United States General Accounting Office 

GAO Report to the Ranking Minority Member, 

Committee on Health, Education, Labor, 

and Pensions, U.S. Senate 

October 2003 INFORMATION 


TECHNOLOGY


Benefits Realized for 

Selected Health Care 

Functions 

GAO-04-224


a
October 2003 

INFORMATION TECHNOLOGY 

Benefits Realized for Selected Health 

Care Functions 

The 10 health care delivery organizations reported 13 examples of cost savings 

resulting from the use of IT, including reduction of costs associated with 

medication errors, communication and documentation of clinical care and test 

results, staffing and paper storage, and processing of information. Other 

benefits included improved quality of care, more accurate and complete 

medical documentation, more accurate capture of codes and charges, and 

improved communications among providers that enabled them to respond 

more quickly to patients’ needs. A few examples are noted in the chart below. 

Examples of Cost-Related and Other Benefits Reported by Health Care Delivery 

Organizations and Insurers 

Cost-Related Benefits Other Benefits 

Clinical Care Functions 

Highlights of GAO-04-224 a report to the 

Minority Member, Committee on Health, 

Education, Labor, and Pensions, U.S. 

Senate 

The rapidly rising costs of health 

care, along with an increasing 

concern for the quality of care and 

the safety of patients, are driving 

health care organizations to use 

information technology (IT) to 

automate clinical care operations 

and their associated administrative 

functions. Among its other 

functions, IT is now being used for 

electronic medical records, order 

management and results reporting, 

patient care management, and 

Internet access for patient and 

provider communications. It also 

provides automated billing and 

financial management. 

The Ranking Minority Member of 

the Senate Committee on Health, 

Education, Labor, and Pensions 

asked GAO to identify cost savings 

and other benefits realized by 

health care organizations that have 

implemented IT both in providing 

clinical health care and in the 

administrative functions associated 

A teaching hospital reported that it realized 

about $8.6 million in annual savings by 

replacing outpatient paper medical charts with 

electronic medical records. 

A rural community hospital prevented the 

administration of over 1,200 wrong drugs or 

dosages using bar code technology and 

wireless scanners to verify both the identities 

of patients and their correct medications. 

An integrated health care delivery system 

reported improvements in diabetes control for its 

members with the disease. 

A teaching hospital reported a decrease in 

average length of stay from 7.3 to 5 days due to 

improvements in health care efficiency and 

practice changes. 

Administrative Functions 

An integrated health care delivery system An insurer reported that it improved clinical care 

to its members through its health screening 

reminders. 

reported a 53 percent decease in claims 

rejected due to eligibility checks during 

registration. 

with health care delivery. GAO 

analyzed information from 10 

private and public health care 

delivery organizations, 3 health 

care insurers, and 1 community 

data network. 

www.gao.gov/cgi-bin/getrpt?GAO-04-224 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact David Powner 

at (202) 512-9286 or pownerd@gao.gov. 

Source: GAO. 

All three insurers reported examples of reduced costs and other benefits 

resulting from improvements in electronic claims processing and the use of 

technology to enhance customer service. Benefits included increased staff 

productivity, improved timeliness in processing claims, improved customer 

satisfaction, and improved clinical care to members. 

One community data network established a regional exchange of health care 

data among physicians, hospitals, insurers, and others in the community, 

demonstrating that information can be exchanged securely and affordably 

while improving the quality and reducing the cost of health care. It expects to 

realize over $7 million in benefits for participating organizations. Other 

expected benefits include fewer admissions to the emergency department, 

reductions in staff time spent handling test results, and avoidance of test 

duplication. 
Contents


Letter 1


Appendix 

Appendix I:	 Use of Information Technology for Selected Health Care 

Functions 

This is a work of the U.S. government and is not subject to copyright protection in the 

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reproduce this material separately. 

Page i GAO-04-224 IT for Selected Health Care Functions 

4 
Page 1 GAO-04-224 IT for Selected Health Care Functions 

A

United States General Accounting Office 

Washington, D.C. 20548 

October 31, 2003


Senator Edward M. Kennedy


Ranking Minority Member


Committee on Health, Education, Labor, and Pensions


United States Senate


Dear Senator Kennedy:


According to the Institute of Medicine and others, health care is an


information-intensive industry that remains highly fragmented and 


inefficient. Hence, the use of information technology (IT) in delivering 


clinical care and performing administrative functions has the potential to 


yield both cost savings and improvements in the care itself. You asked us to 


identify cost savings and other benefits realized by health care 


organizations that have implemented IT both in providing clinical health


care and in the administrative functions associated with health care 


delivery.


To identify monetary and other benefits resulting from the use of IT, we 


reviewed available literature and consulted with experts in the academic 


and professional community about electronic medical records and about 


cost savings and other benefits that have been reported by health care 


organizations. We identified key clinical health care and administrative


functions for which IT is used and then identified health care organizations 


recognized in the health care community that could provide data to


demonstrate cost savings and other benefits realized from implementing IT. 


We obtained and analyzed data reported by 10 private and public health 


care delivery organizations, 3 health care insurers, and 1 community data 


network. We conducted our work from October 2002 through August 2003 


in accordance with generally accepted government auditing standards.


On October 8, 2003, we provided your office with a briefing on the results 


of this review, which is included as appendix I. The purpose of this letter is 


to provide the published briefing slides to you.


In brief, we identified 20 examples of IT initiatives that resulted in reported 


cost savings or other benefits—13 at health care delivery organizations, 6 at 


insurers, and 1 at a community data network. The participating 


organizations also discussed some important lessons they learned from 


implementing IT solutions. For example, a 1,951-bed teaching hospital 


serving urban, rural, and international populations reported that it realized 


Page 1 GAO-04-224 IT for Selected Health Care Functions 
about $8.6 million in annual savings by replacing paper medical charts with 

electronic medical records for outpatients. It also reported saving over $2.8 

million annually by replacing its manual process for handling medical 

records with electronic access to laboratory results and reports. 

Additionally, a 350-bed community hospital serving a rural population 

prevented the administration of over 1,200 wrong drugs or dosages and 

almost 2,000 early or extra doses by using bar code technology and 

wireless scanners to verify both the identities of patients and their correct 

medications. The reported monetary value of the errors prevented was 

almost $850,000. 

IT also contributed to other benefits, such as shorter hospital stays, faster 

communication of test results, improved management of chronic disease, 

and improved accuracy in capturing charges associated with diagnostic 

and procedure codes. For example, a large integrated health care delivery 

system serving an urban population reported improvements in diabetes 

control, decreases in upper gastrointestinal studies ordered, and increases 

in Pap smears performed. Most organizations also reported lessons 

learned, such as the importance of reengineering business processes, 

gaining users’ acceptance of IT, providing adequate training, and making 

systems secure. 

We will send copies of this report to other congressional committees; to the 

private sector organizations that participated in our review; and to the 

Secretaries of Defense, Health and Human Services, and Veterans Affairs. 

In addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

Page 2 GAO-04-224 IT for Selected Health Care Functions 
If you have any questions about this report, please contact me at (202) 512-


9286 or M. Yvonne Sanchez, Assistant Director, at (202) 512-6274. We can


also be reached by e-mail at pownerd@gao.gov or sanchezm@gao.gov. Niti 


Bery, Joanne Fiorino, Pamlutricia Greenleaf, M. Saad Khan, Jessica Steele,


and Teresa F. Tucker were major contributors to this report.


