The document discusses the challenges of implementing a health information technology (HIT) system. It outlines several stakeholder groups - including inpatient systems, outpatient systems, regional health information organizations, physicians, patients, payers, and policymakers - and analyzes the challenges each group faces. Inpatient systems face the largest challenges due to high costs of hardware, software, and staff training. Physicians could see reduced income if the system reduces unnecessary tests and procedures. However, patients and payers may realize reduced costs from avoiding duplicate and harmful services. The document argues incentives must be structured to encourage stakeholders to work together to maximize the benefits of investing in HIT.

1. Margaret Hoisington 10/11/13
Challenges of a Health IT System
In an industry where the completeness of information considered in decision-making
could mean the difference between life and death, it seems unusual that
healthcare providers continue to rely so heavily on paper-based methods of
communication and keeping records. It’s undeniable that the availability of an
individual’s comprehensive health record would improve their chance of receiving
appropriate, quality care as well as reduce the overall cost of care. Due to the complexity
of our modern healthcare system, individual care is often provided by a combination of
different medical professionals and institutions, meaning that a lot of information needs
to be recorded, organized and communicated in order for the system to work efficiently
and effectively. The implementation of health IT (HIT) systems to facilitate these
processes has high potential benefits, but the economic, structural, organizational and
technical challenges that it presents have slowed its development. These challenges are
complexly interwoven and vary for the different groups who stand to be affected by the
system changes.
The rising cost of healthcare is a national problem and any changes in policy will
affect individuals and groups within all sectors. Federal healthcare reform currently plans
to allocate over $19 billion to the development of HIT so assessing the reasons for these
challenges as well as the viability of overcoming them is essential for designing structural
and policy changes that will maximize the benefits of this investment. Implementation of
this plan requires an analysis that focuses upon specific stakeholders, whose participation
and support will be vital for securing the success of this initiative. The primary
stakeholders are inpatient systems, outpatient systems, Regional Health Information
Organizations (RHIOs), physicians, patients, payers and policy makers.
Inpatient systems are large, complex establishments so they have the most at
stake in this matter and will present the largest challenge. Their size and the extent of
different departments and units within them make for extremely high upfront costs of
hardware and software needed for the HIT system as well as significant indirect costs
associated with the time it will take to train their staff to use the system. The cost of
implementing hardware and software is estimated between $20 and $50 million with

2. maintenance costs per year of around 25% of the initial investment (Milstein & Bates,
2009). Most hospitals are already operating on thin margins and they are concerned about
the potential risks of a capital investment of this significance. The estimated cost for
outpatient systems is between $20,000 and $50,000 per physician (Milstein & Bates,
2009). While outpatient systems aren’t as complex and implementation wouldn’t be as
expensive in most of them compared to inpatient systems, the uncertain return on
investment has made many of them hesitant to adopt all of the components of HIT. They
also usually have fewer employees, physicians and resources so initiating the HIT plan
would require more work from physicians as well as additional outside administrative
and technological support.
RHIOs are developed in order to provide an infrastructure that facilitates the
exchange of health information between inpatient and outpatient systems. Although the
estimated savings from avoidance of adverse drug events and redundant tests are
substantial, so are the costs of building a structure that will be able to provide all of the
required capabilities and create interoperability between all of the systems that it serves.
The cost of implementing a nationwide standardized health information exchange is
estimated to be as high as $276 billion with $16 billion of annual costs afterwards
(Milstein & Bates, 2009). The high economic, structural and technological costs at stake
here are challenging but because RHIOs would be expanding in response to need created
by the HIT plan, they don’t have as much at stake as the hospitals and clinics that they
would serve.
Physicians are a stakeholder group with high interest but not as much influence
relative to the healthcare organizations that they work through. However, their interest
influences the interest of those organizations because inpatient and outpatient systems
don’t want to lose physicians who are unhappy with how HIT affects their work. For
compensation that is based on fee-for-service, physicians could face a reduction in
income from avoidance of additional tests. The changes necessary for the HIT system
would at first either require them to work longer hours or result in a reduction of their
efficiency, which could also lower their income. At least in the short term, both
physicians and the organizations that they are employed through face high costs with

3. little measurable reward. This misalignment of rewards and incentives is a major
organizational challenge to the implementation of HIT.
Currently, patients and payers are more likely to realize the reduced cost benefits
arising from this plan. Depending on how much insurance providers and patients each
contribute to the costs of healthcare, they will be the two main groups who save money
from avoiding the administration of unnecessary or harmful services and drugs. The goal
of our healthcare system should be to provide patients with adequate and efficient care at
low costs and the growth of HIT would most likely support that objective. If the
investment in HIT is successful and these savings are realized, then policy makers will
benefit as well because the issue of rising healthcare costs is putting a tremendous strain
on the national budget and is a source of major political conflict. While all three of these
parties have a high interest in this issue, together they present the least amount of
challenge to the implementation of HIT.
The main goal of HIT is to support the cost-effectiveness and quality of
healthcare available and government policy should aim to align this goal with the goals of
every stakeholder group. An IT system on this scale that is capable of so many functions
will be expensive to implement but the economic, structural, organizational and technical
challenges can be overcome with the right allocation of resources and rewards. If
incentives are structured appropriately, different stakeholders will be encouraged to work
together towards achieving the same goal and the investment in HIT will have a much
higher chance of achieving its objectives.

4. REFERENCES
Adler-Milstein, J. & Bates, D.W. (2009). Paperless healthcare: Progress and challenges
of an IT-enabled healthcare system. Business Horizons, 53, 119–130. doi:
10.1016/j.bushor.2009.10.004.
Institute of Medicine (US) Roundtable on Value & Science-Driven Health Care; Yong
PL, Olsen LA, McGinnis JM, editors. Value in Health Care: Accounting for Cost,
Quality, Safety, Outcomes, and Innovation. Washington (DC): National Academies Press
(US); 2010. 2, Stakeholder Perspectives on Value. Available from:
http://www.ncbi.nlm.nih.gov/books/NBK50926/