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Hospitals play catch-up in digitizing records

/ Source: CNBC

Doctors at the Lahey Clinic outside Boston treat patients with stethoscopes and handheld computers in tow.

From these handhelds, they record visits, prescriptions and tests for each patient in one electronic file, an effort that enables them at a later date to pull out complete medical records for patients instantly. That speed and accuracy is most valuable in cases of emergency.

“It really has made it easier for clinicians,” said Dr. David Barrett, CEO of Lahey Clinic. “We feel good about what we're doing because we know it's going to be accurate.

A growing number of hospitals nationwide are adopting similar electronic medical record system. A industry survey of 5,000 hospitals released in February found more than 45 percent of hospitals have adopted medium to high levels of information technology in record keeping, up from 37 percent a year ago.

With medical costs expected to grow faster than the overall economy, the hope is that by reducing misdiagnosis and speeding up doctor visits, hospitals and insurance companies stand to save money.

So far, electronic record keeping has been cost-effective for Lahey Clinic. The hospital says the system has helped it to cut about $1 million in annual costs.

“There's an enormous inefficiency out there in the movement of clinical data and information,” said Dana Callow, a Boston-based venture capitalist who invests in MedAptus, provider of Lahey’s IT system.

The potential in health care IT is so huge that MedAptus is seeing double-digit growth every year.

“In the 22 years I've been doing private investment in systems and service areas, this is the fastest payback I've seen for any hospital or health care provider,” said Callow.

Public officials have also been promoting health care IT application in government health care plans. The Bush administration set a goal of using electronic medical records for all Americans by 2014. It’s also expected that electronic medical records in a shared nationwide network can make switching doctors or insurers easier for consumers, thus leading to increased competition in the health care industry.

But the costs of computerizing everyone's health records are staggering. Estimates run up to $300 billion, almost as much as the government’s annual spending on Medicare.

Industry advocates argue the spending will pay off quickly.

“If the entire American medical system, doctors and hospitals all adopt electronic medical records, it probably has a return of $70 (billion) to $80 billion a year in reduced costs associated with better quality care, fewer negative outcomes that are results of misinformation,” said Stephen Lieber, CEO of Healthcare Information and Management Systems Society, a trade association.

On a micro level, implementing and maintaining costs for physicians in private practice have also impeded wide adoption.

According to American Medical Association, the cost of implementing a system is $30,000 per doctor, and it costs another $3,000 to $15,000 to maintain the system every year.

In a February survey by health care consulting firm Accenture, only 10 percent private-practice doctors said they adopted IT in record keeping. Eighty-six percent cited costs of such systems as a concern, despite industry reports finding that patients favor health care providers that use electronic medical records.

In 2005, Medicare said it would provide doctors free software to computerize records. But the effort has not been sufficient, although the urgency was never as clear as after Hurricane Katrina, when doctors fought in vain to piece papers together to reconstruct patients’ medical history.