Sincerely yours,


David A. Powner


Director, Information Technology Management Issues


Page 3 GAO-04-224 IT for Selected Health Care Functions 
Appendix I 

Use of Information Technology for Selected 

Health Care Functions 

Use of Information Technology for 

Selected Health Care Functions 

Briefing for Minority Staff 

of the 

Senate Committee on Health, Education, 

Labor, and Pensions 

October 8, 2003 

Page 4 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


2 

Table of Contents 

• Introduction 

• Objective, Scope, and Methodology 

• Results in Brief 

• Background 

• Benefits of Implementing Information Technology 

• Health Care Delivery Organizations 

• Insurers 

• Community Data Networks 

• Summary 

• Appendixes 

• Appendix 1: Benefits and Lessons Learned for Health Care Delivery Organizations 

• Appendix 2: Benefits and Lessons Learned for Insurers 

• Appendix 3: Benefits for Community Data Networks 

• Appendix 4: Related Health Care Information Technology Studies 

Page 5 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


3 

Introduction 

• The Institute of Medicine, Deloitte Research, and others have reported that 

while health care is an information intensive industry, it remains highly 

fragmented and inefficient in comparison to other industries, but nevertheless, 

major change may be underway due to 

• rapidly rising health care costs 

• increasing concern for patient safety and the quality of care 

• The use of information technology (IT) to address improvements in patient 

safety is currently driving health care organizations to automate clinical care 

operations and associated administrative functions 

• HIPAA1 requirements to address administrative simplification are to provide 

for the exchange of health care clinical and administrative information to move 

the industry to use more efficient and standardized electronic communications 

• Over the last decade, the percentage of health insurance claims received 

electronically has steadily increased to 44% in 2002 

1 Health Insurance Portability and Accountability Act of 1996 

Page 6 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


4 

Objective, Scope, and Methodology 

Objective 

Identify cost savings and other benefits reported by health care organizations 

that have implemented information technology both in providing clinical health 

care and in the administrative functions associated with health care delivery 

Scope 

• We conducted our work at: 

• 11 private and public health care delivery organizations 

• 3 health care insurers 

• 5 community data networks1 

• We selected these organizations based upon their reported success with 

implementing IT and sharing data 

1 Community data networks are community-based organizations that are involved in collaborative efforts involving the exchange of electronic health 

information among two or more organizations 

Page 7 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


5 

Objective, Scope, and Methodology 

Organizations by Location 

z Health care delivery organizations 

S Insurers 

 Community data networks 

z Danville Regional Medical Center 

z Maimonides Medical 

Center 

St. Vincent’s zS Blue Cross & Blue 

Hospital Shield of Alabama 

z Mayo Clinic 

Massachusetts Health z Partners 

Data Consortium HealthCare 

 Santa Barbara County 

Care Data Exchange 

z Intermountain 

Health Care 

S Premera Blue Cross 

Community Health Information 

Technology Alliance 

z

Kaiser Permanente 

Northwest 

z

Tinker Air Force Base 

Medical Facility 

Blue Cross & Blue 

Shield of Minnesota 

S

z Vanderbilt University 

Medical Center 



North Carolina Healthcare 

Information & Communications 

z

Geisinger Medical Center 

CA 

OR 

OK 

WA 

MN 

AL 

NC 

MA 

TN 

PA 

NY 

VA 

UT 

z VA Washington Medical Center U (District of Columbia) tah Health 

Information Network 

Source: GAO 

Page 8 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


6 

Objective, Scope, and Methodology 

Methodology 

• Reviewed available literature and consulted with experts in the academic and 

professional community about electronic medical records and reported cost 

savings and other benefits by health care organizations 

• Identified key clinical health care and administrative functions that 

incorporate the use of IT for health care delivery organizations (e.g., 

medical record documentation, order management and results reporting, 

etc.), insurers (e.g., claims processing and customer service), and 

community data networks 

• Identified health care organizations recognized in the health care 

community for their use of IT and had data available that demonstrate 

cost savings and other benefits 

• Obtained and analyzed information from 10 of 11 health care delivery 

organizations, 3 insurers, and 1 of 5 community data network on functions 

that support clinical care delivery and administrative operations1 

1 One of the health care delivery organizations reported success with the implementation of IT but did not provide data; only one of the 

community data networks provided data on a demonstration project for establishing a regional network for sharing medical information 

Page 9 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


7 

Objective, Scope, and Methodology 

Methodology (continued) 

• Data analyzed included: 

• organizational profile information 

• description of the IT environment 

• cost and cost-related benefits 

• other benefits 

• lessons learned 

• Provided participating organizations with the opportunity to comment and 

verify the accuracy of the material presented 

• All 14 organizations for which we have highlighted specific examples 

verified the accuracy of their data 

• Conducted our work from October 2002 through August 2003 in 

accordance with generally accepted government auditing standards 

• We did not independently verify the data provided to us 

Page 10 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


8 

Objective, Scope, and Methodology 

Data Limitations 

• The organizations in our review do not represent a statistically valid sample 

of health care delivery organizations and insurers 

• Data from the health care delivery organizations are unique to their specific 

settings and processes and are not necessarily consistent or comparable 

from organization to organization 

Page 11 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


9 

Objective, Scope, and Methodology 

Description of Terms Used 

• For health care delivery organizations, based on our review of literature and 

consultation with experts, we considered clinical care and administrative 

functions to be: 

• For insurers, we considered administrative functions to consist of claims 

processing and customer service 

• For community data networks, we considered information exchange to 

consist of electronic data sharing of health information 

• Automated billing and financial management 

• Patient admission, discharge, transfers and 

registration 

• Coordination of communications infrastructure 

Administrative 

• Electronic medical records (EMR) 

management 

• Order management and results reporting 

• Patient care management 

• Internet access for patient and provider 

communications 

• Decision support tools 

Clinical Care 

Page 12 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


10 

Results in Brief 

• We identified 20 IT initiatives associated with health care organizations that resulted in 

reported cost savings or other benefits 

• 13 examples of IT initiatives at health care delivery organizations 

• 6 examples of IT initiatives at insurers 

• 1 example of an IT initiative at a community data network 

• Examples of reported cost and cost-related benefits varied, such as 

• reduction of 28 staff positions needed to handle paper records, with over $700,000 

in associated cost savings 

• 40% decrease in new orders for portable chest x-rays, with over $1 million saved in 

associated costs 

• 10% increase, or $4 million saved, in the number of claims processed without 

human intervention 

• Examples of other benefits included 

• increased patient safety 

• improved communications and documentation 

• Organizations also identified several lessons learned from implementing IT 

Page 13 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


11 

Background 

Key Participants in the Health Care System 

in the United States 

Source: Financing Health Care, Volume II; Hoffmeyer et al., 1994 

• As the graphic illustrates, 

the health care system in 

the United States is complex 

• Health care is a large 

sector of the economy that 

involves multiple provider 

associations, health care 

delivery organizations, 

insurers, consumers, and 

local, state, and federal 

agencies; including the 

emergence of community 

data networks 

• According to Centers for 

Medicare and Medicaid, 

national health expenditures 

are projected to be about 

$1.78 trillion by 2004 

Page 14 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


12 

Background 

Status of IT in Health Care 

• The Department of Health and Human Services (HHS) reports that: 

• IT is expensive and it is difficult for organizations to generate the capital 

needed for IT investment, which is often regarded as an add-on cost 

• Currently, there is fragmented use of electronic connectivity to exchange 

health data among all providers 

• Standards for content (how the meanings of medical terms are 

represented) are not yet agreed upon, nor are there standards for how 

messages are to be sent 

• Security, and thus privacy, has not yet been assured—authentication of 

users and data encryption need to be more effectively implemented 

• Despite the $20 billion in health care-related IT expenditures in the United 

States in 2001, less than 10% of US hospitals had adopted electronic 

medical records1 

Appendix 4 contains summaries of selected studies on health care IT benefits 

1 Goldsmith, J; Blumenthal, D; Rishel, W, Federal Health Information Policy: A Case of Arrested Development, Health Affairs (July/August 2003) 

and received 

Page 15 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


13 

Background 

Current Federal IT-Related Efforts 

• To encourage improvements in patient safety and information sharing, for fiscal year 

