Potential Impact of HIT on Oregon Health Expenditures

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Potential Impact of HIT on Oregon Health
Expenditures

• HIMSS Oregon Fall Conference
• November 5, 2005
• David Witter, Witter Associates

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Potential Impact of HIT on Oregon Health
Expenditures
Office of Oregon Health Policy and Research

• Authors Dave Witter Tom Ricciardi
• Sponsors Quality Corp OHPR
• Project Supporters
• - Northwest Health Foundation
• - State of Oregon, Division of Medical
• Assistance Programs

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Do it for QUALITY, but

• The driving force for adopting advanced HIT is
  the potential it provides for IMPROVING the
  QUALITY and SAFETY of health care.
• However,
• Misaligned costs incentives are barriers
• Need to understand financial savings costs
• how they accrue to stakeholders
• identifying incremental steps in working toward
  widespread implementation

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National Data

• Natl Health Expenditures 2 trillion/year
• POTENTIAL HIT SAVINGS
• CITL ACPOE 2002 49 billion/year
• CITL HIEI 2003 90 billion/year
• RAND 2004 77 billion//year
• 147 billion on chronic disease prev/mgmt

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What does this mean to Oregon?

• How does this translate to us?
• National studies have different time periods,
  scope study methods.
• Oregons health system is not the same as the
  average of the U.S.
• Whats relevant for Oregon.

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Oregon Context

• Population 1.23 of US
• Hospital expenditures 1.1 of US
• Physician expenditures 1.3
• Prescription drugs 0.8
• Overall health expenditures 1.14
• 2006 health expenditures 20.3 billion, 22.7 B
  with pub health insur admin

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Oregon Questions

• What is the potential impact of advanced health
  information technologies on Oregons health care
  expenditures?
• If favorable, what should be done in encourage
  rapid broad adoption?

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Oregon Study Approach

• Assume comprehensive health information
  technology systems are installed throughout
  Oregon and actively used to take advantage of
  possible efficiencies.
• What savings would be projected?
• What is the projected cost of the systems?
• What is the net potential impact on Oregons
  health care expenditures?

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Oregon Results

• Potential Savings 1.7 billion per year
• Costs .44 to .75 billion per year
• Net Savings 1.0 to 1.3 billion/year
• 4.3 to 5.9 of Oregon Health Spending

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Definitions

• Advanced HIT not just EHR but also
• Order entry results management
• Clinical decision support
• Connectivity communications
• Interoperability info access to other records
• Info moves seamlessly integrated
• Widespread Adoption Use
• 9x of providers have advanced HIT
• Workflow redesigned used to achieve benefits

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SAVINGS
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Savings Opportunities

• Missing info, access, timeliness problem
• Easier to order another service
• Reduce adverse drug events (ADEs)
• Covert paper-based work
• Eliminate repeat/multiple data collection
• Refine data completeness, accuracy
• Electronic communications

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Study Methods Savings

• Deconstruct national Oregon studies
• Identify the savings components
• Apply standard calculation method to all
  components
• Update numbers to 2006, US Oregon
• Synthesize savings estimate
• Avoid double counting
• Best methodology data

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Standard Savings Calculation Method

• Source RAND methodology
• Base Savings 100 adoption, 0 current adoption
• Max Possible Savings 85-95 of base
• Less existing adoption benefits already
  achieved
• Result Potential Savings

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Savings Components

• Avoidable services
• Missing info visits, lab tests, imaging, ED
  admits
• Adverse Drug Events visits, admits, LOS
• Medications use, lower cost options
• Employer time-loss savings

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Savings Components

• Reduced Inefficiencies Productivity
  Improvements
• Transcriptions, filing, charts/pulls eliminated
• Lost time looking for missing info
• Repeated histories, med lists
• Electronic processing efficiencies consults,
  orders, reports, scripts, pub hlth reports,
  bills, communications

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Oregon Savings Impacts

• Potential Savings Millions/year
• Avoidable services 621 36
• Efficiencies/Productivity 1,126 64
• Total Potential Savings 1,747
• 1.7 billion 7.7 of 22.7 billion

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Who Benefits

• Community-wide savings EVERYBODY benefits by
  lower costs and efficiencies
• Avoided services most immediately the payers
  patients, health plans providers for
  uncompensated/underfinanced care
• Efficiencies/Productivity most immediately
  providers ( plans) have lower costs

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Regional Savings Impact

• More than population share in urban areas
  (Portland area, Willamette Valley)
• Less than population share in Bend Medford
  areas (counties)
• Lowest in 25 most rural counties
• Urban areas have more providers health systems

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COSTS
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Estimating Costs

• Published studies one-time annual
• Annual 17.5 to 30 of one-time
• Necessary to know but inadequate
• Expenditure impact requires accounting
  amortization treatment
• Issues proprietary data, moving targets
• competitive markets, mergers, evolving
  functionalities, standards

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Costs

• One-time
• Hardware, software licenses, interfaces,
  implementation, integration, training, provider
  productivity loss during implementation
• Annual Recurring
• Operating, maintenance, upgrades, ongoing
  training

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Provider HIT Costs

• Large scale systems
• Hospitals, health systems, large practices
• 10 year decision ? lt 10 cost per year
• High-end recurring cost 30 /- per year
• Small scale systems
• Small medium practices
• 5/- year decision ? 20 /- cost per year
• Low-end recurring cost 20 /- per year
• Amortized cost impact 40 of one-time

