1. Training of healthcare staff is essential to reduce unnecessary costs from $700 billion wasted annually on tests and procedures. Residents need training to order fewer tests and prevent hospitalizations. 2. There is a disconnect between new health IT being introduced and proven effectiveness, as manufacturers want to bring new tech to market before efficacy is proven. 3. Enterprise-directed health IT tends to be more cost-effective than consumer-directed technologies that focus on wellness and mobile apps. 4. Lack of security for health data costs over $6 billion annually from breaches, yet many hospitals do not make data protection a top priority.

1. 4 keys to the cost of health IT
November 17, 2011 | Michelle McNickle, New Media Producer
We know health IT saves money and streamlines workflow, and when used properly, its benefits are
widespread and long lasting. But within the past decade or so, the revolution of health IT has also
sparked some interesting talk about the cost.
“First of all, investment firms that normally stayed on the sidelines are going all in," said Lisa Suennen,
managing member at Psilos Group and author of the blog Venture Valkyrie. “Three years ago, if you told
a roomful of venture capitalists that healthcare IT would boom like the Internet once did, they would
have laughed you out of the room. Today they are trying to figure out how to get in on the action.”
But not so fast, warns Suennen. According to her, there’s a greater recognition today, compared to a
decade ago, that health IT products need a serious clinical or administrative value proposition, or a clear
and recurring revenue model and the ability to demonstrate evidence of real cost-savings.
“There is a much matured customer base demanding IT solutions to solve the real problems inherent in
our teetering healthcare system,” Suennen wrote on her blog. “[It’s not] just a bunch of technology
looking for a problem to solve.” She added the new landscape of legislation and regulation directly
supports the evolution of the HIT marketplace, “sometimes with cold hard cash.”
Suennen shares some of the keys to understanding the cost of health IT.
1. The most cost-effective IT is enterprise directed. “Most of the technology that’s interesting and cost-
effective right now, although it may be different five years from now, isn’t consumer directed – it’s
much more enterprise directed,” Suennen said. The technologies that are consumer directed tend to be
the most popular and focus more on wellness and mobile technologies. “And while they’re [helpful]
technology, a vast majority of them are not cost efficient,” she said.
[See also: Costs, lack of standards agreement hamper healthcare IT adoption, experts tell Congress.]
2. Training is essential. On her blog, Suennen referenced an Institute of Medicine article, which
reported $700 billion a year is wasted medical spending, stemming from unnecessary tests, hospital
visits, and more. “Can you imagine taking one-third of your paycheck every month and flushing it down
the toilet?” wrote Suennen. “That is basically what happens with the more than $2.5 trillion circulating
through our healthcare system.” And the culprits are easy to spot. According to the article, interns and
residents are more likely to get in trouble for not using diagnostic tests and similar interventions than
using them. The author, Steven Weinberg, said, “Now that cost control in healthcare has reached a crisis
level, it's essential we change the culture of the training environment with regard to healthcare costs.”
According to him, residents need to be more thoughtful in ordering tests, avoid the overuse of imaging
studies and laboratory tests, and be conscious of opportunities to prevent avoidable hospitalizations or
readmissions.

2. 3. There’s a disconnect between effective IT and new IT. Suennen referenced a panel at the
MedTechVision Conference to explain the disconnect between products that prove their effectiveness
and the desire to introduce more and more IT into the market. “A key takeaway from this panel was the
rising tension between payers’ desire to reimburse only for new products that improve health
outcomes, and manufactures’ desire to bring new technology into the market, often long before there is
a body of evidence that proves efficacy,” wrote Suennen. And this disconnect between medtech buyer
and seller, Suennen noted, is one of the most problematic issues facing the industry today. “Much of the
discussion centered around how differently payers, providers, and product purveyors define ‘lower cost’
and what standards are used when it comes to innovations that promise to address the rising tide of
healthcare inflation,” wrote Suennen. “This included both how payers and providers think about the
return on investment they get from adopting new technologies, as well as what medtech purveyers take
into account when deciding which products are worth bringing to market.”
[See also: Cost-consciousness means unsettled future for imaging equipment service providers,
vendors.]
4. Lack of security is costly. By now, we know protecting against health data breaches is key, and the
consequences of forgoing these measures can be costly. A report released by ID Experts and Ponemon
Institute, found data breaches in US healthcare organizations cost providers more than $6 billion a year
and were most likely a result of employee actions, third-party error, and lost or stolen devices. Suennen
noted in her blog the last instance was the biggest problem and, according to the study, some of the
nation’s largest healthcare organizations aren’t trying very hard to solve this problem. “In fact, according
to the study, most provider institutions aren’t even making patient privacy and data security a priority,”
Suennen wrote. “In the press release about this study, it was noted that 70 percent percent of hospitals
said that protecting patient data is not a top priority and 67 percent reported having less than two staff
members dedicated to data protection management.”
Follow Michelle McNickle on Twitter @Michelle_writes
Source: http://www.healthcareitnews.com/news/4-keys-cost-health-it
Acroseas is of the opinion that reduction of wastage in terms of unnecessary procedures and tests
would go a long way in curving the ever-escalating healthcare costs. At a macro level it would also
require a complete overhaul of existing practices and the biggest challenge is to enforce newer
procedures assisted by technology amongst the senior most healthcare staff.