2004, the President requested $50 million for projects related to the use of IT for 

patient safety and $12 million to support development of standards 

• FDA has proposed a new rule for bar coding medications to improve patient safety by 

allowing the use of information systems to reduce preventable medication errors 

• HHS has licensed SNOMED1 clinical terms for $32.4 million over 5 years to be 

available at no charge throughout the United States in order to provide a common 

vocabulary standard needed for the exchange of health care information 

• GAO recently reported on opportunities to improve health care standards initiatives 

and made several recommendations to further these efforts2 

• define activities for ensuring that the various standards-setting organizations 

coordinate their efforts and reach further consensus on the definition and use of 

standards 

• establish milestones for defining and implementing all standards 

• create a mechanism to monitor the implementation of standards throughout the 

health care industry 

1 Systematized Nomenclature of Medicine 2 U.S. General Accounting Office, Bioterrorism: Information Technology Strategy Could Strengthen Federal Agencies’ Abilities to Respond to Public 

Health Emergencies, GAO-03-139 (Washington, DC: May 30, 2003) 

Page 16 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


14 

Background 

14th Annual HIMSS Leadership Survey1 

In February 2003, HIMSS reported the results of its annual survey of 287 

health care IT executives and other respondents 

• 52% of the responses identified the top IT priority as implementing IT to reduce 

medical errors and promote patient safety 

• 23% named the lack of financial support as the biggest barrier to implementing IT at 

health care organizations 

• IT applications identified to be the most important in the next 2 years include 

computerized provider order entry (64%), clinical information systems (53%), and bar 

coded medication management (46%) 

• 68% reported that their IT operating budgets will increase, although projected 

increases are small—10% or less 

• 55% identified internal breaches of security as the problem of most concern, while 33% 

named the limits of existing security technology as a concern 

• 95% cited high-speed networks as the technology used most frequently by health care 

organizations, followed by intranets and client/server systems, 87% and 85% 

respectively 

• Web site functionality for patients—including access to clinical information—is 

expected to increase in the next 2 years; current access is reported at 44% 1 Health Information Management Systems Society (HIMSS) 

Page 17 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


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15 

Benefits of Implementing IT 

Overview of Health Care Delivery Organizations 

• We identified 13 reported examples of IT used to support functions 

associated with clinical care and administrative operations at 10 health care 

delivery organizations—see appendix 1 for details 

• Examples include public and private medical centers of various sizes, both 

rural and urban, which are taking steps to improve clinical care and patient 

safety through the use of IT for inpatient and outpatient health care delivery 

• successfully implementing EMRs that integrate information—from 

physician orders, results reporting, medication administration, and clinical 

encounter documentation—to provide better decision support capabilities 

• making improvements in electronic communications and documentation 

• establishing IT architectures and standardizing formats for exchanging 

data 

• addressing issues related to security, and thus privacy, introduced by the 

use of wireless networks and devices 

Page 18 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


16 

Benefits of Implementing IT 

Examples of Cost-Related and Other Benefits 

Reported by Health Care Delivery Organizations 

Cost and Cost-Related Examples: 

• Fewer medication errors (e.g., wrong 

drugs or dosages, fewer adverse drug 

reactions) 

• Prevented 1,241 wrong drugs or 

dosages, amounting to a $732,909 

value of prevented errors 

• Faster communication of clinical care 

and test results 

• Decrease in time from 180 to 14 

hours in radiology, from receiving an 

order to issuing a final report 

• Lower costs to document clinical care 

• $1,167,317 saved in transcription 

costs 

Other Examples: 

• Improved quality of care 

• 48% increase in the number of 

members with diabetes in good or 

excellent control 

• More accurate and complete medical 

documentation 

• Increase in documentation of pain 

assessment from 0% to 95% 

• Reductions in length of hospital stay 

• 47% decrease in average length of 

stay from 7.3 to 5 days because of 

improvements in health care efficiency 

and practice changes 

Clinical Care Functions 

Page 19 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


17 

Benefits of Implementing IT 

Examples of Cost-Related and Other Benefits 

Reported by Health Care Delivery Organizations 

Cost and Cost-Related Examples: 

• Decrease in staffing and other costs 

• Two-year total net savings of 

$483,000 resulting from reduction in 

staff, paper, storage facilities, and 

postage 

• Streamlined processing of information 

• 53% decrease in claim rejection due 

to eligibility checks during 

registration 

• Improved financial management 

• Decreased average days in 

accounts receivable from 74 to 35 

days, saving $2.9 million 

Other Examples: 

• More accurate capture of diagnostic 

and procedure codes and charges 

• Since physicians are directly 

entering ICD-91 codes, it has 

created opportunities to enhance 

the quality of care by enabling “real 

time” disease management 

• Improved communications 

• Installation of a wireless phone 

system eliminated paging over 

speaker system, improving 

communications between providers 

and other associates, enabling staff 

to respond to patient needs in a 

more timely manner 

Administrative Functions 

1 International Classification of Diseases, 9th edition 

Page 20 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


18 

Benefits of Implementing IT 

Examples of Lessons Learned Reported by 

Health Care Delivery Organizations 

The following examples were cited by two or more organizations: 

• Investments are needed in change management and training to ensure 

successful implementation of IT 

• Devote training to work flow changes as well as process changes 

• Social engineering is 75% to 90% of the effort to implement technology 

solutions; technical implementation is 20% to 25% of the effort 

• A major portion of the quantifiable benefit is related to process improvement 

and reduction of manual effort 

• Provider and customer satisfaction are crucial to successful IT 

implementation 

• Involve providers in design, development, and implementation 

• Recognize the importance of managing security issues 

• For user acceptance, a robust and secure system and infrastructure are 

needed 

• Identify web-based access authorization and control issues 

Page 21 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


Health Care Functions


19 

Benefits of Implementing IT 

Overview of Insurers 

• We identified 6 reported examples of IT used for claims processing and 

customer service at 3 health care insurers—see appendix 2 for details 

• Examples of benefits include the use of IT to improve electronic claims 

processing and improvements in customer service through the use of the 

Internet and other technologies 

• Reduced claims processing costs with increasing claims volume 

• Improved quality of claims data 

• Improved staff productivity 

• Increased provider and customer satisfaction 

• Adoption of technologies such as speech recognition, intelligent 

character recognition, and imaging 

Page 22 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


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Health Care Functions


20 

Benefits of Implementing IT 

Examples of Cost-Related and Other Benefits 

Reported by Insurers 

Cost and Cost-Related Examples: 

• Increased percentage of claims 

processed electronically, reducing 

processing costs 

• Pass rates have increased by 6% 

since 2002, with 1% improvement in 

the pass rate translating into 

administrative savings of $400,000 

• Better timeliness in processing claims 

• Timeliness improved from 90% in 30 

days to 99% in 30 days 

• Enhanced staff productivity 

• Inventory levels of claims dropped 

from 275,000 to 180,000 (or from 

4.5-5 days work-on-hand to 1.3 days 

work-on hand) 

Other Examples: 

• Improved quality of claims submission 

data 

• Fewer claims require manual 

corrections 

• Improved staff productivity 

• Data entry rates for optical 

character recognition are about 95 

pages per hour, while manual entry 

ranges from 22-45 pages per hour 

• Customer and provider satisfaction 

• Increased customer satisfaction as 

a result of improved claims 

turnaround 

Claims Processing Functions 

Page 23 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


Use of Information Technology for Selected 


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21 

Benefits of Implementing IT 

Examples of Cost-Related and Other Benefits 

Reported by Insurers 

Cost and Cost-Related Examples: 

• Lower costs to deliver services, while 

increasing customer satisfaction 

• Using speech recognition 

technology, lowered cost, with per 

call costs 10-30% of vendor service 

for call campaigns 

• Lower costs associated with the 

handling of customer phone calls 

• Decrease in cost of handling annual 

call volume from $22 million to less 

than $18 million 

• Decrease in staffing 

• 50% decrease in temporary nursing 

staff required to review medical 

records 

Other Examples: 

