Health IT will bring even more cost savings to the U.S. healthcare system than expected, but those benefits will take quite some time to mature, said David Brailer, the former national HIT coordinator, in an interview published in Health Affairs. Based on other industries that underwent substantial automation, “it takes about a decade after the substantial majority of the players are automated for full benefit to be gleaned,” said Brailer. “It’s not until the second decade that users say, ‘Now that we have the tools in place, let’s use them to redesign our fundamental processes.’”
Studies forecasting savings from IT tend to “overestimate near-term savings and underestimate long-term savings,” added Brailer. “This is because they didn’t take into account second-order effects, such as elimination of excess hospital capacity or the market forces that currently enable medical specialists to protect their guilds,” which can be substantial. So how big could long-term savings be? “About a third of our spending and probably a third of our healthcare capacity are likely unnecessary,” Brailer said, although he warns that “provider-induced demand has traditionally filled any extra provider capacity.”
Beyond this, Brailer noted that in a previous stint as a hospital consultant, he “found up to two-to-one variation in true production costs among hospitals where there were very good data. That supports a 50% estimated savings above and beyond the 33% savings from eliminating nonvaluable services and their associated unnecessary capacity.” In addition, “HIT could drive a radical disruption of what we consider to be hospitalizable diseases or what we consider to be necessary primary care interventions,” producing even more savings.
