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entitled 'Information Technology: Benefits Realized for Selected Health 
Care Functions' which was released on October 31, 2003.

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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:

GAO-04-224:

GAO Highlights:

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

Why GAO Did This Study:

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.

What GAO Found:

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 patientsí 
needs. A few examples are noted in the chart below.

[See PDF for image]

[End of figure]

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. 

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.

[End of section]

Contents:

Letter: 

Appendix:

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

Letter 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:

Signed by David A. Powner:

[End of section]

Appendixes:

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

[See PDF for image]

[End of figure]

[End of section]

(310458):

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