New Study Estimates Costs of Bush Administration's Health IT Plans

Main Category: IT / Internet / E-mail
Article Date: 03 Aug 2005 - 0:00 PDT

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President Bush's proposal to create a "model" national health information network would cost more than $156 billion in initial capital investment and $48 billion in annual operating costs over the next five years, according to a study published in the Aug. 2 issue of the... Annals of Internal Medicine, CQ HealthBeat reports. The study was conducted by researchers at Brigham and Women's Hospital and Massachusetts General Hospital and funded jointly by the Harvard Interfaculty Program for Health Systems Improvement and the Commonwealth Fund (Carey, CQ HealthBeat, 8/1). For the study, a panel of health care officials provided researchers with a set of minimum requirements that a model network must meet. After determining that the network should be accessible to doctor's offices, hospitals, pharmacies, clinical labs, nursing homes and home health agencies, researchers estimated the cost of deploying such a network nationwide (Freking, AP/Contra Costa Times, 8/2).

Cost Breakdown
The study projects that establishing and operating the IT systems would account for about two-thirds of the $156 billion initial capital investment and that the remaining one-third of funds would be allocated to support system interoperability. Maintaining system functionalities would require about $27 billion annually, and ongoing interoperability efforts would cost about $21 billion annually, researchers found. "These findings suggest that policy initiatives are needed if we are to close this gap," the authors write, adding, "Clearly the implementation of an NHIN will be expensive" (CQ HealthBeat, 8/1).

Funding Sources
The AP/Times reports that the health care industry will assume less than 20% of the cost of an NHIN, based on current estimates. However, lead author Rainu Kaushal of Brigham and Women's Hospital said, "I don't see [the government] as having to foot the bill," adding, "They can create incentives. Then the private sector can run with it" (AP/Contra Costa Times, 8/2). National Health Information Technology Coordinator David Brailer -- a panelist and one of the developers of the financial model used for the study -- said that using government funds as the principal source of financing for an NHIN would be "incredibly inefficient," adding that using public funds "comes with all kinds of strings attached and all kinds of rules and regulations that would stop us from achieving the goal" of interoperable EHRs (CQ HealthBeat, 8/1).

An abstract of the study is available online.

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