• Improved customer services 

• Customer retention due to service 

delivery capabilities 

• Decreased customer hold time on 

the telephone from 180 seconds to 

no delay 

• Improved clinical care to members 

• Diabetic retinal exams increased 

from 71% to 93% 

• Rate of adolescents receiving full 

vaccinations increased from 29% to 

43% 

• Marketing tool for the acquisition of new 

accounts 

Customer Service Functions 

Page 24 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


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22 

Benefits of Implementing IT 

Examples of Lessons Learned 

Reported by Insurers 

The following examples were cited by at least two of the three organizations: 

• Continued improvements to electronic claims are needed to ensure 

provider satisfaction and meet customer demands 

• Continue making enhancements to allow all types of claims and to 

provide products that will reach all providers, while ensuring that 

processes are HIPAA compliant 

• Continue to leverage technology to increase capacity 

• Transformation from legacy systems and processes to a more customerfocused entity is a challenge 

• Server and mainframe technologies require complex interfaces 

• Transition to a new platform takes time and requires retraining 

• Procedures and workflows need to be revamped 

• Collaborative relationships and good communications are important for 

successful implementation of IT 

Page 25 GAO-04-224 IT for Selected Health Care Functions 
Appendix I


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23 

Benefits of Implementing IT 

Overview of Community Data Networks 

• For one of the five community data networks, we identified an example of IT 

used for the regional exchange of health care data among physicians, 

hospitals, payers, and ancillary services (e.g., laboratories and radiology)— 

see appendix 3 for details 

• The organization expects annual benefits to include, among others: 

• annual total benefits of $7.3 million 

• savings in laboratory and radiology labor costs 

• enhanced revenue resulting from proper coding 

• This initiative demonstrates that information can be exchanged securely 

and affordably in a manner that improves the quality and reduces the 

costs of health care 

• The four other networks are working to ensure secure standard transactions 

and improve the speed and reliability of secure electronic communications 

containing health data 

Page 26 GAO-04-224 IT for Selected Health Care Functions 
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24 

Summary 

• Selected health care organizations have reportedly benefited from the 

implementation of IT initiatives that have resulted in associated cost savings 

and other benefits 

• The range of reported cost and cost-related benefits varied from reductions 

in staff and supplies, to savings from reductions in transcription services 

• Other benefits realized also addressed a wide range of improvements 

related to increases in patient safety measures and improvements in 

communications and documentation, among others 

• Lessons learned reported by these organizations include the need to 

redesign business processes and workflows, ensure “ownership” of IT 

initiatives to facilitate adoption of technology and its benefits, and ensure 

that staff are adequately trained 

Page 27 GAO-04-224 IT for Selected Health Care Functions 
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25 

Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 1 (Clinical Care) 

Organizational Overview 

• Danville Regional Medical Center is a 350-bed, private, not-for-profit 

community hospital serving a rural population 

• IT budget was $2.7 million (3% of total budget) for 2002, including 28 staff 

Description of the IT Environment 

• Danville provided data on the use of their medical administration check 

(MAC) application, which is one component of their EMR system 

• MAC utilizes bar code technology and wireless scanners to provide 

positive identification of drugs and patients at the point of care 

• Patients’ bracelets, medications, and nurse IDs are bar coded; no 

inpatient receives medication without bar code verification technology 

• Bar code technology is integrated into a wireless network and EMR; 

patients’ charts are updated when medication is administered 

Page 28 GAO-04-224 IT for Selected Health Care Functions 
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26 

Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 1 (Clinical Care) 

Reported Cost and Cost-Related Benefits 

• Prevented 1,241 wrong drugs or dosages, amounting to a $732,909 value 

in errors prevented1 (2002) 

• Prevented 1,968 early or extra doses, amounting to a $116,226 value in 

prevented errors (i.e., potential overdoses)(2002) 

Other Reported Benefits 

• 50% decrease in phone calls to the pharmacy per day 

• Increased patient safety 

• Decreased medication errors 

• Improved communication and documentation 

• No paper charting required when medications are administered 

1 Value computations based upon The Costs of Adverse Drug Events in Hospitalize Patients, Bates, David, JAMA, 1997, Vol 277 No 4 and, 

Adverse Drug Events in Hospitalized Patients, Classen, David, JAMA, 1997 Vol 277 No 4 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 1 (Clinical Care) 

Lessons Learned 

• Ensure that the configuration of hardware and equipment (scanners, 

batteries, bar code placement) is conducive to performing the manual 

tasks associated with the process (i.e., scanning, charging batteries, etc.) 

• Devote training to work flow changes as well as process changes 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 2 (Clinical Care) 

Organizational Overview 

• Geisinger Medical Center is a 437-bed, private, not-for-profit integrated 

health care system, which provides primary and specialty care in 50 clinics 

and 3 hospitals serving a rural population; it also operates an HMO covering 

290,000 members 

• IT budget in 2002 was $68 million (4.1% of total budget) and included 

293 staff 

Description of the IT Environment 

• Geisinger uses a commercial system as its outpatient EMR system 

• System became operational in 1996 and is still evolving 

• Its EMR database contains 2.4 million patients 

• Used to document 1.2 million patient visits in 2002 

• Implemented digital radiological image capture and transmission, with 

remote reading of studies for hospitals without radiologist 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 2 (Clinical Care) 

Description of the IT Environment (continued) 

• EMR system functions include: 

• Direct order entry for laboratory and radiology, with real-time alerts and 

reminders for about 600 physicians 

• Laboratory, radiology, pathology, centrally scanned documents, and 

transcribed documents that interface with the clinical data repository 

• Patient encounter documentation using electronic templates 

• Web technologies for access to information across the enterprise for 

providers and patients 

• E-mail that provides rapid, secure messaging to every clinician in the 

system 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 2 (Clinical Care) 

Reported Cost and Cost-Related Benefits 

• 372,000 fewer laboratory and radiology reports printed and filed annually 

• About $1,000 in savings per year per physician due to improved formulary 

compliance 

• 50% or greater decrease in transcription costs in some medical departments 

• $1,992 savings per month in reduced dermatology transcription costs 

• 9-25% increase in productivity in 5 clinical services over a one year period1 

(2001-2002) 

• Able to perform 550 extra colonoscopies resulting in $265,000 first year net 

financial benefit 

• 100% ICD-9 coding of all orders by the provider, improving the accuracy of 

billing 

• Chart pulls reduced by 105,000 annually; average non-appointment chart 

pulls per clinic day decreased from 1,580 to 1,248 (2001) 

1 Productivity measure based on relative value unit per full-time equivalence 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 2 (Clinical Care) 

Other Reported Benefits 

• Automatic allergy and drug-drug interaction checking on all prescriptions 

• Increased ordering of Pneumovax and aspirin for coronary artery disease 

• Rapid patient notification of drug and vaccine recalls 

• 33% reduction in Medicare disallowance of tests ordered 

• 97% of visits have allergies checked and documented 

• 1,651 fewer appointments completed without referral authorization 

(Jan 2001-June 2002) 

• 94% of 16,690 patients surveyed in December 2002 rated the “helpfulness 

of having the computer in the exam room” as good or very good 

• More accurate and complete documentation and billing 

• Real-time medical necessity checking and warning at order entry 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 2 (Clinical Care) 

Lessons Learned 

• Develop a phased approach to facilitate implementation 

• Recognize the difficulty of writing laboratory result interpretations to allow 

for easy to understand explanations for patients who are unfamiliar with 

medical terminology 

• Determine how to route patients’ drug renewal requests to the correct 

provider within an integrated delivery system with multiple specialists 

• Identify web-based access authorization and control issues for pediatric 

patients, and for someone other than the patient but authorized by the 

patient 

• Identify ways to achieve efficiencies in system use and to measure benefits 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 3 (Clinical Care) 

