2009 November 20 Friday
Electronic Medical Records Do Not Help Cut Costs?

A study comparing performance of hospitals at different levels of electronic record implementation findsthat I could file for divorce delivers at best a very small quality of care benefit or a reduction in hospital stay time.

The nation is set to begin an ambitious program, backed by $19 billion in government incentives, to accelerate the adoption of computerized patient records in doctors’ offices and hospitals, replacing ink and paper. There is wide agreement that the conversion will bring better care and lower costs, saving the American health care system up to $100 billion a year by some estimates.

But a new study comparing 3,000 hospitals at various stages in the adoption of computerized health records has found little difference in the cost and quality of care.

I've become suspicious of silver bullets advocated by politicians trying to avoid contentious trade-offs between competing demands of interest groups. Computers are not (at least in the foreseeable future) going to radically improve the quality of care so much that they appreciably cut costs. Until computers either replace health care workers or make incurable diseases curable they aren't going to do much to cut costs.

What are the big drivers of higher health care costs?

  • An aging population, pointless defensive medicine caused by the tort lawyers (and you need to talk to a smart nurse to find out how much this costs us).
  • More government subsidies increasing demand.
  • Regulatory obstacles in the way of introducing newer and cheaper therapies (basically only expensive drugs can generate the revenue to afford the approval costs),.
  • Expensive new technologies that make more diseases treatable - albeit often with only small benefits.
  • Patient demands for all possible treatments whatever the cost and how little the benefit.

To address the economic forces that drive up medical costs requires that Democrats take on their key interest group the trial lawyers, that both parties tell the populace that aggressive treatment of late stage terminally ill patients is a big waste (which the Repubs just demagogued with their "death panels" talk), and that the Democrats admit that the US Food and Drug Administration causes harm as well as good. Our growing portion of the populace that is stupid isn't going to push for needed changes. Will enough parts of our elites promote reforms to restore some common sense? I'm betting against it. The declining empire will continue to decline for this and other reasons. Things will get worse.

Update: While on the subject of great false hopes of medical care: Testing for early detection of cancer has been oversold. Early detection is often marketed under the label of preventative medicine. Well, it leads to unnecessary and harmful treatments and lots of money spent on tests.

Two new recommendations, calling for delaying the start and reducing the frequency of screening for breast and cervical cancer, have been met with anger and confusion from some corners, not to mention a measure of political posturing. The backers of science-driven medicine, with its dual focus on risks and benefits, have cheered the elevation of data in the setting of standards. But many patients — and organizations of doctors and disease specialists — find themselves unready to accept the counterintuitive notion that more testing can be bad for your health.

Share |      By Randall Parker at 2009 November 20 08:40 PM  Economics Health

Sophia said at November 21, 2009 5:35 AM:

I'm a nurse and my observations suggest the biggest expense in medical care is due to bad lifestyle choices by patients such as:

1. People who decide to have high risk sex and get HIV.

2. Smokers with their heart disease and cancers.

3. The obese who choose to eat unhealthy high calorie diets and then get any number of diseases such as diabetes. Obesity by choice is probably the #1 healthcare expense. No more than 10% of obese people have significant medical problems preventing them from controlling their weight.

4. The illegal drug abusers not to include marijuana which is relatively harmless. Many of these people in order to have the time and energy to do drugs drop out of the workforce so are also supported by the taxpayer in and out of prison.

5. The anxious/depressed who refuse to implement common sense treatments for both disorders such as regular exercise, a healthy diet and adequate sleep. Many of them are double dippers in having high health care costs and being on disability payments.

6. Women who get pregnant and then make the effort to increase the odds they'll have a child with major health issues by, for example, abusing alcohol.

7. Most of us make some of these mistakes and others now and then and get away with them. But some people specialize in being irresponsible to the point we spend vast amounts of money on their health care.

In defense of these people in the USA the "Powers That Be" have chosen to abuse people to the point that bad behaviors are likely for many of us. Employees have almost no rights, entire groups of people are treated as second class citizens as with the LGBT population, our taxes support cheap junk food, people are sent to fight wars to make oil company executives rich bringing lifelong disabilities to many in the cannon fodder group, the development of intellect is discouraged in our southern states due to the force feeding of conservative religion, the right of women to abortions is limited ensuring new generations of incompetent and/or criminal, our workforce gets less paid for breaks and benefits than anywhere in the civilized world, illegal immigrants are welcomed by liberals (who love more victims) and conservatives (who profit from them) alike crushing our middle class both with job losses and the cost for their care, etc.

Ultimately health care costs can not be lowered unless many other issues are addressed.

