix 1
    Benefits and Lessons Learned for Health Care
  Delivery Organizations – Example 2 (Clinical Care)
Organizational Overview
• Geisinger Medical Center is a 437-bed, private, not-for-profit integrated
  health care system, which provides primary and specialty care in 50 clinics
  and 3 hospitals serving a rural population; it also operates an HMO covering
  290,000 members
   • IT budget in 2002 was $68 million (4.1% of total budget) and included
     293 staff
Description of the IT Environment
• Geisinger uses a commercial system as its outpatient EMR system
   • System became operational in 1996 and is still evolving
   • Its EMR database contains 2.4 million patients
   • Used to document 1.2 million patient visits in 2002
• Implemented digital radiological image capture and transmission, with
  remote reading of studies for hospitals without radiologist


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                                Appendix 1
    Benefits and Lessons Learned for Health Care
  Delivery Organizations – Example 2 (Clinical Care)
Description of the IT Environment (continued)
• EMR system functions include:
   • Direct order entry for laboratory and radiology, with real-time alerts and
     reminders for about 600 physicians
   • Laboratory, radiology, pathology, centrally scanned documents, and
     transcribed documents that interface with the clinical data repository
   • Patient encounter documentation using electronic templates
   • Web technologies for access to information across the enterprise for
     providers and patients
   • E-mail that provides rapid, secure messaging to every clinician in the
     system



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                                                                 Appendix 1
          Benefits and Lessons Learned for Health Care
        Delivery Organizations – Example 2 (Clinical Care)
    Reported Cost and Cost-Related Benefits
    • 372,000 fewer laboratory and radiology reports printed and filed annually
    • About $1,000 in savings per year per physician due to improved formulary
      compliance
    • 50% or greater decrease in transcription costs in some medical departments
        • $1,992 savings per month in reduced dermatology transcription costs
    • 9-25% increase in productivity in 5 clinical services over a one year period1
      (2001-2002)
    • Able to perform 550 extra colonoscopies resulting in $265,000 first year net
      financial benefit
    • 100% ICD-9 coding of all orders by the provider, improving the accuracy of
      billing
    • Chart pulls reduced by 105,000 annually; average non-appointment chart
      pulls per clinic day decreased from 1,580 to 1,248 (2001)
1   Productivity measure based on relative value unit per full-time equivalence
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                               Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 2 (Clinical Care)
Other Reported Benefits
• Automatic allergy and drug-drug interaction checking on all prescriptions
• Increased ordering of Pneumovax and aspirin for coronary artery disease
• Rapid patient notification of drug and vaccine recalls
• 33% reduction in Medicare disallowance of tests ordered
• 97% of visits have allergies checked and documented
• 1,651 fewer appointments completed without referral authorization
  (Jan 2001-June 2002)
• 94% of 16,690 patients surveyed in December 2002 rated the “helpfulness
  of having the computer in the exam room” as good or very good
• More accurate and complete documentation and billing
• Real-time medical necessity checking and warning at order entry

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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 2 (Clinical Care)
Lessons Learned
• Develop a phased approach to facilitate implementation
• Recognize the difficulty of writing laboratory result interpretations to allow
  for easy to understand explanations for patients who are unfamiliar with
  medical terminology
• Determine how to route patients’ drug renewal requests to the correct
  provider within an integrated delivery system with multiple specialists
• Identify web-based access authorization and control issues for pediatric
  patients, and for someone other than the patient but authorized by the
  patient
• Identify ways to achieve efficiencies in system use and to measure benefits




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                                  Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 3 (Clinical Care)
Organizational Overview
• Kaiser Permanente Northwest is a private, not-for-profit integrated health
  care delivery system serving an urban population of 440,000 members with 1
  200-bed medical center, 7 contract plan hospitals, 28 multi-specialty medical
  offices, and 2 ambulatory surgery centers
   • IT budget in 2002 was about $50 million (about 3% of total)
Description of the IT Environment
• Its clinical information system is a commercially available, comprehensive EMR
  that automates many of the information transmission processes related to
  outpatient care, such that they no longer create paper charts
    • Complete life-long paperless medical record
    • Detailed information on over 4 million office visits and 2.5 million telephone
       interactions per year, with a total of over 30 million visits and 17 million
       telephone interactions
    • Direct clinician order entry with decision support embedded with alerts and
       guidelines for prescribing and ordering
    • Extensive intranet web site
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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 3 (Clinical Care)
Description of the IT Environment (continued)
• Key components of the EMR include
   • Results reporting system that leverages existing electronic data from
     departmental systems
   • Commercial outpatient EMR that automates all
      • outpatient documentation (e.g., progress notes, problem list maintenance)
      • order communications for pharmacy, laboratory, radiology and referrals
      • patient instructions
      • coding of all diagnoses, procedures, and length of stay
      • messaging processes
• Databases for
   • Clinical and disease prevention and management
   • Merged financial data for business management, clinician feedback,
     reduction in variation of care, and research
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                                             Appendix 1
           Benefits and Lessons Learned for Health Care
         Delivery Organizations – Example 3 (Clinical Care)
Reported Cost and Cost-Related Benefits
• 76% decrease in phone calls to obtain lab results between 1993 and 1997
• Over 90% decrease in chart pulls for quality review
• Reduction of 2,000 in overall daily chart pulls, eliminating 16 FTEs and saving
  and avoiding about $5.7 million on medical record unit FTE costs1
• 7.5% decrease in laboratory test ordering—attributable to reliable and efficient
  access to test results—decreasing redundant tests
• 10% decrease in outpatient visits per member per year over three years,
  reversing previous increases
• Decrease in average number of lab tests per member from nearly 17.5 to less
  than 16 per year



1   FTE is full-time equivalents
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                                 Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 3 (Clinical Care)
Other Reported Benefits
• 16% increase in Pap smears performed from 69% to 80% (1995-1998)
• 15% increase in the documentation of smoking status, allowing for targeted
  patient education from 80% to 92% (1998-2000)
• 44% increase in the documentation of coronary artery disease or peripheral
  vascular disease in patients with lipids measured in last 24 months (1998-2000)
• 48% increase from 46% to 66% in members with diabetes in good or excellent
  control (1993-1998)
• 46% increase from 48% to 68% in members with diabetes receiving annual retinal
  exams (1987-1992)
• 90% of users prefer not to return to paper chart, indicating high user acceptance
• 85% of users feel the EMR has a positive impact on productivity and is worth the
  time and effort to use
• 65% of users feel that patients are more satisfied with the use of the EMR, while
  30% are neutral
• Decrease in the number of upper gastrointestinal studies ordered following
  automated patient care guidelines

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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 3 (Clinical Care)
Lessons Learned
• Prepare clinicians for major change and manage differences in proficiency
• Maintain enthusiasm despite initial “start-up difficulties” experienced by
  clinicians
• Implement patient care guidelines for prevention, diagnosis, and treatment
  to provide clinicians with information more efficiently
• Recognize the importance of managing security and confidentiality issues
• Establish collaborative relationship with the IT vendor




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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 4 (Clinical Care)
Organizational Overview
• Maimonides Medical Center is a 705-bed, private, not-for-profit
  independent teaching hospital serving an urban population
   • IT budget in 2002 was $21 million (3.6% of total budget) and included 92
     staff
Description of the IT Environment
• Maimonides Access Clinical System (MACS) is a computerized patient
  record system comprised of four distinct systems from different vendors
   • Inpatient EMR with permanent inpatient record, medication charting and
     documentation, order entry and results reporting, and communications
     and management
   • Outpatient EMR with full physician and nurse documentation
   • Emergency department EMR with full physician and nurse
     documentation
   • Obstetrical EMR with full physician and nurse documentation and
     decision support with expert knowledge

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                               Appendix 1
    Benefits and Lessons Learned for Health Care
  Delivery Organizations – Example 4 (Clinical Care)
Description of the IT Environment (continued)
• Systems that supply data to MAC include, among others
   • decision support system
   • laboratory information system
   • transcription system
   • patient management and accounting system
   • picture archiving and communications system




