Medical Device Daily Washington Editor

WASHINGTON – Technologically advanced hospitals have greater potential to improve outcomes in patient care, reduce medical errors, increase productivity, and better compete for market share.

Sounds like a pretty obvious statement, right? Well, perhaps it's not as obvious as it would seem, contends Neal Bowlen, a director with the Digital Health Consulting Practice of PricewaterhouseCoopers (Indianapolis).

Early last week during the Health Information Technology Summit in San Francisco, PricewaterhouseCoopers' Health Research Institute and its Global Technology Center released a paper concluding exactly that – better outcomes as a result of technology.

The paper, titled "Reactive to Adaptive: Transforming Hospitals with Digital Technology," examined benefits being seen at a growing number of digital hospitals across the country.

"It is common sense, but a lot of people don't believe it," Bowlen told Medical Device Daily. "A lot of people don't see technology as an enabler in itself without comprehensive process reengineering."

A digital hospital is one that relies on technology as an integral part of its business strategy, using a completely automated set of health information management functions, including all administrative, financial and clinical capabilities.

Such systems provide 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 also could be applied to existing healthcare facilities. According to the paper, 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.

"If you go to some of these sites, you will see that technology is a fundamental element of the organization's business plan," Bowlen explained. "It is a total commitment to fix patient safety and productivity, and they think that technology and process redesign is the answer."

Bowlen said he is eager for the opportunity to educate doubters.

"I think that is what I am most excited about," he said. "So many people out there have not believed or understood that you can actually get tangible demonstrations of return with this comprehensive commitment to technology."

There has been much debate recently among lawmakers on Capitol Hill regarding the implementation of electronic health records (EHRs). President George Bush has called for a nationwide HER system in the next 10 years.

The healthcare sector is widely criticized for not adopting information technologies as quickly as other industries. Though technology solutions are found increasingly in healthcare offices, automation has not played a significant role in the direct support of best-practice clinical care.

PricewaterhouseCoopers teamed with HIMSS Analytics, part of the Healthcare Information and Management Systems Society (HIMSS; both Chicago), 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 in the process of adding IT systematically, beginning with back office systems and moving along a continuum toward fully integrated, automated clinical systems and electronic medical records.

One of the benchmark hospitals the paper identified was the Indiana Heart Hospital (Indianapolis), which opened in 2002 as the first all-digital heart hospital in the U.S.

Compared to previous cardiac facilities in the health system, The Indiana Heart Hospital achieved an 85% reduction in medication errors in its first year of operation.

It also experienced a 65% reduction in inappropriate payer denials and delays, a 15% reduction in coding workload, and a 45% drop in medical transcription and dictation costs. Cart management costs also fell from $15 per chart to $3.

Perhaps more impressive from a business standpoint, there was a 15% increase in market share in the first fiscal year.

"Healthcare takes place outside hospitals far more than inside them," said Jim Henry, partner and chairman of PricewaterhouseCoopers Health Industries Group. "The challenge for the industry is to disentangle the misaligned incentives across all health-related sectors that impede progress toward information sharing and connectivity."

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.

For example, research identified differences between digital and national average hospitals, with digitally advanced hospitals seeing a larger drop in average length of stay and a larger increase in operating revenues.

Digital 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 & Medicaid Services (Baltimore) hospital quality initiative.

When asked what the most important benefit of increased information technology integration was, patient safety ranked highest among hospital executives interviewed. About 20% of medical errors are due to inadequate availability of patient information.

The paper said that though interconnectedness of technologies is important, it also is very difficult and expensive. Significant technology implementation requires costly and complex integration of many subsystems and technologies.

The burden of implementation, the paper says, falls to hospital executives – not software vendors and IT departments – to drive organizational and process changes in order to realize substantial benefits.

Change will become more rapid as hospitals respond to outside pressures, such as pay-for-performance programs and government reporting on quality, according to the paper's findings.

According to Bowlen, the investment in this kind of technology is easier with new facilities that are prepared for a larger capital investment. 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, according to government statistics. That figure is only 2.5% of a typical hospital's annual operating budget, according to PricewaterhouseCoopers.

Digital hospitals spend 3% to 5% of their operating budget on information technology, the paper said, and the cost of increasing average IT spending to this level across the industry would add $5 billion to hospital IT spending in 2005 alone.

Approximately 90% of the more than 30 billion healthcare communications that occur in the U.S. each year are currently by fax, paper, mail or phone, according to the research paper.

"This is not cheap, we're not going to lie to anybody about that," Bowlen said. "But it is more about understanding the return on the cost. Is there a real benefit? Absolutely."