Bob Badour said at November 21, 2009 6:14 AM:


All excellent points. Certainly, massive illegal immigration affects the middle class; however, it affects poor Americans even more. A lot of the social dysfunction you note in your post would abate if we removed the illegal immigrants. Reduced competition for jobs, housing and basic staples would make the situations of a lot of poor American citizens a lot less hopeless.

Having stated that these other causes increase costs more, how much do you think defensive medicine (prescribed by doctors seeking to avoid lawsuits) contributes to the cost of medicine?

I am also curious how much needless consultations and follow-up visits increase costs.

It would seem to me that defensive medicine, needless consultations and needless follow-up exams would act as multipliers of all the other costs.

Eric Johnson said at November 21, 2009 6:49 AM:

WHAT?! Some over-flogged innovation doesnt really do much? In the field of health care, at that?

I have a feeling all the talk of preventive care is mostly pie in the sky too.

Randall Parker said at November 21, 2009 8:13 AM:


Agreed on the inefficacy of preventative care. But the appeal is that we can pretend people can get everything they want.

The list of effective preventative care measures is rather short. Vaccines for example.

MaryJ said at November 21, 2009 10:50 AM:

Electronic medical files are probably much more useful to the state than to the patient; they are methods that make it easier for the state to control us. Be very afraid. The easier access to private information WILL be used for political purposes.

Eric Johnson said at November 21, 2009 11:25 AM:

Actually I think everything or near everything on Sophia's list could theoretically save mountains of dough via preventive care -- and one could add a lot more to the list. But a lot of behaviors that would be good to change are very hard to change, and generally there have already been government efforts and doctor efforts to change them. Some gains might still stand to be made -- but a revolution saving zillions?

MaryJ said at November 21, 2009 12:16 PM:

The state-funded medical care in Europe already denies some types of medical care to smokers, old people, handicapped infants, and fat people.

Bob Badour said at November 21, 2009 12:25 PM:

MaryJ, Do you have a source you can cite? I would very much like to read that source.

MaryJ said at November 21, 2009 1:25 PM:

I'm not going to search for you Bob. You can search on the UK Daily Telegraph site on "obesity limits" or "BMI limits" for "NHS treatment." It was a couple of years ago that the British NHS decided it would deny certain types of treatments to people who have a BMI higher than 29.

You can also Google in general for "Dutch letting handicapped infants die" or a similar type of search criteria.

Vonagan Cheeseman said at November 21, 2009 4:10 PM:

How much could we save if physicians incomes were a lot lower? It seems to me that we have university associated medical schools that compete for top researchers for faculty members. Why? There is no reason on earth to have a Nobel Prize winning biochemist teaching medical students. If we were to adopt the "Caribbean" model for medical education--trade schools--we could drastically increase the supply of physicians and, one hopes, cut the high incomes.

Michael L said at November 21, 2009 4:18 PM:

I wonder why Sophia forgot to mention the "LGBT population" as one of the big cost centers in the field of healthcare. Somebody has to pay for all the AIDS cocktails, for the treatment of other venereal diseases that are rampant among them, for the "we all have AIDS" movies and campaigns etc. The somebody may include both the government and the insurance companies. The latter probably aren't allowed to "discriminate", which means that they end up subsidizing the sicker gays at the expense of the healthier males of the same age and social class.

Randall Parker said at November 21, 2009 5:23 PM:

Vonagan Cheeseman,

I do not expect the presence of a greater number of doctors to result in a net decrease in health care costs. Since doctors can generate work for themselves I expect higher costs from more doctors rather than lower costs.

Stephen said at November 21, 2009 7:46 PM:

The vast majority of consumers are poor decision makers when it comes to their own health - especially their own long term health. If it wasn't for state intervention, how many more people would be doing obviously dumb things like smoking? How about lead levels? The free market doesn't fix these problems, rather it takes state intervention.

Sophia said at November 22, 2009 6:16 AM:

To Bob Badour - I don't think defensive medicine adds much cost to medical care due to most care focusing on chronic conditions. I.E. if you have a simple ankle sprain and get an unnecessary ankle x-ray to protect the doctor in the remote chance you have a fracture that sort of cost is minimal compared to treating a diabetic, HIV patient, etc. for a lifetime. Something else to consider is that most patients are ignorant. If a doctor wastes thirty minutes explaining to the ankle sprain patient why an x-ray is unnecessary the cost for the doctor's time is probably more than the x-ray. Particularly since the same patient will often ignore the doctor's education and find another doctor to take the x-ray anyway. Defensive medicine often provides a cost savings by minimizing the costs of our general population being ignorant.

