4 keys to the cost of health IT
We know health IT saves money and streamlines workflow, and when used properly, its benefits are widespread and long lasting. But within the past decade or so, the revolution of health IT has also sparked some interesting talk about the cost.
“First of all, investment firms that normally stayed on the sidelines are going all in," said Lisa Suennen, managing member at Psilos Group and author of the blog Venture Valkyrie. “Three years ago, if you told a roomful of venture capitalists that healthcare IT would boom like the Internet once did, they would have laughed you out of the room. Today they are trying to figure out how to get in on the action.”
But not so fast, warns Suennen. According to her, there’s a greater recognition today, compared to a decade ago, that health IT products need a serious clinical or administrative value proposition, or a clear and recurring revenue model and the ability to demonstrate evidence of real cost-savings.
“There is a much matured customer base demanding IT solutions to solve the real problems inherent in our teetering healthcare system,” Suennen wrote on her blog. “[It’s not] just a bunch of technology looking for a problem to solve.” She added the new landscape of legislation and regulation directly supports the evolution of the HIT marketplace, “sometimes with cold hard cash.”
Suennen shares some of the keys to understanding the cost of health IT.
1. The most cost-effective IT is enterprise directed. “Most of the technology that’s interesting and cost-effective right now, although it may be different five years from now, isn’t consumer directed – it’s much more enterprise directed,” Suennen said. The technologies that are consumer directed tend to be the most popular and focus more on wellness and mobile technologies. “And while they’re [helpful] technology, a vast majority of them are not cost efficient,” she said.
2. Training is essential. On her blog, Suennen referenced an Institute of Medicine article, which reported $700 billion a year is wasted medical spending, stemming from unnecessary tests, hospital visits, and more. “Can you imagine taking one-third of your paycheck every month and flushing it down the toilet?” wrote Suennen. “That is basically what happens with the more than $2.5 trillion circulating through our healthcare system.” And the culprits are easy to spot. According to the article, interns and residents are more likely to get in trouble for not using diagnostic tests and similar interventions than using them. The author, Steven Weinberg, said, “Now that cost control in healthcare has reached a crisis level, it's essential we change the culture of the training environment with regard to healthcare costs.” According to him, residents need to be more thoughtful in ordering tests, avoid the overuse of imaging studies and laboratory tests, and be conscious of opportunities to prevent avoidable hospitalizations or readmissions.
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