Organizational Overview 

• Kaiser Permanente Northwest is a private, not-for-profit integrated health 

care delivery system serving an urban population of 440,000 members with 1 

200-bed medical center, 7 contract plan hospitals, 28 multi-specialty medical 

offices, and 2 ambulatory surgery centers 

• IT budget in 2002 was about $50 million (about 3% of total) 

Description of the IT Environment 

• Its clinical information system is a commercially available, comprehensive EMR 

that automates many of the information transmission processes related to 

outpatient care, such that they no longer create paper charts 

• Complete life-long paperless medical record 

• Detailed information on over 4 million office visits and 2.5 million telephone 

interactions per year, with a total of over 30 million visits and 17 million 

telephone interactions 

• Direct clinician order entry with decision support embedded with alerts and 

guidelines for prescribing and ordering 

• Extensive intranet web site 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 3 (Clinical Care) 

Description of the IT Environment (continued) 

• Key components of the EMR include 

• Results reporting system that leverages existing electronic data from 

departmental systems 

• Commercial outpatient EMR that automates all 

• outpatient documentation (e.g., progress notes, problem list maintenance) 

• order communications for pharmacy, laboratory, radiology and referrals 

• patient instructions 

• coding of all diagnoses, procedures, and length of stay 

• messaging processes 

• Databases for 

• Clinical and disease prevention and management 

• Merged financial data for business management, clinician feedback, 

reduction in variation of care, and research 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 3 (Clinical Care) 

Reported Cost and Cost-Related Benefits 

• 76% decrease in phone calls to obtain lab results between 1993 and 1997 

• Over 90% decrease in chart pulls for quality review 

• Reduction of 2,000 in overall daily chart pulls, eliminating 16 FTEs and saving 

and avoiding about $5.7 million on medical record unit FTE costs1 

• 7.5% decrease in laboratory test ordering—attributable to reliable and efficient 

access to test results—decreasing redundant tests 

• 10% decrease in outpatient visits per member per year over three years, 

reversing previous increases 

• Decrease in average number of lab tests per member from nearly 17.5 to less 

than 16 per year 

1 FTE is full-time equivalents 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 3 (Clinical Care) 

Other Reported Benefits 

• 16% increase in Pap smears performed from 69% to 80% (1995-1998) 

• 15% increase in the documentation of smoking status, allowing for targeted 

patient education from 80% to 92% (1998-2000) 

• 44% increase in the documentation of coronary artery disease or peripheral 

vascular disease in patients with lipids measured in last 24 months (1998-2000) 

• 48% increase from 46% to 66% in members with diabetes in good 

control (1993-1998) 

• 46% increase from 48% to 68% in members with diabetes receiving annual retinal 

exams (1987-1992) 

• 90% of users prefer not to return to paper chart, indicating high user acceptance 

• 85% of users feel the EMR has a positive impact on productivity and is worth the 

time and effort to use 

• 65% of users feel that patients are more satisfied with the use of the EMR, while 

30% are neutral 

• Decrease in the number of upper gastrointestinal studies ordered following 

automated patient care guidelines 

or excellent 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 3 (Clinical Care) 

Lessons Learned 

• Prepare clinicians for major change and manage differences in proficiency 

• Maintain enthusiasm despite initial “start-up difficulties” experienced by 

clinicians 

• Implement patient care guidelines for prevention, diagnosis, and treatment 

to provide clinicians with information more efficiently 

• Recognize the importance of managing security and confidentiality issues 

• Establish collaborative relationship with the IT vendor 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 4 (Clinical Care) 

Organizational Overview 

• Maimonides Medical Center is a 705-bed, private, not-for-profit 

independent teaching hospital serving an urban population 

• IT budget in 2002 was $21 million (3.6% of total budget) and included 92

staff 

Description of the IT Environment 

• Maimonides Access Clinical System (MACS) is a computerized patient 

record system comprised of four distinct systems from different vendors 

• Inpatient EMR with permanent inpatient record, medication charting and

documentation, order entry and results reporting, and communications and management 

• Outpatient EMR with full physician and nurse documentation 

• Emergency department EMR with full physician and nurse

documentation 

• Obstetrical EMR with full physician and nurse documentation and

decision support with expert knowledge 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 4 (Clinical Care) 

Description of the IT Environment (continued) 

• Systems that supply data to MAC include, among others 

• decision support system 

• laboratory information system 

• transcription system 

• patient management and accounting system 

• picture archiving and communications system 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 4 (Clinical Care) 

Reported Cost and Cost-Related Benefits 

• Reduction of adverse drug reactions from 435 to 325, with corresponding 

increase in pharmacy clinical interventions from 1,046 to 1,873 (1998-2001) 

as pharmacists respond to electronic flags in the system 

• 32% decrease in average length of stay from 7.3 to 5 days (1995 – 2001) 

because of improvements in health care efficiency and practice changes, 

such as improved time to deliver medications to the patient’s bedside 

• Decrease in time from 180 to 14 hours in radiology, from receiving an order 

to issuing a final report 

• 68% decrease in medication processing time from 276 to 88 minutes 

• Growth in patient revenues from $369 to $509 million and profit from 

$751,000 to $6 million during 1995-2001 

• 25% of growth in revenues attributed to improved efficiencies with MACS 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 4 (Clinical Care) 

Other Reported Benefits 

• 45% increase in compliance with problem lists from 67% to 97% 

• 14% increase in documentation of allergies from 88% to 100% 

• 49% increase in documentation of medication lists from 67% to 100% 

• Increase in documentation of pain assessment from 0% to 95% 

• 55% decrease in medication discrepancies 

• 58% decrease in problem medication orders 

• Elimination of pharmacy transcription errors (e.g., incorrect time, quantity, 

route) 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 4 (Clinical Care) 

Lessons Learned 

• Create the right information systems environment with proven management 

and leadership skills, dedicated IT staff, and respected clinical staff 

• Establish programs specifically focused on physician participation and 

ownership of the system 

• Provide real-time user support 24 hours, 7 days a week 

• Provide “just-in-time” training 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 5 (Clinical Care) 

Organizational Overview 

• Mayo Clinic is a 1,951-bed, private, not-for-profit teaching hospital serving 

urban, rural, and international populations 

• IT budget in 2002 was $107 million (5% of total budget), including 750 

staff1 

Description of the IT Environment 

• Mayo’s initial clinical information system consisted of a database management 

system developed in 1972 and a fiber optic network installed in 1986 

• There are 32,000 active users 

• The database contains 145 million laboratory/procedure results and 44 million 

radiology images 

• 50,000 clinical notes are created weekly; total of 12 million are in the database 

• 125,000 electronic outpatient orders are created weekly 

1 IT budget includes only direct expenses and the total budget is operating expenses 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 5 (Clinical Care) 

Description of the IT Environment (continued) 

• The Mayo Integrated Clinical Systems (MICS) project was initiated in 1995 

to enhance clinical care, education, and research, and to help ensure the 

financial success of the organization through the use of integrated 

electronic patient care systems 

• MICS is comprised of forty implementation initiatives that support four major 

categories of activity—electronic medical records, clinical process support, 

system infrastructure, and other initiatives 

• Examples of initiatives to support electronic health records include clinical 

notes, electronic results and reports, moving to paperless medical records 

for outpatient services, advanced beneficiary notification, and Mayo’s 

scheduling system 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 5 (Clinical Care) 

Reported Cost and Cost-Related Benefits 

• $2,906,000 annual savings resulting from reduction in staff needed to route 

paper medical records from clinical notes technology and from automation 

of correspondence 

• $2,850,000 annual savings resulting from electronic access to all laboratory 

results and reports compared with the previous manual process for 

handling medical records 

• $8,630,000 annual savings resulting from the elimination of paper medical 

charts during outpatient encounters 

• $7,000,000 annual savings resulting from a reduction in unbillable tests 

and the ability to bill patients directly 

• $400,000 savings to date resulting from the reduction in staff needed to 

manually create and manage patient’s appointments; other benefits being 

analyzed 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 5 (Clinical Care) 