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                               Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 4 (Clinical Care)
Reported Cost and Cost-Related Benefits
• Reduction of adverse drug reactions from 435 to 325, with corresponding
  increase in pharmacy clinical interventions from 1,046 to 1,873 (1998-2001)
  as pharmacists respond to electronic flags in the system
• 32% decrease in average length of stay from 7.3 to 5 days (1995 – 2001)
  because of improvements in health care efficiency and practice changes,
  such as improved time to deliver medications to the patient’s bedside
• Decrease in time from 180 to 14 hours in radiology, from receiving an order
  to issuing a final report
• 68% decrease in medication processing time from 276 to 88 minutes
• Growth in patient revenues from $369 to $509 million and profit from
  $751,000 to $6 million during 1995-2001
    • 25% of growth in revenues attributed to improved efficiencies with MACS

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                                 Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 4 (Clinical Care)
Other Reported Benefits
• 45% increase in compliance with problem lists from 67% to 97%
• 14% increase in documentation of allergies from 88% to 100%
• 49% increase in documentation of medication lists from 67% to 100%
• Increase in documentation of pain assessment from 0% to 95%
• 55% decrease in medication discrepancies
• 58% decrease in problem medication orders
• Elimination of pharmacy transcription errors (e.g., incorrect time, quantity,
  route)




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                               Appendix 1
    Benefits and Lessons Learned for Health Care
  Delivery Organizations – Example 4 (Clinical Care)
Lessons Learned
• Create the right information systems environment with proven management
  and leadership skills, dedicated IT staff, and respected clinical staff
• Establish programs specifically focused on physician participation and
  ownership of the system
• Provide real-time user support 24 hours, 7 days a week
• Provide “just-in-time” training




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                                                                 Appendix 1
           Benefits and Lessons Learned for Health Care
         Delivery Organizations – Example 5 (Clinical Care)
Organizational Overview
• Mayo Clinic is a 1,951-bed, private, not-for-profit teaching hospital serving
  urban, rural, and international populations
   • IT budget in 2002 was $107 million (5% of total budget), including 750
     staff1
Description of the IT Environment
• Mayo’s initial clinical information system consisted of a database management
  system developed in 1972 and a fiber optic network installed in 1986
• There are 32,000 active users
• The database contains 145 million laboratory/procedure results and 44 million
  radiology images
• 50,000 clinical notes are created weekly; total of 12 million are in the database
• 125,000 electronic outpatient orders are created weekly
1   IT budget includes only direct expenses and the total budget is operating expenses
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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 5 (Clinical Care)
Description of the IT Environment (continued)
• The Mayo Integrated Clinical Systems (MICS) project was initiated in 1995
  to enhance clinical care, education, and research, and to help ensure the
  financial success of the organization through the use of integrated
  electronic patient care systems
• MICS is comprised of forty implementation initiatives that support four major
  categories of activity—electronic medical records, clinical process support,
  system infrastructure, and other initiatives
• Examples of initiatives to support electronic health records include clinical
  notes, electronic results and reports, moving to paperless medical records
  for outpatient services, advanced beneficiary notification, and Mayo’s
  scheduling system




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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 5 (Clinical Care)
Reported Cost and Cost-Related Benefits
• $2,906,000 annual savings resulting from reduction in staff needed to route
  paper medical records from clinical notes technology and from automation
  of correspondence
• $2,850,000 annual savings resulting from electronic access to all laboratory
  results and reports compared with the previous manual process for
  handling medical records
• $8,630,000 annual savings resulting from the elimination of paper medical
  charts during outpatient encounters
• $7,000,000 annual savings resulting from a reduction in unbillable tests
  and the ability to bill patients directly
• $400,000 savings to date resulting from the reduction in staff needed to
  manually create and manage patient’s appointments; other benefits being
  analyzed

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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 5 (Clinical Care)
Other Reported Benefits
• Immediate access to legible patient information to support Mayo’s three
  missions of practice, education, and research
• Structured format for ease of access and for support of data mining
• Improved security
• Improved billing process
• Increased patient satisfaction with up-front knowledge and authorization of
  tests
• Improved patient scheduling, allowing for travel time, fasting, provider,
  calendar, and other criteria
• Less staff training as scheduling rules are incorporated into scheduling
  system
• Automatic creation and recreation of schedule material

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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 5 (Clinical Care)
Lessons Learned
• Benefits can be obtained from successful IT projects
• Process measurement is time consuming and sometimes difficult to capture,
  particularly with large integrated systems
• A major portion of the quantifiable benefit is related to process improvement
  and reduction of manual effort
• Full realization of the benefit requires the combined efforts of IT and
  operations




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                                Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 6 (Clinical Care)
Organizational Overview
• Partners HealthCare is a 3,196-bed, private, not-for-profit integrated
  health care system serving an urban community that consists of 11 hospitals
  and about 7,200 physicians; includes primary care and specialty physicians,
  community hospitals, the two founding academic medical centers, specialty
  facilities, community health centers, and other health-related entities
    • IT budget in 2002 was $112 million (3% of total budget), including about
        850 staff
• The two founding academic medical centers—Brigham and Women’s
  Hospital (BWH) and Massachusetts General Hospital (MGH)—have
  conducted research on their EMR systems
    • BWH data, as reported in several articles about the Brigham Integrated
        Computing System (BICS), are summarized on the next three pages


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                                  Appendix 1
     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 6 (Clinical Care)
Description of the IT Environment
• In February 2002, Partners implemented a patient portal that is currently in use at
  11 practices, with 8,358 patients enrolled as of September 3, 2003
• The portal, called Patient Gateway, provides patients with Web-based access to
   • request routine appointments, prescriptions, and referral authorizations
   • obtain health and disease information
   • obtain practice information
• BWH uses the Brigham Integrated Computing System (BICS) to handle the
  majority of its clinical, financial, and administrative computing needs
• BICS clinical information system includes:
   z longitudinal medical records                    z results review

   z critical pathway management                     z provider order entry

   z operating room scheduling                       z coverage lists

   z critical event detection and altering           z automated inpatient summaries


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        Benefits and Lessons Learned for Health Care
      Delivery Organizations – Example 6 (Clinical Care)
Reported Cost and Cost-Related Benefits of BICS
• A single drug substitution intervention saved $250,000-$500,000 annually on
  just one drug
• Using event triggers to identify possible changes in dosing and provide
  appropriate suggestions to the physicians saved $950,000 for:
    • 8,000 changes in orders of H2 blockers
    • 1,000 changes in orders of Ondansetron1
   • 3,000 changes in orders of Ceftriaxone2
• 4,500 fewer redundant laboratory tests for a savings of $100,000 per year
• Shift from intravenous to oral drug delivery in 20,000 instances saved
  $1 million per year
• User acceptance of a drug family suggestion favoring one H2 blocker3—
  because of cost—increased to 94% within the first few days
1 Ondansetron is used to prevent nausea and vomiting caused by cancer chemotherapy, radiation therapy, anesthesia, and surgery
2 Ceftriaxone is used in the treatment of infections caused by bacteria
3 Histamine H 2-receptor antagonists, also known as H 2-blockers, are used to treat duodenal ulcers and prevent their return                      50




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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 6 (Clinical Care)
Other Reported Benefits of Patient Gateway
• Less staff labor, time saved, fewer delays, and more accurate information
  compared with the telephone
• High patient satisfaction associated with the availability of the system and the
  receipt of replies from the practices
• High satisfaction in medical practices associated with higher use by patients
• Growth in demand among practices as enrollment has risen
Other Reported Benefits of BICS
• Ambulatory record is available at any time and at any location
• 4% of radiology orders into the system were canceled and 55% were
  changed when an embedded alert warned that an ordered study was
  inappropriate for specified clinical reasons
• Positive response to order entry; overall score of 5.7 on a scale from 1-7