To Michael L - I strongly agree with you. Gay males should hang their heads in shame at how little their community cares about abusing the rest of society with the consequences of their sexual immaturity. Consider a young gay male I know. Several months ago he decided that making gay male bareback porn was a good idea. He got HIV from this exercise in stupidity. He'll cost the US taxpayer approximately a million dollars in the next 25 years of his lifetime. If any non-bleeding heart liberals complain about this they will be chastised. Yet these same liberals wouldn't contemplate chastising the guy for his behavior. Liberals thrive on victims. His behavior supports their agenda.

Bob Badour said at November 22, 2009 8:58 AM:


Thank you for your reply.

Your answer seems to assume chronic care does not have any opportunity for defensive medicine. I am not sure that assumption stands up to scrutiny. For example, might not doctors order tests more frequently or earlier in the progression of a disease to obviate liability from rare complications? Might not doctors make referrals over symptoms that are almost certainly innocuous on the remote chance it might be an early sign of something serious and rare? Don't the regular visits of chronic care patients give doctors more opportunities to see things that could conceivably (although not probably) expose the doctor to liability?

You cite the example of a young gay man who will cost the taxpayer a million dollars as things are now. Might he not cost less if doctors and hospitals were less fearful of civil action?

Eric Johnson said at November 22, 2009 10:43 AM:

Heres a credible looking document suggesting that estimates of defensive medicine costs top out at $100-130 billion, or 12-15% of all health care costs. Thats about three times the US public spending on all biomedical research, ie the NIH (more is done by private firms).


Randall Parker said at November 22, 2009 11:53 AM:


Total US health care spending in 2006 was over $2 trillion or over 16 % of GDP. So $130 billion is about 6.5% of health care spending and less than 1% of GDP.

In 2009 total US health care spending is probably up to $2.3 trillion given the rate of growth in recent years.

I think the biggest factors driving up health care spending are inflexible demand (said inflexibility being what the public wants) and new high cost treatments.

Stephen said at November 22, 2009 3:55 PM:

These graphs show a marked upswing in health expenditure from about 1976. What happened then?

Irish Savant said at November 22, 2009 4:00 PM:

Computers COULD drastically cut costs but they hardly ever do. The reason is that the underlying business processes are not changed in tandem. Getting computers to automate existing processes is like designing a mechanical horse instead of a tractor

Randall Parker said at November 22, 2009 7:19 PM:

Irish Savant,

Some diagnoses could be done more efficiently by expert systems. But doctors naturally oppose this.

When people are dying in a US hospital they become like a carcass to feed off of for the many specialists. Tons of tests get done on a dying patient that are pointless. This makes US health care very inefficient. My point about inflexible demand is that all that pointless medical work gets paid for, mostly by the US government.

Springcharts said at November 24, 2009 5:08 AM:

Good points Sophia

sg said at November 24, 2009 12:25 PM:

Generally the most cost effective "preventive" stuff is free stuff like living clean and eating healthy.
It costs nothing to do this. It gets expensive when fools want to demand funding for health professionals to waste their time telling people stuff their parents should have trained them to do.

Early detection saves money if patients pay for it themselves. They then get prompt less expensive treatment and better outcomes.
Patients need to take responsibility for their own health and health care costs. No one cares about costs that others pay, duh.

Having insurance pay for routine care is insane. It is like buying gas and food. Insurance should not cover it, period.

Deport all illegals immediately. They will never contribute as much in taxes as they consume in services. They are not "strength from diversity". They are dead weight.

Eric Johnson said at November 24, 2009 10:23 PM:

> Having insurance pay for routine care is insane.

I really agree. When I looked into a "catastrophe" plan that had a high deductible but also a real high ceiling, it was not that expensive at all. It covers like two doctor visits per year, but I dont go anyway. I'm young, which helps the price. But on the other hand being older would help me have more dough.

I guess the sticking point is, what if you have high deductible insurance and then suddenly you need some very expensive med, permanently.

Bob Badour said at November 25, 2009 9:35 AM:

"I guess the sticking point is, what if you have high deductible insurance and then suddenly you need some very expensive med, permanently."

That's where the opportunity for reform lies. If insurance companies are allowed to exclude pre-existing conditions from coverage, insurance companies have to be held liable for the entire treatment of a disease or condition diagnosed while insured. Of course, premiums will reflect that liability, but really that just means "low-cost" insurance companies won't be able to divert the most profitable patients from other plans and then dump them when they get sick.

Tater Salad said at December 6, 2009 1:39 PM:

I think the taxpayers are being "hood-winked" with this electronic stuff. What's funny is the fact that Compuware and the CEO, Peter Karmanos hired the ex-mayor of Detorit, Kwame Kilpatrick after he got out of prison for perjury so he could become a salesman for the company. Kwame is going to use his mother as the go-between Compuware and him because she is a Congresswoman and the stimulus money is at her disposal for upgrading medical records to "electronic".

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