Other Reported Benefits 

• Immediate access to legible patient information to support Mayo’s three 

missions of practice, education, and research 

• Structured format for ease of access and for support of data mining 

• Improved security 

• Improved billing process 

• Increased patient satisfaction with up-front knowledge and authorization of 

tests 

• Improved patient scheduling, allowing for travel time, fasting, provider, 

calendar, and other criteria 

• Less staff training as scheduling rules are incorporated into scheduling 

system 

• Automatic creation and recreation of schedule material 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 5 (Clinical Care) 

Lessons Learned 

• Benefits can be obtained from successful IT projects 

• Process measurement is time consuming and sometimes difficult to capture, 

particularly with large integrated systems 

• A major portion of the quantifiable benefit is related to process improvement 

and reduction of manual effort 

• Full realization of the benefit requires the combined efforts of IT and 

operations 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 6 (Clinical Care) 

Organizational Overview 

• Partners HealthCare is a 3,196-bed, private, not-for-profit integrated 

health care system serving an urban community that consists of 11 hospitals 

and about 7,200 physicians; includes primary care and specialty physicians, 

community hospitals, the two founding academic medical centers, specialty 

facilities, community health centers, and other health-related entities 

• IT budget in 2002 was $112 million (3% of total budget), including about 

850 staff 

• The two founding academic medical centers—Brigham and Women’s 

Hospital (BWH) and Massachusetts General Hospital (MGH)—have 

conducted research on their EMR systems 

• BWH data, as reported in several articles about the Brigham Integrated 

Computing System (BICS), are summarized on the next three pages 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 6 (Clinical Care) 

Description of the IT Environment 

• In February 2002, Partners implemented a patient portal that is currently in use at 

11 practices, with 8,358 patients enrolled as of September 3, 2003 

• The portal, called Patient Gateway, provides patients with Web-based access to 

• request routine appointments, prescriptions, and referral authorizations 

• obtain health and disease information 

• obtain practice information 

• BWH uses the Brigham Integrated Computing System (BICS) to handle the 

majority of its clinical, financial, and administrative computing needs 

• BICS clinical information system includes: 

z longitudinal medical records z results review 

z critical pathway management z provider order entry 

z operating room scheduling z coverage lists 

z critical event detection and altering z automated inpatient summaries 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 6 (Clinical Care) 

Reported Cost and Cost-Related Benefits of BICS 

• A single drug substitution intervention saved $250,000-$500,000 annually on 

just one drug 

• Using event triggers to identify possible changes in dosing and provide 

appropriate suggestions to the physicians saved $950,000 for: 

• 8,000 changes in orders of H2 blockers 

• 1,000 changes in orders of Ondansetron1 

• 3,000 changes in orders of Ceftriaxone2 

• 4,500 fewer redundant laboratory tests for a savings of $100,000 per year 

• Shift from intravenous to oral drug delivery in 20,000 instances saved 

$1 million per year 

• User acceptance of a drug family suggestion favoring one H2 blocker3— 

because of cost—increased to 94% within the first few days 1 Ondansetron is used to prevent nausea and vomiting caused by cancer chemotherapy, radiation therapy, anesthesia, and surgery 2 Ceftriaxone is used in the treatment of infections caused by bacteria 3 Histamine H 2-receptor antagonists, also known as H 2-blockers, are used to treat duodenal ulcers and prevent their return 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 6 (Clinical Care) 

Other Reported Benefits of Patient Gateway 

• Less staff labor, time saved, fewer delays, and more accurate information 

compared with the telephone 

• High patient satisfaction associated with the availability of the system and the 

receipt of replies from the practices 

• High satisfaction in medical practices associated with higher use by patients 

• Growth in demand among practices as enrollment has risen 

Other Reported Benefits of BICS 

• Ambulatory record is available at any time and at any location 

• 4% of radiology orders into the system were canceled and 55% were 

changed when an embedded alert warned that an ordered study was 

inappropriate for specified clinical reasons 

• Positive response to order entry; overall score of 5.7 on a scale from 1-7 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 7 (Clinical Care) 

Organizational Overview 

• Department of Defense (DOD) operates a worldwide health care 

program, including overseas facilities, that consists of 75 hospitals and 461 

outpatient clinics for about 9 million beneficiaries 

• 20% are active duty personnel and 80% are retirees and dependents 

Description of the IT Environment 

• We visited Tinker Air Force Base Medical Treatment Facility (MTF) to 

observe the use of the Composite Health Care System (CHCS) II 

• CHCS II is currently operational in Tinker’s outpatient clinics; 

implementation began on March 31, 2003 

• 6 other MTFs have implemented CHCS II over the past year, with 

worldwide implementation of release 1 expected to be completed by 2006 

• CHCS I, first implemented in 1993 and operational in all DOD MTFs today, is 

expected to be replaced by CHCS II by fiscal year 2008 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 7 (Clinical Care) 

Description of the IT Environment (continued) 

• CHCS II, a COTS based product, interfaces with the existing military health 

systems to provide an integrated electronic health record of treatment for the 

care provided in DOD medical facilities worldwide 

• CHCS II, release 1 provides functions for outpatient services 

• Structured documentation of history, physical, diagnostic, and treatment 

• Secure electronic connectivity of the health record 

• Automated coding derived from the patient encounter documentation 

• Enterprise global clinical database for research, management, and 

military deployment decisions 

• EMR management in support of population health activities 

• Lexicon and health data dictionary 

• Future CHCS II capabilities are planned to be fielded incrementally, including 

inpatient, vision, occupational exposure and surveillance, immunizations, and 

dental care 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 7 (Clinical Care) 

Reported Cost and Cost-Related Benefits 

• Baseline metrics and data have been established; however, postimplementation review of cost and cost-related benefits are not expected 

until November 2003 

Expected CHCS II Benefits 

• Maintain a secure lifelong health record for inpatient and outpatient medical 

and dental services 

• Support force readiness through improved collection, storage, integration, 

management and communication of patient information 

• Enable comparison of structured data with lexicon and health data 

dictionary 

• Improve health care delivery by providing access to previously unavailable 

clinical information 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 7 (Clinical Care) 

Expected CHCS II Benefits (continued) 

• Enhance enterprise decision-making with timely, accurate, and secure data 

• Reduce time for and improve accuracy of billing and coding 

• Improve patient and provider satisfaction 

• Improve management of resources and availability of Internet resources 

• Support record legibility, accuracy, and availability, regardless of record 

location 

• Enhance quality of prescription services 

• Enhance patient safety by reducing the likelihood of adverse drug events, 

therapeutic overlaps, and duplicate procedures and treatments 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 7 (Clinical Care) 

Other Reported Benefits 

• Population data to determine efficacy of patient care plans and treatments 

• Standardized care through the use of templates for patient types 

• Increased capabilities for “non-provider” technicians, by building pre-set 

provider care plans and order sets 

• Continuity of care enhanced by ability to quickly look up any encounter on the 

system, refer back to last visits, and see medical records from other sites 

• Multiple windows visible on the screen (i.e., patient vitals, drugs, and lab 

results) for better and quicker decision making 

• Provide reminders, alerts, pathways, and guidelines 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 7 (Clinical Care) 

Lessons Learned 

• Understand the clinical workflow prior to implementation of the system 

• Exploit the system capabilities for “non-providers”, consider reengineering 

workflow 

• Ensure consistent leadership and provide support and feedback 

• Define proactive strategies with clinician leadership 

• Consider the value of data versus the time and resources required for data 

collection and input 

• Expect an initial, transient productivity dip when implementing an EMR 

• Augment training with “in clinic” support during initial use 

• Provide a robust, secure, available, system and infrastructure to ensure 

user acceptance 

• Involve providers in design, development, and implementation 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 8 (Clinical Care) 