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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 7 (Clinical Care)
Organizational Overview
• Department of Defense (DOD) operates a worldwide health care
  program, including overseas facilities, that consists of 75 hospitals and 461
  outpatient clinics for about 9 million beneficiaries
   • 20% are active duty personnel and 80% are retirees and dependents
Description of the IT Environment
• We visited Tinker Air Force Base Medical Treatment Facility (MTF) to
  observe the use of the Composite Health Care System (CHCS) II
   • CHCS II is currently operational in Tinker’s outpatient clinics;
     implementation began on March 31, 2003
   • 6 other MTFs have implemented CHCS II over the past year, with
     worldwide implementation of release 1 expected to be completed by 2006
• CHCS I, first implemented in 1993 and operational in all DOD MTFs today, is
  expected to be replaced by CHCS II by fiscal year 2008

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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 7 (Clinical Care)
Description of the IT Environment (continued)
• CHCS II, a COTS based product, interfaces with the existing military health
  systems to provide an integrated electronic health record of treatment for the
  care provided in DOD medical facilities worldwide
• CHCS II, release 1 provides functions for outpatient services
    • Structured documentation of history, physical, diagnostic, and treatment
    • Secure electronic connectivity of the health record
    • Automated coding derived from the patient encounter documentation
    • Enterprise global clinical database for research, management, and
       military deployment decisions
    • EMR management in support of population health activities
    • Lexicon and health data dictionary
• Future CHCS II capabilities are planned to be fielded incrementally, including
  inpatient, vision, occupational exposure and surveillance, immunizations, and
  dental care

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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 7 (Clinical Care)
Reported Cost and Cost-Related Benefits
• Baseline metrics and data have been established; however, post-
  implementation review of cost and cost-related benefits are not expected
  until November 2003

Expected CHCS II Benefits
• Maintain a secure lifelong health record for inpatient and outpatient medical
  and dental services
• Support force readiness through improved collection, storage, integration,
  management and communication of patient information
• Enable comparison of structured data with lexicon and health data
  dictionary
• Improve health care delivery by providing access to previously unavailable
  clinical information

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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 7 (Clinical Care)
Expected CHCS II Benefits (continued)
• Enhance enterprise decision-making with timely, accurate, and secure data
• Reduce time for and improve accuracy of billing and coding
• Improve patient and provider satisfaction
• Improve management of resources and availability of Internet resources
• Support record legibility, accuracy, and availability, regardless of record
  location
• Enhance quality of prescription services
• Enhance patient safety by reducing the likelihood of adverse drug events,
  therapeutic overlaps, and duplicate procedures and treatments




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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 7 (Clinical Care)
Other Reported Benefits
• Population data to determine efficacy of patient care plans and treatments
• Standardized care through the use of templates for patient types
• Increased capabilities for “non-provider” technicians, by building pre-set
  provider care plans and order sets
• Continuity of care enhanced by ability to quickly look up any encounter on the
  system, refer back to last visits, and see medical records from other sites
• Multiple windows visible on the screen (i.e., patient vitals, drugs, and lab
  results) for better and quicker decision making
• Provide reminders, alerts, pathways, and guidelines




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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 7 (Clinical Care)
Lessons Learned
• Understand the clinical workflow prior to implementation of the system
• Exploit the system capabilities for “non-providers”, consider reengineering
  workflow
• Ensure consistent leadership and provide support and feedback
• Define proactive strategies with clinician leadership
• Consider the value of data versus the time and resources required for data
  collection and input
• Expect an initial, transient productivity dip when implementing an EMR
• Augment training with “in clinic” support during initial use
• Provide a robust, secure, available, system and infrastructure to ensure
  user acceptance
• Involve providers in design, development, and implementation

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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 8 (Clinical Care)
Organizational Overview
• The Veterans Health Administration consists of 21 regional networks that
  support 162 hospitals, 137 nursing homes, and 681 community-based
  outpatient clinics—providing care for over 4.6 million veterans in fiscal year
  2002
• We visited the Department of Veterans Affairs (VA) Washington DC
  Medical Center, a 137-bed facility with 3 community-based outpatient clinics
  and 1 nursing and rehabilitation center to observe how IT is being used in
  support of patient care
Description of the IT Environment
• VA has had an automated information system, the Decentralized Hospital
  Computer Program (DHCP), in its medical facilities since 1985
• In 1996, with the introduction of Windows-based applications, DHCP evolved
  into the Veterans Health Information Systems and Technology Architecture
  (VistA)

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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 8 (Clinical Care)
Description of the IT Environment (continued)
• The Computerized Patient Record System (CPRS) is the interface that
  integrates all clinical VistA data, providing clinicians a complete electronic
  health record, supporting patient care in both inpatient and outpatient settings
    • CPRS enables clinicians to enter, review, and update all order and
      encounter related information connected with patients, such as progress
      notes, lab and radiology tests, medications, diagnoses, procedures
      performed, allergies, and clinical reminders
• Bar Code Medication Administration (BCMA), a VistA component, validates
  medications for inpatients and documents medication administration
    • implemented nationwide as part of an effort to eliminate paper
      prescriptions and reduce medication errors
    • visually alerts staff when the proper parameters are not met
    • uses a handheld device to scan bar codes on patient’s wristbands to
      ensure that the medications are administered accurately and as intended

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         Benefits and Lessons Learned for Health Care
       Delivery Organizations – Example 8 (Clinical Care)
Description of the IT Environment (continued)
• For this review, VA provided a report addressing the quantitative evaluation
  of VistA-RAD, the filmless radiology component of the VistA Integrated
  Medical Imaging System1
   • VistA Imaging is a core image capture and archiving system that
      integrates all types of images, from advanced directives to multi-media
      gait studies, into the EMR, enabling clinicians to have a complete view
      of the patient’s status
   • VistA-Rad augments VistA Imaging, providing radiologists tools that
      enable them to “read” x-ray studies directly from computer screens
      without the need for x-ray film




1   Data from VA Medical Center in Jackson, Mississippi
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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 8 (Clinical Care)
Reported Cost and Cost-Related Benefits of VistA-RAD
 • Net effect has been a reduction in personnel and materials cost of $13.67
   per radiology exam, averting annual operating costs of between $900,000
   and $1 million
    • Imaging service workforce was reduced from 45.5 to 36 FTEs, while
        volume of exams increased by about 23%
    • Cost of film and chemicals was reduced from $2.94 to $.28 per exam,
        or savings of $230,000 per year in operating expenses
 • 99% availability of images (prior to the use of VistaRAD, 9-10% loss rate of
   hardcopy films or 16,650-18,500 films per year)
 • Reduced patient wait time from 28 to 10 minutes, on average
 • Reduction of about 100 film retakes per month due to the ability to adjust
   digital images on the screen, resulting in savings of $3,144 in a 1-year period
 • About a 25-27% increase in departmental efficiency (based on comparison
   of time from exam to report)
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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 8 (Clinical Care)
Other Reported Benefits of CPRS
• Clinicians have more complete information on which to base clinical care
  decisions, improving patient safety and quality of care
• Information is from VistA at the site of care
    • information on request from other VA sites and DOD via remote data
      views
• By standardizing best practices, CPRS can reduce negative variation, create
  standardized data, acquire (and share) health information beyond care
  delivered in VA, and automatically link reminders with appropriate
  documentation
• Nationally, 91% of all prescriptions are entered directly by physicians, up
  from 79% one year ago



