Interoperability Device Savings Estimated to Exceed $30 Billion

Ron Shoop

Ron Shoop

Posted on April 04, 2013

A recent study by the West Health Institute, an independent non-profit research organization, found that hospitals could save more than $30 billion by improving interoperability between medical device systems. The comprehensive study, titled “The Value of Medical Device Interoperability,” was released and reviewed last month at a hearing before the House Energy and Commerce Subcommittee on Health. The study focused on waste – or any activity that does not add value to the health care system – and sought to identify where interoperability could yield savings.
Medical device interoperability encompasses information sharing from one device to another, or between devices and electronic health record (EHR) software. Functional interoperability enables clinical medical devices to communicate in a consistent, predictable and reliable way. By allowing for the exchange of data with other medical devices and with patient data sources through EHRs, medical device interoperability would enhance the function of the systems and devices involved. Exchange of data between EHRs is commonly designated as Healthcare Information Exchange (HIE) which includes private, state and federal systems.
Some of the areas identified in the report for potential savings include:

  • 90% of hospitals use six or more types of devices that be integrated with EHRs – this includes patient portals. Furthermore, one-third of hospitals have started integrating medical devices with their EHRs. However, of those that are investing in interoperability, most have actually integrated an average of three devices.
  • Approximately $12.4 billion can be saved each year by decreasing manual entry of patient related data through interoperability between EHRs and patient portals. This number is considered a conservative estimate as it only includes the impact of time saved for nurses and NOT for support staff.
  • Cost avoidance of adverse events could save an additional $2 billion per year. This includes medical errors where as many as 3 million preventable adverse events occur each year. The report shows that drug errors accounted for 20% of those adverse events. These errors, along with diagnostic errors (17%) and failure to prevent injury (12%), could be all be prevented through interoperability.
  • Redundant testing cost avoidance amounted to $3 billion of the $8 billion total in direct healthcare costs per year. The report shows that “defensive medicine” is a leading cause of redundant testing driven by the lack of trust in tests conducted by other institutions and a fear of liability. It is also caused by misplaced, delayed or illegible hard-copy test results. Interoperability would eliminate this problem, as it would allow test results to flow directly between EHRs.
  • Costs resulting from increased length of stay in hospitals amounted to $17.8 billion. Many of these decreased hospital stays were caused by delays in receiving test results which increases decision-making time. Medical device interoperability would help reduce the length of stay by providing physicians with instant access to pertinent data, which can help accelerate the decision-making process.

There are many additional areas of savings and cost avoidance that are covered in the study, however the conclusion is this: widespread medical device interoperability can eliminate $36 billion of waste in the healthcare system. Functional interoperability can lead to increased efficiency, lower costs and better quality of care through four primary drivers:

  1. Quality improvement through reduction of adverse events due to safety interlocks
  2. Reduced cost of care secondary to avoidance of redundant testing
  3. Increased clinician productivity secondary to decreased time spent manually entering information
  4. Increased capacity for treatment secondary to shortening length of stay

Although the study doesn’t cover every aspect of the broad spectrum of healthcare delivery, it does illustrate the real potential to lower costs and provide better efficiencies and overall patient care through interoperability between EHR systems – which includes patient portals.

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