State of Oklahoma Return on Investment Statewide Health Information Exchange

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State of Oklahoma Return on InvestmentStatewide
Health Information Exchange
March 28, 2007
This report is being provided through the efforts
of SMRTNET, a joint federal/state/city/ and
tribal effort to support the development of
health information exchange in Oklahoma.
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Here is Steve, our patient
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Chronic Headaches
Diagnosed With Asthma 5-27-99
Prescribed medication for Elevated LDL
Cholesterol 12-22-05
Diagnosed With Arthritis 4-29-06
Diagnosed with IBS 9-30-02
Diagnosed With Arthritis 4-29-06
Foot Surgery 1-15-02 Bone Spur removal
Like most of us, Steve has unconnected healthcare
providers, many of his conditions were treated
under different providers, different
prescriptions, different facilities, under
different insurance, at different times.
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Chronic Headaches
Diagnosed With Asthma 5-27-99
Prescribed medication for Elevated LDL
Cholesterol 12-22-05
Diagnosed With Arthritis 4-29-06
Health Information Exchange
Diagnosed with IBS 9-30-02
Diagnosed With Arthritis 4-29-06
Foot Surgery 1-15-02 Bone Spur removal
Health information exchange brings them together!
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Data Sources

• Public Health
• Community Health Centers
• Hospitals
• Pharmacy and PBM
• National Laboratories
• Local Laboratories
• Insurance and Medicaid
• Office EMRs
• Native American Tribes
• Federal Hospitals
• Mental Health
• University Providers
• The patient!

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Data FunctionalitiesNote This economic study
measures only the impact of the first two
functionalities below. The other functionalities
will add additional benefits.

• Community Health Record
• ePrescribing
• Personal Health Record
• Secure Messaging
• Images and Reports
• Chronic Disease Management
• Computer Physician Order Entry and ACPOE
• Electronic Medical Record

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Various Types of Costs from Disconnected Records

• Pharmacy/medication mistakes due to negative drug
  interactions, misread handwriting, and dosage
  misinterpretation
• Repeat laboratory procedures
• Increase defensive medicine costs
• Repeat imaging
• Increased capacity for fraud
• Paperwork costs of faxing records
• Increased capacity for medical overuse
• Increased number of medical visits
• Increased cost of chronic disease management

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Cost to Oklahomans from Disconnected Health
Records

• 1.2 billion in healthcare costs of 20.1
  billion health care expenditures in Oklahoma
• This is a minimum of 6 of all health
  expenditures
• 1,139 potential lost lives
• Estimate based in U.S. Center for
  Medicare and Medicaid Services 2004 and medical
  inflation at 6.65 through 2007. 1.7 billion
  projected by 2011 against medical costs of 25.8
  billion.

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The Macro PictureOverview of Cost Savings for
Statewide Adoption

• Year All Oklahoma State Govt. Medicaid
  Deaths Avoided
• 2007 100.6 million 20.1 million 10.1
  million 101
• 2008 205.1 million 41.0 million 19.8
  million 172
• 2009 349.7 million 69.9 million 32.3
  million 247
• 2010 539.8 million 107.9 million 48.2
  million 325
• 2011 784.8 million 156.9 million 67.7
  million 407

Total Cost Based on Percentage of Providers Using
System
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Cost Benefits Based on Statewide Initiative

• Prescription Savings and Fraud and Abuse are the
  largest areas for potential savings

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Increased Statewide Patient Safety

• Throughout Oklahoma, by 2011 over 29,000 Adverse
  Drug Events (ADEs) will have been avoided, 1,300
  potential lives saved, and nearly 21,000 provider
  and hospital visits avoided due to reduced
  Adverse Drug Events.
• An ADE is any unexpected or dangerous reaction to
  a drug or unwanted effect caused by the
  administration of a drug.

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What about the 600,000 Uninsured in Oklahoma?

• Perhaps no other group is more medically at risk
  than the uninsured as their healthcare is more
  disconnected than any other group.
• While it is unlikely that we will insure these
  people any time soon, we can rapidly build them
  an electronic medical home through health
  information exchange so as they move between
  safety-net providers the quality and safety of
  their care will increase.
• This should relieve pressure on providers,
  emergency departments, improve workflow, and
  coordination of care.

