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 [email protected].

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

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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 [email protected] or [email protected]. 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

Appendix I
Use of Information Technology for Selected
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