The Heartland Institute is a national nonprofit research and education organization, tax exempt under Section 501(c)3 of the Internal Revenue Code, and founded in Chicago in 1984. It is not affiliated with any political party, business, or foundation. Heartland's mission is to discover, develop, and promote free-market solutions to social and economic problems.
I have no affiliations with this group, but shared a list of reference materials I maintain at my educational website on HIT difficulties.
In their report, they point out that fanning the flames of what I call the "irrational exuberance" around HIT was a 2005 RAND Corp. analysis:
As part of the federal government’s economic stimulus package, Congress has authorized spending about $20 billion on health information technology (health IT) and another $1 billion on comparative effectiveness research. These provisions achieved wide bipartisan support in Congress and in the health care industry, based on the hope that the investment will help improve efficiency, cut costs, and result in better care. The reality is likely to be far different.
Proponents of this spending rely heavily on a short RAND Corporation analysis from 2005 that predicted $77 billion in annual savings and improved outcomes. RAND estimated “implementation would cost around $8 billion per year, assuming adoption by 90 percent of hospitals and doctors offices over 15 years.” It said, “The benefits can include dramatic efficiency savings, greatly increased safety, and health benefits.”
Unfortunately, RAND assumed an error-free system that is quickly and enthusiastically adopted by virtually the entire health care system. That might happen, but it is an absolute best-case scenario. Even then, instead of “dramatic savings,” the $77 billion hoped-for savings amounted to a mere 4.5 percent of total costs, placed at $1.7 trillion by RAND.
The assumption of an "error free system" (including smooth and efficient HIT implementations) is a very, very bad assumption indeed. I would have to question the competence and perhaps sanity of anyone who makes such an assumption, about any type of mass societal IT project, let alone a national project in a field as complex as healthcare.
The Heartland Report goes on to observe:
Far more likely is that every penny of the $20 billion will be wasted on systems that don’t work and can never be implemented. That was the outcome of federal attempts to upgrade technology at the IRS, the FBI, and the air traffic control system. And these are all relatively simple enterprises involving single federal agencies. Health IT is vastly more complex and must include hundreds of thousands of private organizations that have invested in legacy systems that work reasonably well and are as varied as there are providers.These are good points about the IRS, FBI etc. They also base this likelihood on the experience of another country with a far smaller, less complex socialized healthcare system:
This also has been the experience of the United Kingdom, which has been trying to adopt a similar information technology upgrade for its National Health Service (NHS) since 2002. This plan was far less ambitious than the U.S. version, involving merely 30,000 physicians and 300 hospitals, all of whom are already employed by the NHS. Originally estimated to cost 2.3 billion pounds, it is already at 12.7 billion pounds—$18.4 billion, or about as much as provided in the stimulus package for the entire United States. A recent report to Parliament admitted the program is four to five years late and may never be implemented as envisioned. The project has lost two of the four vendors who were working on it, and some of the elements that have been installed are not meeting expectations.
They did not mention that several of the vendor and consultant firms responsible for the problems are American.
They also relate:
This is not to say health IT is a bad idea or that hopes for it are unwarranted. Quite the opposite. The health care system sorely needs better management tools and better application of technology. There is currently a vast amount of entrepreneurial energy, innovation, and money being invested in developing, refining, and marketing the tools the system needs to come into the twenty-first century. The danger is that massive federal intrusion will bring all that innovation to a screeching halt.
I fear that the assessment about the fate of the $20 billion and about innovation is not very far off the mark.
-- SS
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