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Cost Scenarios

• One-time costs from CITL-HIEI, RAND NHIN cost
  study
• Normalized inflation adjusted to 2006
• Determine YET-TO-BE incurred cost
• Applied to each provider service component
• Average Cost for each component, average the
  available cost estimates
• Highest Cost for each component, take the
  highest cost estimate

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Oregon Cost Impacts

• Annualized Yet-to-be Incurred Cost
• Hospitals 150 212 million
• Physicians 250 495 million
• Pharmacies 20 27 million
• Other 14 61 million
• Total 434 756 million
• Oregon HIE Utility 10 million/year
• Total Y-t-b Annualized Cost 444 766M

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NET POTENTIAL SAVINGS
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Oregon Potential Savings

• Potential Savings 1.7 billion per year
• Costs .44 to .75 billion per year
• Net Savings 1.0 to 1.3 billion/year
• 4.3 to 5.9 of Oregon Health Spending

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Conservative Estimates

• Estimate the easy stuff, supportable data
• Did not consider
• Electronic patient/provider communications
• Nursing workforce shortage impact
• Other settings SNF, home health, LT care, mental
  health, rehab, corrections
• Chronic disease prevention management
• Full time-loss impacts
• Recent reports higher ADE rates, Milken

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Issues Limitations

• Modeling limits, lots of approximations
• May not know enough yet
• Cost benefit mismatch
• Avoider services lost revenue
• End point analysis, no adoption phasing
• Organization level cost financing ignored
• Adoption is more than implementation

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What Will It Take ?

• Time 10-15 years
• Like ATMs, Visa cards, airline tickets, web
• EHR implementation get to critical mass
• Widespread
• More advanced product functions
• Info Exchange Interoperability
• Integration
• Workflow redesign, product integration

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Access the Documents

• Oregon HIE Options report
• Oregon expenditure impact report
• Metro Portland HIE mobilization planning
• 2006 Oregon EHR Survey (soon)
• Oregon Health Care Quality Corp
  http//www.q-corp.org
• Office for Oregon Health Policy Research
  http//www.oregon.gov/DAS/OHPPR/index.shtml

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Contact Information

• David Witter
• witterdave_at_aol.com
• 503-222-6469, 503-819-6593 (cell)
• Tom Ricciardi, PhD
• tom_ricciardi_at_comcast.net
• 503-680-5647 (cell)

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Oregon Ambulatory EHR Survey Fall 2006
Office of Oregon Health Policy and Research

• Authors Dave Witter, Jody Pettit, MD,
• Daren Nicholson, MD, CM, Tina
  Edlund
• Sponsors OHPR Quality Corp
• Resource Providers
• OHPR, Quality Corp, Regence BlueCross/BlueShiel
  d
• of Oregon, Witter Associates

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Questions ???or

• More info on
• EHR Survey
• Metro Portland HIE progress

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Sample

• August October 2006
• 2,403 surveys mailed to 1,998 entities
• 1,244 responses received
• 56 no patient care provided
• 1,188 responses from 1,166 entities
• Overall response rate 58.4
• Clinicians MDs/DOs, PAs, NPs
• Focus organizations clinicians

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Overall Results

• EHRs at 27.5 of surveyed organizations
• EHRs serve 59.9 of surveyed clinicians
• EPMs at 66.6 of surveyed organizations
• EPMs serve 84.6 of surveyed clinicians
• 86 of EHR orgs have EPMs

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EHR Adoption Findings

• Highest EHR adoption rates
• Health system practices clinics
• Larger practices
• Practices with more locations
• Multi specialty mixed primary care practices
• Lowest EHR adoption rate
• Solo small practices (2-4 clinicians)

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Other Findings

• CCHIT vendors
• 50 of orgs NOT with CCHIT vendors
• Consider vendors not specific products
• Large portion of installed base but change or
  upgrade
• Why no EHR in foreseeable future?
• Too expensive, satisfied with existing
• Other too small, value proposition, retiring
• EPM users best prospects

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EHR Adoption All Orgs
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EHR Adoption All Orgs
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EHR Adoption Clinician Orgs
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EHR Trajectory - Orgs
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Metro Portland Health Information Exchange
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Metro Portland HIE

• May 2006 HIE Options Report
• Sept 2006 OBC commissions a Mobilization
  Planning for a results and reports retrieval
  service HIE
• May 2007 mobilization plan completed, report
  presented to OBC
• Fall 2007 no decision to move-forward

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MPHIE Savings Costs

• Potential Savings
• Eventually 21.4 million/yr
• Avoided services 8.8
• Processing 5.6
• Productivity 5.8
• employer 1.2
• 12 million/yr within 5 yrs
• Costs
• HIE staff ASP-based operations 3.4M/yr
• 150K per health system per year

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Metro Portland HIE Nov 2007

• Unresolved Questions
• Will physicians use it? Use drives benefits
• Timing for HIE integration into EHRs
• Ranking HIT priorities timing EHR /or HIE
• HIE/HIT priorities vs other community benefits
• Training workflow redesign clarity
• Sustainable financing risks
• Privacy consumer engagement

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Access the Documents

• Oregon HIE Options report
• Oregon expenditure impact report
• Metro Portland HIE mobilization planning
• 2006 Oregon EHR Survey (soon)
• Oregon Health Care Quality Corp
  http//www.q-corp.org
• Office for Oregon Health Policy Research
  http//www.oregon.gov/DAS/OHPPR/index.shtml