    Information Technology: Benefits Realized for Selected Health
    Care Functions (31-OCT-03, GAO-04-224).

    The rapidly rising costs of health care, along with an increasing
    concern for the quality of care and the safety of patients, are
    driving health care organizations to use information technology
    (IT) to automate clinical care operations and their associated
    administrative functions. Among its other functions, IT is now
    being used for electronic medical records, order management and
    results reporting, patient care management, and Internet access
    for patient and provider communications. It also provides
    automated billing and financial management. The Ranking Minority
    Member of the Senate Committee on Health, Education, Labor, and
    Pensions asked GAO 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. GAO analyzed
    information from 10 private and public health care delivery
    organizations, 3 health care insurers, and 1 community data
    network.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-04-224
        ACCNO:   A08809
      TITLE:     Information Technology: Benefits Realized for Selected
    Health Care Functions
         DATE:   10/31/2003
      SUBJECT:   Health care costs
    	     Health care facilities
    	     Health care services
    	     Information technology
    	     Medical fees
    	     Medical records
    	     Patient care services
    	     Health care cost control
    	     Quality-of-care

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    GAO-04-224

    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

                                           a

    GAO-04-224

    October 2003

    INFORMATION TECHNOLOGY

    Benefits Realized for Selected Health Care Functions

    The 10 health care delivery organizations reported 13 examples of cost
    savings resulting from the use of IT, including reduction of costs
    associated with medication errors, communication and documentation of
    clinical care and test results, staffing and paper storage, and processing
    of information. Other benefits included improved quality of care, more
    accurate and complete medical documentation, more accurate capture of
    codes and charges, and improved communications among providers that
    enabled them to respond more quickly to patients' needs. A few examples
    are noted in the chart below.

    Examples of Cost-Related and Other Benefits Reported by Health Care
    Delivery Organizations and Insurers

                                Clinical Care Functions

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

    The rapidly rising costs of health care, along with an increasing concern
    for the quality of care and the safety of patients, are driving health
    care organizations to use information technology (IT) to automate clinical
    care operations and their associated administrative functions. Among its
    other functions, IT is now being used for electronic medical records,
    order management and results reporting, patient care management, and
    Internet access for patient and

    provider communications. It also provides automated billing and financial
    management.

    The Ranking Minority Member of the Senate Committee on Health, Education,
    Labor, and Pensions asked GAO 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

    A teaching hospital reported that it realized about $8.6 million in annual
    savings by replacing outpatient paper medical charts with electronic
    medical records.

    A rural community hospital prevented the administration of over 1,200
    wrong drugs or dosages using bar code technology and wireless scanners to
    verify both the identities of patients and their correct medications.

    An integrated health care delivery system reported improvements in
    diabetes control for its members with the disease.

    A teaching hospital reported a decrease in average length of stay from 7.3
    to 5 days due to improvements in health care efficiency and practice
    changes.

                                Administrative Functions

    An integrated health care delivery system An insurer reported that it
    improved clinical care to its members through its health screening
    reminders. reported a 53 percent decease in claims rejected due to
    eligibility checks during registration.

    with health care delivery. GAO analyzed information from 10 private and
    public health care delivery organizations, 3 health care insurers, and 1
    community data network.

    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.

    Source: GAO.

    All three insurers reported examples of reduced costs and other benefits
    resulting from improvements in electronic claims processing and the use of
    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.

    Contents

                                        Letter 1

      Appendix

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

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
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    separately.

    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

    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.

    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

    Appendix I

    Use of Information Technology for Selected Health Care Functions

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