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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 8 (Clinical Care)
Other Reported Benefits of BCMA
• Provides real time access to medication order information at the patient’s
  bedside
• Reminds clinical staff when medications need to be administered, have been
  overlooked or the effectiveness of doses administered should be assessed
• At one VA site, the reported error rate improved by 86% from 21.7 incident
  reports for each 100,000 units dispensed to 3 incidents per 100,000 units
  dispensed (1993-2001)
Other Reported Benefits of VistA-RAD
• Improved image quality, reducing patient exposure to radiation and repeated
  tests
• Ability to organize and present digital images for teaching conferences
• Savings of 5 to 80 minutes per day per physician due to reduction in time
  spent waiting for film to be processed or located
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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 9 (Clinical Care)
Organizational Overview
• Vanderbilt University is a 927-bed, academic medical center serving an
  urban population
    • IT budget in 2003 was $30 million (2.3% of total budget), including 207 staff
Description of the IT Environment
• Vanderbilt’s information management system was created to automate billing,
  admissions, discharges, pharmacy, laboratory, radiology, and other functions
• Vendor systems are purchased only if they are “best of class” and able to
  interface with Vanderbilt’s overall IT architecture.
• An information management infrastructure is in use throughout Vanderbilt
    • Shared registration data across all inpatient and outpatient areas
    • Shared electronic patient charts across inpatient and outpatient areas, with
      about 150 types of documents; used interactively 9,000 times a day by 2,200
      distinct users
    • Over 20,000 reports are on a Web-based portal for provider access, with over
      2,000 new reports automatically generated on a quarterly basis
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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 9 (Clinical Care)
Description of the IT Environment (continued)
• E3 Vision project identified needs of clinicians, patients, and office support for
   • electronic availability of all information, including admissions, results from
     laboratory, x-rays, pathology, and studies from outside Vanderbilt facilities
   • ability to electronically write all orders for prescriptions, laboratory, and
     radiology
   • computer-assisted ICD-9 coding
   • electronic clinical notes with prompts
• E3 Star “Cluster” (i.e., StarPanel, StarChart, and StarVisit) supports the
  electronic health records
• WizOrder provides computerized provider order entry with integrated decision
  support capabilities, including pharmacy warnings, online access to drug and
  prescription information, automated ICD-9 justifications for tests ordered, and
  guidelines to control excessive test ordering
   • generates 7,000-10,000 orders per day directly by physicians
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     Benefits and Lessons Learned for Health Care
   Delivery Organizations – Example 9 (Clinical Care)
Cost and Cost Related Benefits of E3/StarCluster
• $1,167,317 saved in transcription costs in 2003
• 40% reduction in paper faxes as they are intercepted and imported into the
  system
• 28 FTEs saved resulting from automatic scanning, problem lists, and EMR,
  saving $704,000 (2003)
• Solved problems related to the entry of incorrect ICD-9 codes, saving FTEs
  and reducing the number of denied claims
• Recovery of storage space for paper charts led to conversion of space into
  a new patient room




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    Benefits and Lessons Learned for Health Care
  Delivery Organizations – Example 9 (Clinical Care)
Reported Cost and Cost-Related Benefits of Provider Order Entry
• About 90% increase in compliance rate for ICD-9 coding for EKGs
• 60% decrease (from previous year) in new blood chemistry test orders;
  40% decrease in actual tests performed
• 40% decrease in new orders for portable chest x-rays; 30% decrease in
  studies performed, amounting to $1.1 million saved annually
• $5 million saved annually on drug substitutions, based upon automated
  prompts that recommended alternatives that increased quality and
  decreased cost




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    Benefits and Lessons Learned for Health Care
  Delivery Organizations – Example 9 (Clinical Care)
Lessons Learned
• System implementation represents a profound workflow change for users
• Users’ concerns must be continuously respected, listened to, and
  addressed
• Social engineering is 75% to 90% of the effort to implement technology
  solutions; technical implementation is 20% to 25% of the effort
• Tools have to be usable enough to deliver benefits and support the delivery
  of medical care, education, and cost control
• Change agent groups are important
• Investments must be made in change management




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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 10 (Administrative)
Description of the IT Environment
In 1999, Danville Regional Medical Center installed a wireless phone
system and network, as well as physician Internet access for clinical data
 • Wireless Phone System: 180 wireless phones are available for physicians,
    care givers, and other associates; system selected based upon the
    scalability of the system and compatibility with the existing phone switch and
    other in-house wireless devices
 • Wireless Network: Wireless infrastructure replaced wall-mounted
    computers with roving wireless devices, which provide for data to be
    entered into wireless devices and transmitted to the mainframe, updating
    patients’ medical records in real time; system is compliant with HIPAA
    security requirements
 • Net Access: Provides physicians secure, direct access to patient data,
    allowing physicians to customize screens to meet specific needs; system
    is expandable to include electronic signatures for medical records and is
    HIPAA compliant
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Benefits and Lessons Learned for Health Care Delivery
    Organizations – Example 10 (Administrative)
Other Reported Benefits
• Wireless phone system eliminated paging over speaker system, improving
  communications among physicians, care givers, and other associates,
  enabling staff to respond to patient needs in a more timely manner
• Wireless network enables care givers to remain logged in while traveling
  from room to room
• Extra wireless device in each clinical area provides downtime coverage
• Larger monitors make status displays visible from inside room
• Secure and timely access to patient data
• Decrease in mailing and faxing of paper medical records
• Decrease in phone calls requesting patient information
• Anytime/anywhere access


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Benefits and Lessons Learned for Health Care Delivery
    Organizations – Example 10 (Administrative)
Lessons Learned
• Service availability and quality of service are critical factors in the design of
  a wireless phone system
• Physician education was important in managing expectations in the use of
  the wireless phones in the nursing units




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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 11 (Administrative)
Description of the IT Environment
• Mayo Clinic’s Electronic Clearinghouse Service Project is being
  implemented to automate claims and remittance processing for all Mayo
  Clinic and Mayo Health System sites through a central hub1
• Implementation began in October 2000 and will continue through October
  2003
   • Implementation for remittance processing is currently at 70%
   • Implementation for claims processing is currently at 55% and has been
     delayed due to HIPAA compliance preparation
• The project is providing service to 20 Mayo sites




1   Mayo has clinics in Rochester, Minnesota, Jacksonville, Florida, and Scottsdale, Arizona
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        Benefits and Lessons Learned for Health Care
    Delivery Organizations – Example 11 (Administrative)
    Reported Cost and Cost-Related Benefits
    • Two-year total net savings of $483,000 ($229,000 over initial estimate),
      resulting from reduction in staff, paper, storage facilities, and postage
    • The Mayo Clinic in Scottsdale, Arizona reported that billing staff decreased
      from 5 to 3 FTEs1
    • Project providing returns on investment throughout the implementation
      process


    Other Reported Benefits
    • Facilitates faster payments




1   Note: We did not visit the Mayo Clinic in Arizona
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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 11 (Administrative)
Lessons Learned
• The need to meet October 16th HIPAA requirements slowed progress on the
  claims implementation
• Spend time ensuring that savings are achieved (e.g., if there is an expected
  reduction in staff, plan for attrition, retraining, etc. to ensure gains)
• Maintaining customer satisfaction in an environment of significant industry
  change is a challenge




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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 12 (Administrative)
Description of the IT Environment
• Partners HealthCare maintains a central data repository, which receives
  data from all of the hospitals in its system
• In 1998, Partners started using the New England Healthcare EDI Network
  (NEHEN) for insurance eligibility checking
    • NEHEN is a not-for-profit corporation formed and owned by a
      collaboration of providers and payers in eastern Massachusetts; its
      objectives include
       • Creation of a common technology platform to exchange insurance
          transactions between regional providers and payers
       • Development of a common set of guidelines and policies for
          implementing transactions and governing the network
• Partners began using PDA1 handheld devices to capture charges for
  inpatients at the end of February 2003 for items such as procedure and
  diagnostic codes, viewing all laboratory and radiology results throughout
  Partners, and alerts to any abnormal laboratory test results
1   PDA: personal digital assistants
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     Benefits and Lessons Learned for Health Care
 Delivery Organizations – Example 12 (Administrative)
NEHEN
Architecture                           Provider                                     VPN                                      Payers




Source: Blackford Middleton, MD, MPH, MSc; Chairman, Center for Information Technology Leadership; Partners HealthCare, Boston, MA
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        Benefits and Lessons Learned for Health Care
    Delivery Organizations – Example 12 (Administrative)
    Reported Cost and Cost-Related Benefits from the Use of NEHEN
    • 37% decrease in the number of days bills are in accounts receivable from
      75 to 47 in a one-year period for a large specialty clinic
    • 53% decrease in claim rejection due to eligibility checks during registration
    • $2.54 decease in cost of an eligibility check from $2.64 to $.10

