Hospitals Investing More in Technology Found to Have Improved Clinical Processes, Increased Revenue, Fewer Errors

SAN FRANCISCO -- Information technology and automation have as much potential to transform hospitals and healthcare delivery in the 21st century as ATMs and electronic banking did for financial services in the 20th century.  In a paper released today at the Health Information Technology Summit in San Francisco, PricewaterhouseCoopers

provided the first comprehensive look at the benefits realized by the growing

wave of "digital hospitals" across the country.

Jointly produced by PricewaterhouseCoopers Health Research Institute and

PricewaterhouseCoopers Global Technology Centre, the paper, titled, "Reactive

to Adaptive: Transforming Hospitals with Digital Technology," finds that

technologically advanced hospitals have greater potential to improve processes

and outcome in patient care, reduce medical errors, increase productivity and

compete for market share against other hospitals.

The true digital hospital relies on technology as an integral and

fundamental part of its business strategy.  It comprises a completely

automated set of health information management capabilities -- including all

administrative, financial and clinical capabilities -- that go beyond the

scope of advanced clinical systems to include significant integration between

information and medical technologies such as patient beds, surgical equipment,

nurse call and communications systems, pagers, and medical imaging.   The

strategy is primarily associated with new specialty hospitals and facilities

but can also be applied to existing acute care facilities. Digital hospitals

are the first step of what is seen as an opportunity to use technological

advances to create an even more extended "Digital Health Community".

PricewaterhouseCoopers has worked closely with The Indiana Heart Hospital,

which opened in 2002 as the first all-digital heart hospital in the United

States.  Metrics compared to previous cardiac facilities in the health system

show that in its first year of operation, The Indiana Heart Hospital achieved:

    * An 85 percent reduction in medication errors

    * A 65 percent reduction in inappropriate denials and delays with

      respective payers

    * A 15 percent increase in market share acquisition in the first

      fiscal year

    * Reduction of "chart management" costs from $15 to $3 per chart.

    * A 45 percent reduction in medical transcription and dictation costs

    * A 15 percent reduction in coding workload

"The goal is not simply to build a digital hospital.  Ultimately, it is to

create the Digital Health Community, one in which all processes and

stakeholders; payers, providers, labs, pharmacies and others have significant

connectivity and integration," said Jim Henry, partner and chairman of

PricewaterhouseCoopers Health Industries Group.  "Healthcare takes place

outside hospitals far more than inside them.  The challenge for the industry

is to disentangle the misaligned incentives across all health-related sectors

that impede progress toward information sharing and connectivity."

To gain insight into the state of the Digital Health Community,

PricewaterhouseCoopers teamed with HIMSS Analytics, a leading provider of

health information technology market data, to analyze the financial,

operational and quality indicators of a group of 36 hospitals considered

digitally advanced and chosen based on their reputation for implementing

advanced clinical systems.  Most of the hospitals analyzed are adding IT

systematically, beginning with back office systems and moving along a

continuum toward fully integrated, automated clinical systems and electronic

medical records.

The paper includes findings of the research and examines the ability of

digitally advanced hospitals to provide patient care and compete in the

market, identifies barriers that keep hospitals from becoming more digitally

advanced and shares lessons that other hospitals can learn from pioneers in

the emerging digital health community.

    Highlights of the paper include:

    * Research revealed differences between digital and national average

      hospitals, with digitally advanced hospitals seeing a larger drop in

      average length of stay and larger increase in operating revenues.  These

      hospitals also ranked higher on seven of 10 process measures in the

      treatment of three sample conditions:  heart attack, heart failure and

      pneumonia.  These measures, determined to lead to high quality patient

      outcomes, are collected in response to the Centers for Medicare and

      Medicaid Services (CMS) Hospital Quality Initiative.

    * When asked what was the most important benefit of increased information

      technology integration, patient safety ranked highest among hospital

      executives interviewed.  (Approximately one-fifth of medical errors are

      due to inadequate availability of patient information.)

    * Physicians, once barriers to clinical information systems

      implementations, are becoming supporters of technology, particularly so

      among younger physicians.

    * Deep interconnectedness of technologies is important, but difficult.

      Migrating toward significant technology implementation requires costly

      and complex integration of many subsystems and technologies.  The burden

      of implementation among the significantly digital hospitals studied was

      found to fall not on software vendors and IT departments but on

      hospitals executives who must drive significant organizational and

      process change to realize substantial benefits.

    * The Digital Health Community will come of age as hospitals respond to

      outside pressures, such as pay-for-performance, consumerism and

      government reporting on quality, by better analyzing and reporting their

      clinical data.

Significant benefits will require more investment in technology than

hospitals have typically been making.  In 2005, the healthcare community will

spend approximately $14 billion on information technology, yet this represents

only 2.5 percent of the typical hospital's annual operating budget.  According

to PricewaterhouseCoopers, digital hospitals spend between 3 percent and 5 percent of

their operating budget on information technology.  The cost of increasing

average IT spending to this level across the industry would add $5 billion to

hospital IT spending in 2005 alone.

Widely criticized for not adopting information technologies as quickly as

other industries, the information-intensive healthcare sector remains largely

manual and paper-based.  Approximately 90 percent of the more than 30 billion

healthcare communications that occur in the United States each year are

currently by fax, paper, mail or phone, according to the research paper.

Though technology solutions are found increasingly in back offices, automation

has not played a significant role in the direct support of best-practice

clinical care.  Numerous other studies have shown that implementing

comprehensive clinical information systems, particularly Computer Provider

Order Entry, contributes directly to a decrease in medical errors.

"Technology can unleash the potential that remains latent in hospitals for

delivering higher quality care in increasingly efficient ways," said James E.

Fisher, director of healthcare advisory practice and leader of Digital Health

Community services for PricewaterhouseCoopers.  Speaking at today's

conference, Fisher added, "The time for investing in technology is now, and

the potential benefits are clear.  But the industry remains skeptical of

returns promised by vendors and challenged by technology integration and

implementation issues that are unique to the healthcare environment.

Fortunately, a handful of pioneers are leading the way toward the broader

Digital Health Community, and our research is the first in-depth look at their

progress."

Source: PricewaterhouseCoopers