Organizational Overview 

• The Veterans Health Administration consists of 21 regional networks that 

support 162 hospitals, 137 nursing homes, and 681 community-based 

outpatient clinics—providing care for over 4.6 million veterans in fiscal year 

2002 

• We visited the Department of Veterans Affairs (VA) Washington DC 

Medical Center, a 137-bed facility with 3 community-based outpatient clinics 

and 1 nursing and rehabilitation center to observe how IT is being used in 

support of patient care 

Description of the IT Environment 

• VA has had an automated information system, the Decentralized Hospital 

Computer Program (DHCP), in its medical facilities since 1985 

• In 1996, with the introduction of Windows-based applications, DHCP evolved 

into the Veterans Health Information Systems and Technology Architecture 

(VistA) 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 8 (Clinical Care) 

Description of the IT Environment (continued) 

• The Computerized Patient Record System (CPRS) is the interface that 

integrates all clinical VistA data, providing clinicians a complete electronic 

health record, supporting patient care in both inpatient and outpatient settings 

• CPRS enables clinicians to enter, review, and update all order and 

encounter related information connected with patients, such as progress 

notes, lab and radiology tests, medications, diagnoses, procedures 

performed, allergies, and clinical reminders 

• Bar Code Medication Administration (BCMA), a VistA component, validates 

medications for inpatients and documents medication administration 

• implemented nationwide as part of an effort to eliminate paper 

prescriptions and reduce medication errors 

• visually alerts staff when the proper parameters are not met 

• uses a handheld device to scan bar codes on patient’s wristbands to 

ensure that the medications are administered accurately and as intended 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 8 (Clinical Care) 

Description of the IT Environment (continued) 

• For this review, VA provided a report addressing the quantitative evaluation 

of VistA-RAD, the filmless radiology component of the VistA Integrated 

Medical Imaging System1 

• VistA Imaging is a core image capture and archiving system that 

integrates all types of images, from advanced directives to multi-media 

gait studies, into the EMR, enabling clinicians to have a complete view 

of the patient’s status 

• VistA-Rad VistA Imaging, providing radiologists tools that 

enable them to “read” x-ray studies directly from computer screens 

without the need for x-ray film 

1 Data from VA Medical Center in Jackson, Mississippi 

augments 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 8 (Clinical Care) 

Reported Cost and Cost-Related Benefits of VistA-RAD 

• Net effect has been a reduction in personnel and materials cost of $13.67 

per radiology exam, averting annual operating costs of between $900,000 

and $1 million 

• Imaging service workforce was reduced from 45.5 to 36 FTEs, while 

volume of exams increased by about 23% 

• Cost of film and chemicals was reduced from $2.94 to $.28 per exam, 

or savings of $230,000 per year in operating expenses 

• 99% availability of images (prior to the use of VistaRAD, 9-10% loss rate of 

hardcopy films or 16,650-18,500 films per year) 

• Reduced patient wait time from 28 to 10 minutes, on average 

• Reduction of about 100 film retakes per month due to the ability to adjust 

digital images on the screen, resulting in savings of $3,144 in a 1-year period 

• About a 25-27% increase in departmental efficiency (based on comparison 

of time from exam to report) 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 8 (Clinical Care) 

Other Reported Benefits of CPRS 

• Clinicians have more complete information on which to base clinical care 

decisions, improving patient safety and quality of care 

• Information is from VistA at the site of care 

• information on request from other VA sites and DOD via remote data 

views 

• By standardizing best practices, CPRS can reduce negative variation, create 

standardized data, acquire (and share) health information beyond care 

delivered in VA, and automatically link reminders with appropriate 

documentation 

• Nationally, 91% of all prescriptions are entered directly by physicians, up 

from 79% one year ago 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 8 (Clinical Care) 

Other Reported Benefits of BCMA 

• Provides real time access to medication order information at the patient’s 

bedside 

• Reminds clinical staff when medications need to be administered, have been 

overlooked or the effectiveness of doses administered should be assessed 

• At one VA site, the reported error rate improved by 86% from 21.7 incident 

reports for each 100,000 units dispensed to 3 incidents per 100,000 units 

dispensed (1993-2001) 

Other Reported Benefits of VistA-RAD 

• Improved image quality, reducing patient exposure to radiation and repeated 

tests 

• Ability to organize and present digital images for teaching conferences 

• Savings of 5 to 80 minutes per day per physician due to reduction in time 

spent waiting for film to be processed or located 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 9 (Clinical Care) 

Organizational Overview 

• Vanderbilt University is a 927-bed, academic medical center serving an 

urban population 

• IT budget in 2003 was $30 million (2.3% of total budget), including 207 staff 

Description of the IT Environment 

• Vanderbilt’s information management system was created to automate billing, 

admissions, discharges, pharmacy, laboratory, radiology, and other functions 

• Vendor systems are purchased only if they are “best of class” and able to 

interface with Vanderbilt’s overall IT architecture. 

• An information management infrastructure is in use throughout Vanderbilt 

• Shared registration data across all inpatient and outpatient areas 

• Shared electronic patient charts across inpatient and outpatient areas, with 

about 150 types of documents; used interactively 9,000 times a day by 2,200 

distinct users 

• Over 20,000 reports are on a Web-based portal for provider access, with over 

2,000 new reports automatically generated on a quarterly basis 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 9 (Clinical Care) 

Description of the IT Environment (continued) 

• E3 Vision project identified needs of clinicians, patients, and office support for 

• electronic availability of all information, including admissions, results from 

laboratory, x-rays, pathology, and studies from outside Vanderbilt facilities 

• ability to electronically write all orders for prescriptions, laboratory, and 

radiology 

• computer-assisted ICD-9 coding 

• electronic clinical notes with prompts 

• E3 Star “Cluster” (i.e., StarPanel, StarChart, and StarVisit) supports the 

electronic health records 

• WizOrder provides computerized provider order entry with integrated decision 

support capabilities, including pharmacy warnings, online access to drug and 

prescription information, automated ICD-9 justifications for tests ordered, and 

guidelines to control excessive test ordering 

• generates 7,000-10,000 orders per day directly by physicians 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 9 (Clinical Care) 

Cost and Cost Related Benefits of E3/StarCluster 

• $1,167,317 saved in transcription costs in 2003 

• 40% reduction in paper faxes as they are intercepted and imported into the 

system 

• 28 FTEs saved resulting from automatic scanning, problem lists, and EMR, 

saving $704,000 (2003) 

• Solved problems related to the entry of incorrect ICD-9 codes, saving FTEs 

and reducing the number of denied claims 

• Recovery of storage space for paper charts led to conversion of space into 

a new patient room 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 9 (Clinical Care) 

Reported Cost and Cost-Related Benefits of Provider Order Entry 

• About 90% increase in compliance rate for ICD-9 coding for EKGs 

• 60% decrease (from previous year) in new blood chemistry test orders; 

40% decrease in actual tests performed 

• 40% decrease in new orders for portable chest x-rays; 30% decrease in 

studies performed, amounting to $1.1 million saved annually 

• $5 million saved annually on drug substitutions, based upon automated 

prompts that recommended alternatives that increased quality and 

decreased cost 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 9 (Clinical Care) 

Lessons Learned 

• System implementation represents a profound workflow change for users 

• Users’ concerns must be continuously respected, listened to, and 

addressed 

• Social engineering is 75% to 90% of the effort to implement technology 

solutions; technical implementation is 20% to 25% of the effort 

• Tools have to be usable enough to deliver benefits and support the delivery 

of medical care, education, and cost control 

• Change agent groups are important 

• Investments must be made in change management 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 10 (Administrative) 