    Reported Cost and Cost-Related Benefits from the Use of PDAs
    • Number of lag days reduced from 17 to 10 days1
    • The number of days bills are in accounts receivable reduced from 54 to 37
    • More charges are being captured
    • ICD-9 coding accuracy has increased



1   “lag days” are the number of days from date of service to the date bills are received in the billing office
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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 12 (Administrative)
Other Reported Benefits from the Use of NEHEN
• Registration denials dropped from the first to the third most common reason
  for denials
• Standardized format for extracting and exchanging billing data
• Security provided by a gated community using encrypted data on a virtual
  private network

Other Reported Benefits from the Use of PDAs
• Since physicians are directly entering ICD-9 codes, it has created
  opportunities to enhance the quality of care by enabling “real time” disease
  management




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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 13 (Administrative)
Organizational Overview
• St. Vincent’s Hospital is a 338-bed, private, not-for-profit community
  hospital serving an urban and rural population
   • IT budget in 2002 was $5.7 million (4% of total budget), including 30 staff
Description of the IT Environment
• For about nine years, largely paperless operations, ranging from bedside
  pharmaceutical and patient bar code scanning to allowing patients to pre-
  register from home using a web-based community portal
• All outpatient records online since January 1993
• In the early 1990s, prior to implementing document imaging, the business
  office processed about 1.3 million pieces of paper annually, while the medical
  records department processed about 2.8 million pieces of paper
• Significant process redesign related to manual processes and integration of
  existing information systems
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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 13 (Administrative)
Reported Cost and Cost-Related Benefits
• Decreased average days in accounts receivable from 74 to 35 days, saving
  $2.9 million (1988-1995)
• Decrease in average registration time from 20 to 12.6 minutes
• 66% decrease in time needed for insurance verification
• 20% decrease in business office staff, although patient registrations
  increased 40%
• Increased up-front collections by $250,000 due to pre-registration and bad
  debt modules
• Annual savings of $645,000 through reduction of bad debt and charity,
  interest on accounts receivable, and savings on folders and supplies
• Annual savings of $277,000 in medical records through reduction on “peer
  review organization” denials, microfilm, and space requirements


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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 13 (Administrative)
Reported Cost and Cost-Related Benefits (continued)
• Annual savings of $258,000 in facility and materials management through
  reductions in space requirements, microfilm, paper supply, and copy service
• Annual savings of $664,000 from process redesign (includes improvements
  in productivity, access, and implementation of parallel processing)
• One-time savings of $1.6 million from process redesign
• One-time savings of $1.6 million from reduction in backlog of medical records
  correspondence and improvements in the process for producing a final bill
  upon a patient’s discharge
• One-time savings of $30,000 from reduction of outpatient accounts
  receivable




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    Benefits and Lessons Learned for Health Care
Delivery Organizations – Example 13 (Administrative)
Other Reported Benefits
• Better customer service for both patients and third-party payers
• Increased staff productivity via the image workstation
• Enterprisewide accessibility of information
• More complete insurance verification
• Expedited chart completion and billing
• Faster issue resolution in follow-up and collections
• Two-day improvement in recurring bills




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                      Benefits and Lessons Learned for Insurers
                          Example 1 (Claims Processing)
Organizational Overview
• Blue Cross and Blue Shield of Alabama has over 3 million members
  and processed nearly 63 million claims in 2002
   • Proposed IT budget for 2003 is $71 million (12.5% of total budget)1
Description of the IT Environment
• Improved automated claims processing by implementing new technologies
  over the past decade
• Upgraded claims processing system allows providers to transmit batched
  claims via dial-up networking, frame relay, or a proprietary network through
  its Electronic Medical Claims (EMC) system
    • produces reports to help identify which claims have been accepted or
      need correction, assisting the providers in learning how to send more
      accurate claims
    • Web applications are available to providers for entering claims
    • 90% of hospitals’, 85% of doctors’, and 35% of dental claims are
      submitted electronically
1   Budget year is 7/1/2003 to 6/30/2004
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        Benefits and Lessons Learned for Insurers
            Example 1 (Claims Processing)
Description of the IT Environment (continued)
• Other system upgrades include:
   • Intelligent character recognition (ICR) system extracts data from claim
     forms and performs online edits to further increase pass rates
   • Claims Imaging Processing System (CIPS) stores images
     electronically, allowing customer service representatives to
     instantaneously retrieve an image of a claim when discussing a filed
     claim with a provider or subscriber
       • replaced the manual processes of batching, counting, and reconciling
         claims, as well as the need for space to store paper




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                      Benefits and Lessons Learned for Insurers
                          Example 1 (Claims Processing)
Reported Cost and Cost-Related Benefits
• Estimated $20 million savings in data entry costs (2002)
• Percentage of “first pass” claims increased from 86 to 90 (projected),
  saving $1.6 million (2001- 2003)1
• Claim documents rejection rate dropped from 5% using optical character
  recognition (OCR) devices to about 1% using ICR
• Cost to enter claims data reduced from $.74 using OCR to $.26 using ICR;
  $.48 per claim savings or $100,000 per month
• Total return on investment in ICR since implementation is estimated to
  have surpassed $3 million
• Images are, on average, 20% faster to enter data from than hardcopy
• Keying from images saves an average of 20% cost per claim or about $.15
  per claim in data entry alone—about $3 million savings since inception
1   First pass rate is measured as the percent of claims that do not require manual intervention to adjudicate after entry
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        Benefits and Lessons Learned for Insurers
            Example 1 (Claims Processing)
Other Reported Benefits
• Eliminated costly keying, mailings, and other manual interventions
• Improved provider satisfaction and health care delivery
• Increased the quality of claim submission
• Decreased the number of phone calls and inquiries received
• Increased productivity
• Delivery of images to PCs reduced approximately 11 auxiliary type positions
  that helped maintain paper (logging, batching, etc.) and other functions,
  which could result in about $4 million in savings
• Imaging led to outsourcing data entry, which increased savings
• Document images are generally of a very high quality compared to microfiche
• Reconciliation became automated based upon an image control number;
  reports are available for images that are not processed or reconciled

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         Benefits and Lessons Learned for Insurers
             Example 1 (Claims Processing)
Lessons Learned
• Maintain good communications with providers
• Work directly with vendors and suppliers of EMS software systems
• Furnish free billing software and installation assistance to providers that do
  not use a commercial software vendor
• Purchase systems instead of trying to build, if there are products that are
  available that meet the needs of the organization
• Keep up with customer demands by continuing to make improvements to
  the EMC process
• Continue enhancing EMC to allow all types of claims and to provide
  products that will reach all providers, while ensuring that processes are
  HIPAA compliant


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        Benefits and Lessons Learned for Insurers
            Example 2 (Claims Processing)
Organizational Overview
• Blue Cross and Blue Shield of Minnesota has over 2.6 million
  members and processed over 28 million claims in 2002
   • IT budget in 2002 was $76 million (19% of total budget), consisting of
     both claims processing and IT, including 1,500 staff


Description of the IT Environment
• Leveraged technology by reengineering claims processing based on the
  concept of “straight-through processing,” resulting in increased system pass
  rates, automated business rules, and prioritized service requests




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                               Appendix 2
        Benefits and Lessons Learned for Insurers
            Example 2 (Claims Processing)
Description of the IT Environment (continued)
• Implemented new tools to increase and enhance productivity and reduce
  human intervention, such as
   • Super Examiner Workstation: an online application that moved more
     than 8000 examiner paper documents to an online format
   • Super Adjudicator: a claims rules engine that replaced manual
     adjudication with automatic adjudication of claims to absorb growth
     through increasing the pass rate and improving productivity
   • Desktop image deployment: allows viewing of paper claims and
     attachments online, eliminating the need to search for paper documents