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Additional Benefits From Health Information
Exchange

• Potential improvement of health status for all
  Oklahomans in the areas of heart disease,
  smoking, and alcoholism through the use of
  scientifically based interventions
• Reduction in chronic disease management costs
• Reductions in medical paperwork/staff costs
• Effects of allowing Oklahoma residents access to
  their medical records including improved health
  and more efficient communications with providers
• Positive impact on our states ability to
  counteract bioterrorism and pandemic disease
  outbreaks
• Making the medical system easier and more
  efficient to use for everyone

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Opportunity Costs

• In other states, four to ten years are estimated
  for the development of a large network, assuming
  the political, legal, organizations, and
  technical issues can be resolved.
• A three year delay in developing this network
  will potentially cost all Oklahomas residents
  654 million in medical cost savings and 572
  potential lives lost.
• The state government will potentially loose 130
  million and 103 potential lives lost.

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Average Costs and Savings Per Person

• Average per person health costs in Oklahoma
  5,843
• Cost per year of health information exchange per
  per capita 3.60
• Average savings per personYear 1 28Year 5
  227

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Cost/Benefit from Health Information
ExchangeEach dollar invested in health
information exchange yields2007
8.05 2008 16.38 2009 28.05
2010 43.33 2011 63.05Costs based on 30
cents per month per person

Assumes a 15-55 adoption rate by physicians
and 65 impact on each savings category.
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Statewide - Key Findings

• Cost Savings
• Prescription drug savings by using ePrescribing
  begin immediately in year 1, saving over 29.47
  million and growing to over 147.54 million in
  2011.
• Reducing duplicate orders has year 1 savings of
  11.07 million with a five-year projection of
  49.45 million by 2011.
• Large potential for fighting fraud abuse with
  annual savings of 472.50 million in 2011
• Physician time savings from reduced phone calls
  for clarification of 5.1 million in year 1 and
  20.67 million in year 5 (2011).
• Patient Safety Savings
• 2,368 ADEs avoided in year 1 with a compounding
  result of 29,450 ADEs avoided with ePrescribing
  over 5 years
• 1,900 life-threatening ADEs eliminated over the
  same five year timeframe
• ePrescribing would reduce approximately 20,780
  provider and hospital visits as a result of ADEs
  over five years
• ePrescribing would potentially eliminate 1,250
  potentially avoidable deaths throughout Oklahoma
  that result from medical error

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Cost Savings and Patient Safety Return on
Investment for Individuals Directly Covered by
the State of Oklahoma

• Patient Safety
• 474 fewer ADEs in year 1 growing to over 1,900 in
  year 5
• Approximately 1,900 life-threatening ADEs
  eliminated
• Eliminate 20 potentially avoidable deaths as a
  result of medical error in year 1 with a 5 year
  accumulation of over 240 avoidable deaths
• Over 4,150 provider and hospital visits avoided
  as a result of avoided ADEs

• Cost Savings
• High capacity for fraud and abuse cost savings,
  which reach 94.5 million in year 5
• 5.9 million in year 1 from drug savings by
  utilizing ePrescribing. By 2011, savings reach
  29.5 million.
• Over 1 million in year 1 savings by reducing
  redundant lab and radiology tests, which grows to
  over 4.4 million in 2011

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Statewide Model Assumptions

• Oklahoma statewide population modeled
• 2.5 population growth rate
• 8 YOY growth rate for healthcare expenditures
• Provider adoption rate
• Only non-federal physicians included
• Impact rate for all categories each year is 65
• Fraud and abuse assumes impact rates of 10,15,
  20,25 and 30,
• respectively over 5 years
• Categorical growth rates
• Prescription drug 5.5
• All other categories assume a 2.5 YOY growth
  rate over five years

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Data for this Study

• Data for this study are based on a combination of
  three record systems available through SMRTNET.
  These include a community health record (a
  combined record from all sources), eprescribing
  (for providers and pharmacies), and a personal
  health record (to improve communications between
  providers and patients). Most health information
  exchanges provide one or two of these services.
  Therefore the benefits of this system may be
  greater than for other systems with fewer record
  systems. It is not assumed that any providers
  will adopt an internal electronic records system
  for their office or institution.
• Data and assumptions for this study were produced
  through a detailed study of scientific research
  available about health information exchange and
  using the best available current population
  statistics. Some of this research is new, and
  will be subject to change. Conservative
  assumptions were taken in developing estimates.
• This study is likely to be an understatement of
  results as it does not estimate the benefits of
  improved chronic disease management, decreased
  defensive medicine costs, and the effect of a
  personal health record as these are new subjects.
  Those will be provided in a later release.
• Persons desiring data sources, studies,
  assumptions, and calculations may contact the
  project principal investigator Mark Jones, M.S.,
  M.B.A. at markjhealth_at_yahoo.com phone 918 931
  9410.