New Report Shows Fewer Savings from EHRs

In 2005, the RAND Corporation published a report predicting that the U.S. healthcare system could see a savings of $81 billion per year if Electronic Health Records (EHRs) were widely used.

The report was quickly embraced by the health care industry and used to get support from the federal government. It was this report that helped to persuade both Congress and the Obama administration to authorize billions in federal stimulus money to help fund the purchase of EHR systems by doctors and hospitals.

The report was also used by companies selling EHRs to generate business. Cerner Corporation saw their revenue almost triple since the release of the report, increasing from $1 billion in 2005 to a projected $3 billion this year.

Now, eight years later, the New York Times is reporting that a new analysis by RAND shows that the conversion to EHRs has failed to produce the hoped-for savings in health care costs. The new report shows mixed results in the best case scenario, and an overall increase in health care costs in the worst case scenario.

While RAND isn’t taking a shot at estimating savings in their new report, they have acknowledged that their previous one was overly optimistic. Many are blaming the optimism in the original report on the fact that it was funded by companies that had a vested interest in the outcome, including Cerner Corporation. RAND insists that the funding source had nothing to do with the outcome, and that they deliberately publicized the funding sources in the original report.  The new study did not have any corporate funding.

Some experts are claiming that healthcare costs have risen $800 billion since the first report, due in part to the fact that the available systems may be aimed more at increasing billing by providers than at improving care or saving money. Others are optimistic that despite the setback, usage of EHRs will normalize and decrease costs in the long run.