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        Benefits and Lessons Learned for Insurers
            Example 2 (Claims Processing)
Reported Cost and Cost-Related Benefits
• Administrative costs remained flat while receipts grew at an average of
  14.5% a year
• Pass rates have increased by 6% since 2002, nearly 10% over the past
  three years, with 1% improvement in the pass rate translating into
  administrative savings of $400,000
• Claim processing timeliness improved from 90% to 99% in 30 days (2000-
  2002)
• Inventory levels dropped from 275,000 to 180,000, or from 4.5-5 days work-
  on-hand to 1.3 days work-on hand (2000-2003)
• 99% claims accuracy rate




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       Benefits and Lessons Learned for Insurers
           Example 2 (Claims Processing)
Other Reported Benefits
• System down time and response time were reduced
• Performance results dramatically improved
• Claim inventory levels dropped significantly
• Claim cost stabilized
• Examiner productivity levels increased
• Member and provider satisfaction improved




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         Benefits and Lessons Learned for Insurers
             Example 2 (Claims Processing)
Lessons Learned
• Creating the required infrastructure that enables the organization to rapidly
  transform into a more customer-focused entity given the existing legacy
  systems and processes is a challenge
• Focus on processes
• Continue to leverage technology to increase capacity
• Implement risk mitigation strategies
• Focus on quality




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        Benefits and Lessons Learned for Insurers
            Example 3 (Claims Processing)
Organizational Overview
• Premera Blue Cross has about 1.5 million members and processes about
  19.2 million claims a year
   • IT budget in 2002 was $68 million (17% of total budget), including about
     400 staff
Description of the IT Environment
• Implemented several applications to increase efficiency and accuracy of claims
  • Optical Character Recognition (OCR) and Imaging/Scanning Technology:
    converts 75% of paper claims into electronic documents prior to processing
  • Auto-Adjudication (AA): claim automatically adjudicated based on a series of
    established validations or rules
  • Interactive Voice Response (IVR): intelligent call routing with 24-hour self
    service response to members and providers
  • Automated Call Distributor (ACD): routes calls by selecting the first available
    agent, while tracking call volume and call handling statistics

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        Benefits and Lessons Learned for Insurers
            Example 3 (Claims Processing)
Reported Cost and Cost-Related Benefits
• About $1 million in savings resulting from OCR implementation (2002)
• 13% increase in first pass rate with use of Auto-Adjudication, with 70,000
  additional claims auto-adjudicated from January through June 2003
• Reduced call volumes to live agents, with about 15% of calls handled with
  the IVR




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        Benefits and Lessons Learned for Insurers
            Example 3 (Claims Processing)
Other Reported Benefits
• ACD technology helps facilitate and enable a more consistent call
  experience, better service, and call tracking
• Improved FTE efficiency resulting from automating processes (e.g., entry
  rates for OCR are approximately 95 pages/hour, while manual entry ranges
  from 22-45 pages/hour)
• Increased functionality and system throughput
• Reduction of administrative costs related to handling electronic versus paper
  claims
• Improved customer satisfaction as a result of improved claims turn-around
• Reduction of archive storage expenses and on-site space requirements
• More efficient production and more accurate data
• IVR provides continuous automated access to member data by phone
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         Benefits and Lessons Learned for Insurers
             Example 3 (Claims Processing)
Lessons Learned
• Implementation of a new platform required retraining of all associates
• Transition to new platform takes time—took over 3 years
• HIPAA projects increased competition for resources
• Server and mainframe technologies required complex interfaces
• Important to gain corporate confidence in the reliability of new system
• Need to revamp procedures and workflows




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         Benefits and Lessons Learned for Insurers
              Example 4 (Customer Service)
Description of the IT Environment
• Blue Cross and Blue Shield of Alabama reduced the costs of
  delivering customer service, while increasing customer satisfaction, through
  the implementation of technology
   • Receives about 7 million calls a year or about 30,000 calls per day.
   • Customer Information System is an Intranet application used by the
      customer service department to allow representatives to quickly access
      information at the same time that calls are received
        • a voice response unit allows members to verify eligibility, check
          claims status, order forms and ID cards, or speak to a
          representative, substantially reducing the length of time to complete
          calls, thereby reducing costs



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        Benefits and Lessons Learned for Insurers
             Example 4 (Customer Service)
Reported Cost and Cost-Related Benefits
• Decreased the average length of call from 271 to 218 seconds, resulting in
  a 20% cost savings
• Decreased the cost of handling annual call volume from about $22 million
  to less than $18 million
• Decreased customer hold time from 180 seconds to no delay


Other Reported Benefits
• Increases availability of services to the customer




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        Benefits and Lessons Learned for Insurers
             Example 5 (Customer Service)
Description of the IT Environment
• Blue Cross and Blue Shield of Minnesota’s customer relationship
  management (CRM) is provided by a Web-based customer service system
  that lets members manage their health benefits online to
   • select health plans
   • calculate contributions to their coverage
   • research information on prescription drugs and other treatments
   • locate participating physicians
   • obtain explanations of benefits
   • check deductibles and out-of-pocket maximums
   • check the status of their claims
• Customers can also order prescriptions by mail and estimate the cost of
  prescriptions and medical procedures
• CRM integrates all preferred communication channels—including phone,
  e-mail, and Web-self-service—blending voice and e-mail interactions and
  directing the member to the appropriate service representative
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          Benefits and Lessons Learned for Insurers
               Example 5 (Customer Service)
Reported Cost and Cost-Related Benefits
• Call center staff fielded over 4 million calls in 2002, eliminating more costly
  phone calls
• New flagship national accounts boosted enrollment by 10% (over 264,000
  new members) in 2002, with customer service staff remaining steady

Other Reported Benefits
•   Increased membership
•   Customer retention due to service delivery capabilities
•   Controlled or reduced operating costs
•   Critical marketing tool for the acquisition of new accounts



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        Benefits and Lessons Learned for Insurers
             Example 5 (Customer Service)
Lessons Learned
• CRM is most successful when undertaken within an overall corporate
  strategy and when adopting a small-scale, components-based approach
• Make sure customers really want Web self-service
• Conduct Web site usability and usefulness tests
• Integrate the system with CRM using a centralized architecture
• Keep the Web site content current
• Do not focus on buying a mega-CRM solution; implement smaller, tactical-
  oriented solutions rather than the “one solution does it all”




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                 Benefits and Lessons Learned for Insurers
                      Example 6 (Customer Service)
Description of the IT Environment
 • Premera Blue Cross has invested heavily in technologies to better
   capture, cleanse, and manage information in order to assist in the facilitation
   of quality care at the most effective cost; these include:
       • InterQual: an online decision support tool of clinical review criteria used by Premera
         to help with care facilitation
       • ELIZA: speech recognition technology that lets a person talk with a computer using
         applications that are developed to anticipate the topic of conversation and possible
         responses; used for health screening reminders and surveys
       • HEDIS® real-time data reporting tool1 : a comprehensive database that stores claims
         data, member demographics, and medical records data; developed to calculate
         performance based on HEDIS
       • ePocrates Handheld Formulary: software for handheld devices that provides
         physicians quick access to drug information
       • Polypharmacy Program: a pharmacy education and safety program that searches for
         members who are using five or more chronic medications, encouraging members to
         bring all medications to next doctor’s appointment to review their drug therapy
1The Health Plan Employer Data and Information Set (HEDIS) is a standardized set of performance measures designed to allow comparison of
health plan performance nationally                                                                                                            102




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        Benefits and Lessons Learned for Insurers
             Example 6 (Customer Service)
Reported Cost and Cost-Related Benefits of ELIZA
 • Lower cost, with per call costs 10-30% of vendor service
 • Calls completed more quickly with up to 500 calls per hour; completing call
   campaigns in 1-2 days that previously took 2-6 weeks


Reported Cost and Cost-Related Benefits of HEDIS real-time data
collection
 • 50% decrease in temporary nursing staff required to review medical records

Other Reported Benefits of ePocrates Handheld Formulary
 • 72% of physicians surveyed were satisfied or very satisfied
 • 56% said it improved provider efficiency by reducing pharmacy callbacks

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        Benefits and Lessons Learned for Insurers
             Example 6 (Customer Service)
Other Reported Benefits of InterQual
• Provides reviewers with clear set of rules that determine the medical
  necessity at any level of care, as well as a method for capturing and
  reporting the decision, which reduces inconsistent decision making
Other Reported Benefits of ELIZA
• Improved clinical care to members from 2000-2002 (e.g., diabetic retinal
  exams increased from 71% to 93% and the rate of adolescents receiving
  full vaccinations increased from 29% to 43%)
Other Reported Benefits of HEDIS real time data collection
• Higher staff satisfaction
• Limited disruption of physician offices and improved data collection
Other Reported Benefits of Polypharmacy Program
• 27% of members reported a change in their prescribed medications
  (either a dose change, a medication added, or a medication discontinued)

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        Benefits and Lessons Learned for Insurers
             Example 6 (Customer Service)
Lessons Learned
• ePocrates required changing provider behavior to use a handheld device
• Polypharmacy required developing collaborative relationships with the state
  medical associations (of Washington, Oregon, and Alaska) and the
  Department of Health
• Still resolving shortage of trained analysts to provide and analyze reports,
  and case managers to manage cases identified for the pilot case
  management and data mining projects




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               Benefits of Community Data Networks
                             Example 1
Organizational Overview
• The Santa Barbara County Care Data Exchange (SBCCDE) was
  founded in 1998 by leading public and private health care organizations
  throughout Santa Barbara County, with a goal of improving the health status
  of all Santa Barbara residents
• SBCCDE is piloting a data exchange platform for the rapid and secure
  delivery of patient data to authorized users who have informed consent—
  physicians, health care organizations and consumers
• Participants include
  •   Santa Barbara Regional Health Authority               •   Santa Barbara Department of Public Health
  •   Sansum-Santa Barbara Medical Foundation               •   Cottage Health System
  •   Catholic Health Center West Marion Med Center         •   MidCoast IPA
  •   NDC Health                                            •   Santa Barbara Medical Society
  •   Pueblo Radiology                                      •   UNILAB Corporation
  •   University of California at Santa Barbara             •   Veterans Health Administration
  •   Lompoc Valley Community Healthcare Organizations

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            Benefits of Community Data Networks
                          Example 1
Description of the IT Environment
• SBCCDE uses a peer-to-peer network, enabling the participating
  organizations to retain control over their data while permitting access to
  authorized users
   • In the final phase of pilot testing; expected to provide $1 million net
     financial benefit annually to the community
• The technology components illustrated on the next page include:
   • Central CDE infrastructure—manages security and access, patient
     identification, and keeps a central index of patients and locations of
     clinical data in secure Web-enabled data stores
   • User access—a browser-based interface created for physicians and other
     users to search and retrieve data; users may also “subscribe” to a set of
     patients and then have new information about those patients forwarded to
     them whenever it is released
       • Users include physicians, patients, hospitals, payers, and laboratories

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                                                             Appendix 3
                          Benefits of Community Data Networks
                                        Example 1
   Hospitals                                           CDE Infrastructure
                                                                                                                  Physician

                                                                        Access & Security Management
                                                                        • Controls login
    Patient                 Pharmacy records
    demographics                                                        • Monitors and records access
                                                                           requests                                  Physician Portal
                                                                        • Enables access only to
                                                                           allowed data                              Clinical Records Access
                                                                                                                     • Browser-based
    Radiology                             Lab                                                                        • Retrieve records from anywhere
    studies                           records                                                                          in system
                                                                                                                     • Manage consent process
                                                        Jon   John
                                                        Smith Smith
                                                                        Identity Correlation
   Payors                                                               • Correlates patient identities from
                                                                           different sources
                                                                 ?                                                Patient
                                                                 =      • Intelligently matches similar
                                                                           records (e.g., similar names,
                                                                           SSNs, addresses)
    Policyholder                Eligibility and
    demographics                authorization
                                                                                                                   Consumer Portal

                                                                       Information Location Service                Personal Information
   Diagnostic Services                                                 • Links to patient clinical records         • Browser-based
                                                                           in participants’ systems
                                                                                                                   • Clinical information access reports
                                                                       • No clinical records stored at
                                                                           CDE central site                        • Medications
                                                                       • Demographic data of all                   • Personal Health Information
    Patient         Radiology             Lab                              patients in system
    demographics      studies         records




Source: McKinsey, updated by CareScience
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                          Benefits of Community Data Networks
                                        Example 1
Expected Cost and Cost-Related Benefits (annual results)
                                    Pe r Co n stitu e n t                                    To ta l fo r a ll Co n stitu e n ts
                                         Stand-alone                    Total
                                                          Regional                        Number of          Total            Total
  Organization                 Costs        Web                       Individual
                                                          Network                        Constituents        Costs           Benefits
                                         Enablement                    Benefits
Hospital                      $120,000        $180,000 $     110,000     $290,000                   7   $       840,000      $2,000,000
Imaging Center                $110,000         $44,000 $     (15,000)     $29,000                   4   $       440,000        $120,000
Laboratory                    $110,000         $70,000 $     170,000     $240,000                   2   $       220,000        $480,000
Physician Group               $120,000         $90,000 $     280,000     $370,000                   3   $       360,000      $1,100,000
Solo Physician                     $40              $0 $       2,400       $2,400               1,750   $        70,000      $3,500,000
Note: Excludes clinical efficiency benefits                                                                 ≈ $2,200,000 ≈   $7,300,000
Source: McKinsey



Other Expected Benefits
• Savings in laboratory and radiology labor costs                                      • Fewer readmissions
• Less time spent requesting and providing information                                 • Reduction in medical errors
• Fewer admissions to the emergency department                                         • Shortened length of hospital stay
• Enhanced revenue resulting from proper coding                                        • Avoidance of test duplication
• Less staff time spent handling lab and radiology test results

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                                                               Appendix 4
Related Health Care IT Studies: The Value of Computerized
                            Provider Order Entry in Ambulatory Settings1
• Computerized provider order entry (CPOE) is a software application that
  supports the ordering of medications, lab tests, radiology studies, nursing
  interventions, and referrals
• Ambulatory CPOE systems encompass different features and levels of
  functionality, grouped into five classes
    • basic prescription
    • basic prescription and diagnostic orders
    • intermediate prescription
    • intermediate prescription and diagnostic orders
    • advanced prescription and diagnostic orders
• A key component of ambulatory CPOE is clinical decision support, which
  provides clinicians with a range of diagnostic and treatment-related tools


1   Center for Information Technology Leadership, The Value of Computerized Provider Order Entry in Ambulatory Settings (March 2003)
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Related Health Care IT Studies: The Value of Computerized
        Provider Order Entry in Ambulatory Settings (continued)
Benefits
• Improved patient outcomes
   • Nationwide adoption of advanced ambulatory CPOE systems will
     eliminate more than 2 million adverse drug events and more than
     190,000 hospitalizations per year
   • Projected annual savings of more than $10 billion in radiology, nearly
     $5 billion in laboratory costs, over $2 billion from hospitalizations related
     to avoided adverse drug events


• Provider revenue enhancement
   • Using advanced ambulatory CPOE, providers can eliminate more than
     $10 in rejected claims per outpatient visit


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      Related Health Care IT Studies: Computerized Physician
        Order Entry in Community Hospitals: Lessons from the Field1
• About 89% of US hospitals are community hospitals, where most physicians
  who admit patients have independent practices in the community, often
  admitting patients to several hospitals and spending limited time at the
  hospital each day
• Research based on interviews with key staff in ten community hospitals that
  have made significant progress in implementing CPOE
• Example of CPOE-related safety and quality improvements at Queen’s
  Medical Center in Hawaii include:
          • 75% reduction in transcription errors
          • 30% reduction in wrong medication or route
          • 75% reduction in inappropriate vancomycin use
          • 60% decrease in time to first dose of antibiotic for community acquired pneumonia
          • 98% compliance with the Joint Commission on Accreditation of Health Care Organizations
            standard for orders for restraints
          • 85% reduction in unsigned orders
          • 40% reduction in turnaround time for STAT22 medication orders
1   California Healthcare Foundation and First Consulting Group, Computerized Physician Order Entry in Community Hospitals: Lessons from the Field (June 2003)
2   STAT orders are those required for an emergent clinical situation
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            Related Health Care IT Studies: Clinical Information
                                                Systems: Achieving the Vision1
Anecdotal evidence from the Kaiser Permanente Institute for Health Policy identified the
value of clinical information systems at various organizations in the following areas:
 1. Improved Quality, Outcomes, and Safety
     • Increase in compliance with preventive health guidelines
         • Use of a health maintenance tracking system significantly improved provider
             compliance with 8 of 11 recommended procedures, at a cost of $.78 per
             patient per year
         • Use of computerized protocols increased the rate of recording blood pressure
             by 34%
     • Improved disease management
         • Kaiser Permanente’s use in Ohio of automated medical records and prompts
             to stratify and treat diabetic patients by risk group was successful at
             increasing preventive care, reducing unnecessary visits for low-risk patients,
             and substantially reducing the number of amputations for high-risk patients
         • Use of computer-generated reminders was found to improve patient
             management of asthma, reducing asthma-related hospitalizations by 60% and
             emergency department visits by 50%
1   Kaiser Permanente Institute for Health Policy, Clinical Information Systems: Achieving the Vision (February 2002)
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Related Health Care IT Studies: Clinical Information
            Systems: Achieving the Vision1(continued)
• Improved disease management (continued)
   • Use of computer-generated reminders in an outpatient mental health clinic
     improved adherence to clinical guidelines by 25% and improved
     documentation of problems by over 90%
   • Use of an automated heparin protocol for treating unstable angina reduced
     the average time to reach therapeutic levels from 14% within 24 hours to 96%
     within 24 hours
   • Use of a computer-based decision support system was more effective and
     efficient than standard guidelines tables in applying preventive therapy for
     tuberculosis by 95% for physicians who used the system, compared to 56%
     for those who used paper-based resources
• Improved drug prescribing and administration
   • Intermountain Health Care’s (IHC) use of an antibiotic information system
     helped physicians select antibiotic regimens, resulting in fewer susceptibility
     mismatches and allergic reactions, reducing adverse drug reactions by over
     70%, reducing the number of days patients received excessive dosage by 2.9
     days, and reducing the overall cost of antibiotic therapy
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  Related Health Care IT Studies: Clinical Information
              Systems: Achieving the Vision1 (continued)
• Reduction in medical errors
    • Regenstrief Institute’s use of computer-generated reminders in an inpatient
       setting, followed practice guidelines 25% more often
    • Brigham and Women’s Hospital’s use of computerized provider order entry
       eliminated more than 80% of medication errors unrelated to missed dosage
• Improved medical data capture and display
    • Use of an automated patient data management system eliminated charting
       errors that had previously occurred in 25% of hand-written flow sheets and
       increased the number of progress notes documented
    • Northwestern University’s use of EMRs produced more appropriate clinical
       decisions by physicians when compared with providers who used paper
       medical records




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     Related Health Care IT Studies: Clinical Information
                 Systems: Achieving the Vision1 (continued)
2. Improved Efficiency, Productivity and Cost Effectiveness
    • More appropriate utilization of services
       • IHC’s use of a clinical laboratory alerting system increased the likelihood
          that patients in life-threatening situations received appropriate care,
          decreasing length of stay by up to 6 days for some conditions
       • Regenstrief Institute's use of a provider order entry system in an inpatient
          setting lowered patient charges and hospital costs mainly by reducing
          length of stay by 10.5%, reducing test charges by 12.5%, and reducing
          drug costs by 15.3%; total charges per admission were 12.7% less for
          teams that used the order entry system
    • Better use of formulary and generic drugs
       • Duke University’s use of monthly computerized feedback of prescribing
          charges and patterns encouraged physicians to substitute less costly
          generic alternatives for brand name drugs 30% more often
    • Improved workflow and time savings
       • Duke University’s use of a EMR resulted in an overall time savings of 13%
          for physicians, and it improved physician response to information regarding
          diagnosis and treatment
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                                Appendix 4
  Related Health Care IT Studies: Clinical Information
              Systems: Achieving the Vision1 (continued)
• Savings related to the storage of medical records
   • Memorial Sloan Kettering Cancer Center’s use of an EMR resulted in space
     savings of 2,000 sq.ft., worth $100,000 annually
   • Kaiser Permanente’s use in Colorado of an EMR resulted in estimated annual
     savings of $400,000 in avoided lease costs
• Savings related to reduction in chart pulls
   • Beth Israel Deaconess Medical Center’s use of an EMR to reduce the paper
     chart pulls for processing telephone messages saved between $300,000 and
     $500,000 annually
   • Kaiser Permanente’s use in Colorado of an EMR has resulted in annual payroll
     savings of $4 million, while chart availability is almost 100%
• Improved charge capture and revenue
   • Beth Israel Deaconess Medical Center’s use of an integrated hospital system
     reduced the time to collect unpaid bills from 65 days to 39 days, enabling more
     than 90% of each patient’s charges to be captured


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                                   Appendix 4
     Related Health Care IT Studies: Clinical Information
                 Systems: Achieving the Vision1 (continued)
3.   Improved Service and Satisfaction
      • Improved communication
          • Brigham and Women’s Hospital’s use of an outpatient clinical referral
             system decreased the amount of time needed to complete the referral
             process, improving the communication between physicians
      • Improved satisfaction
          • Palo Alto Medical Foundation’s use of an Internet service giving patients
             access to health care services and their medical records, increased
             patient satisfaction in communicating with the physician and staff and
             promoted the feeling of shared decision making




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      Related Health Care IT Studies: Clinical Transformation:
                                   Cross-Industry Lessons for Health Care1
• According to Deloitte Research, while health care faces massive challenges
  integrating internal and external IT systems, its most overwhelming
  problems relate to gaining physician and hospital staff cooperation for
  implementation
    • Based on cross-industry analysis, two major common conditions
      required for clinical transformation are:
       1. An effective, competitive market environment that rewards
          organizations’ investments in technologies that raise productivity,
          either by improving product quality, reducing the costs of production,
          or both
       2. An intense focus on the consumer, combined with IT leadership,
          enabling organizations to excel with IT-integrated business
          strategies and ongoing IT innovations developed in response to
          market opportunities and threats

1   Deloitte Research, Clinical Transformation: Cross-Industry Lessons for Health Care (2003)
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                                                                 Appendix 4
                Related Health Care IT Studies: Clinical Transformation:
                                    Cross-Industry Lessons for Health Care1 (continued)
                                  Drivers                                             Challenges                                Success Factors
                 Competition and technological advances
     Banking     (mainframes, ATMs, telecom, and the              Primarily the need to gain internal cooperation for IT
                 Internet)                                        system integration, implementation, and utilization


                 Industry crisis regarding passenger              Primarily the need to gain internal cooperation for IT
                 safety, competition, technological               system integration, implementation, and utilization, with
     Airlines    advances (mainframes, radar, and the             some challenges related to managing external
                 Internet)                                        relationships (code-sharing alliance and online ticket
                                                                  distribution)                                                     Customer
                                                                  Not much of a challenge in obtaining internal cooperation
                                                                                                                                     Focus
                 Competition (especially Wal-Mart) and
                                                                  if companies are expanding. More internal challenges               and IT
                                                                  related to system integration of merging companies, and
     Retailing technological advances (mainframes and
                                                                  the greatest challenges are related to gaining external
                                                                                                                                   Leadership
                 the Internet)
                                                                  cooperation from suppliers in order to develop and run
                                                                  supply chain and inventory management systems

                                                                  Major challenges to obtaining both internal cooperation—
                 Industry crisis regarding patient safety         especially with regard to getting physician buy-in, as well
       Health    concerns, technological advances, and            as establishing an external framework for IT system data
       Care      competition                                      sharing, development of industry standards, and systems
                                                                  integration


             Source: Deloitte Research
                                                                                                                                            120




(310458)                                              Page 123                                       GAO-04-224 IT for Selected Health Care Functions
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