Description of the IT Environment 

In 1999, Danville Regional Medical Center installed a wireless phone 

system and network, as well as physician Internet access for clinical data 

• Wireless Phone System: 180 wireless phones are available for physicians, 

care givers, and other associates; system selected based upon the 

scalability of the system and compatibility with the existing phone switch and 

other in-house wireless devices 

• Wireless Network: Wireless infrastructure replaced wall-mounted 

computers with roving wireless devices, which provide for data to be 

entered into wireless devices and transmitted to the mainframe, updating 

patients’ medical records in real time; system is compliant with HIPAA 

security requirements 

• Net Access: Provides physicians secure, direct access to patient data, 

allowing physicians to customize screens to meet specific needs; system 

is expandable to include electronic signatures for medical records and is 

HIPAA compliant 

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Benefits and Lessons Learned for Health Care Delivery 

Organizations – Example 10 (Administrative) 

Other Reported Benefits 

• Wireless phone system eliminated paging over speaker system, improving 

communications among physicians, care givers, and other associates, 

enabling staff to respond to patient needs in a more timely manner 

• Wireless network enables care givers to remain logged in while traveling 

from room to room 

• Extra wireless device in each clinical area provides downtime coverage 

• Larger monitors make status displays visible from inside room 

• Secure and timely access to patient data 

• Decrease in mailing and faxing of paper medical records 

• Decrease in phone calls requesting patient information 

• Anytime/anywhere access 

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Appendix 1 

Benefits and Lessons Learned for Health Care Delivery 

Organizations – Example 10 (Administrative) 

Lessons Learned 

• Service availability and quality of service are critical factors in the design of 

a wireless phone system 

• Physician education was important in managing expectations in the use of 

the wireless phones in the nursing units 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 11 (Administrative) 

Description of the IT Environment 

• Mayo Clinic’s Electronic Clearinghouse Service Project is being 

implemented to automate claims and remittance processing for all Mayo 

Clinic and Mayo Health System sites through a central hub1 

• Implementation began in October 2000 and will continue through October 

2003 

• Implementation for remittance processing is currently at 70% 

• Implementation for claims processing is currently at 55% and has been 

delayed due to HIPAA compliance preparation 

• The project is providing service to 20 Mayo sites 

1 Mayo has clinics in Rochester, Minnesota, Jacksonville, Florida, and Scottsdale, Arizona 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 11 (Administrative) 

Reported Cost and Cost-Related Benefits 

• Two-year total net savings of $483,000 ($229,000 over initial estimate), 

resulting from reduction in staff, paper, storage facilities, and postage 

• The Mayo Clinic in Scottsdale, Arizona reported that billing staff decreased 

from 5 to 3 FTEs1 

• Project providing returns on investment throughout the implementation 

process 

Other Reported Benefits 

• Facilitates faster payments 

1 Note: We did not visit the Mayo Clinic in Arizona 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 11 (Administrative) 

Lessons Learned 

• The need to meet October 16th HIPAA requirements slowed progress on the 

claims implementation 

• Spend time ensuring that savings are achieved (e.g., if there is an expected 

reduction in staff, plan for attrition, retraining, etc. to ensure gains) 

• Maintaining customer satisfaction in an environment of significant industry 

change is a challenge 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 12 (Administrative) 

Description of the IT Environment 

• Partners HealthCare maintains a central data repository, which receives 

data from all of the hospitals in its system 

• In 1998, Partners started using the New England Healthcare EDI Network 

(NEHEN) for insurance eligibility checking 

• NEHEN is a not-for-profit corporation formed and owned by a 

collaboration of providers and payers in eastern Massachusetts; its 

objectives include 

• Creation of a common technology platform to exchange insurance 

transactions between regional providers and payers 

• Development of a common set of guidelines and policies for 

implementing transactions and governing the network 

• Partners began using PDA1 handheld devices to capture charges for 

inpatients at the end of February 2003 for items such as procedure and 

diagnostic codes, viewing all laboratory and radiology results throughout 

Partners, and alerts to any abnormal laboratory test results 

1 PDA: personal digital assistants 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 12 (Administrative) 

Provider VPN Payers 

NEHEN 

Architecture 

Source: Blackford Middleton, MD, MPH, MSc; Chairman, Center for Information Technology Leadership; Partners HealthCare, Boston, MA 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 12 (Administrative) 

Reported Cost and Cost-Related Benefits from the Use of NEHEN 

• 37% decrease in the number of days bills are in accounts receivable from 

75 to 47 in a one-year period for a large specialty clinic 

• 53% decrease in claim rejection due to eligibility checks during registration 

• $2.54 decease in cost of an eligibility check from $2.64 to $.10 

Reported Cost and Cost-Related Benefits from the Use of PDAs 

• Number of lag days reduced from 17 to 10 days1 

• The number of days bills are in accounts receivable reduced from 54 to 37 

• More charges are being captured 

• ICD-9 coding accuracy has increased 

1 “lag days” are the number of days from date of service to the date bills are received in the billing office 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 12 (Administrative) 

Other Reported Benefits from the Use of NEHEN 

• Registration denials dropped from the first to the third most common reason 

for denials 

• Standardized format for extracting and exchanging billing data 

• Security provided by a gated community using encrypted data on a virtual 

private network 

Other Reported Benefits from the Use of PDAs 

• Since physicians are directly entering ICD-9 codes, it has created 

opportunities to enhance the quality of care by enabling “real time” disease 

management 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 13 (Administrative) 

Organizational Overview 

• St. Vincent’s Hospital is a 338-bed, private, not-for-profit community 

hospital serving an urban and rural population 

• IT budget in 2002 was $5.7 million (4% of total budget), including 30 staff 

Description of the IT Environment 

• For about nine years, largely paperless operations, ranging from bedside 

pharmaceutical and patient bar code scanning to allowing patients to preregister from home using a web-based community portal 

• All outpatient records online since January 1993 

• In the early 1990s, prior to implementing document imaging, the business 

office processed about 1.3 million pieces of paper annually, while the medical 

records department processed about 2.8 million pieces of paper 

• Significant process redesign related to manual processes and integration of 

existing information systems 

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Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 13 (Administrative) 

Reported Cost and Cost-Related Benefits 

• Decreased average days in accounts receivable from 74 to 35 days, saving 

$2.9 million (1988-1995) 

• Decrease in average registration time from 20 to 12.6 minutes 

• 66% decrease in time needed for insurance verification 

• 20% decrease in business office staff, although patient registrations 

increased 40% 

• Increased up-front collections by $250,000 due to pre-registration and bad 

debt modules 

• Annual savings of $645,000 through reduction of bad debt and charity, 

interest on accounts receivable, and savings on folders and supplies 

• Annual savings of $277,000 in medical records through reduction on “peer 

review organization” denials, microfilm, and space requirements 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 13 (Administrative) 

Reported Cost and Cost-Related Benefits (continued) 

• Annual savings of $258,000 in facility and materials management through 

reductions in space requirements, microfilm, paper supply, and copy service 

• Annual savings of $664,000 from process redesign (includes improvements 

in productivity, access, and implementation of parallel processing) 

• One-time savings of $1.6 million from process redesign 

• One-time savings of $1.6 million from reduction in backlog of medical records 

correspondence and improvements in the process for producing a final bill 

upon a patient’s discharge 

• One-time savings of $30,000 from reduction of outpatient accounts 

receivable 

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Appendix 1 

Benefits and Lessons Learned for Health Care 

Delivery Organizations – Example 13 (Administrative) 

Other Reported Benefits 

• Better customer service for both patients and third-party payers 

• Increased staff productivity via the image workstation 

• Enterprisewide accessibility of information 

• More complete insurance verification 

• Expedited chart completion and billing 

• Faster issue resolution in follow-up and collections 

• Two-day improvement in recurring bills 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 1 (Claims Processing) 

Organizational Overview 

• Blue Cross and Blue Shield of Alabama has over 3 million members 

and processed nearly 63 million claims in 2002 

• Proposed IT budget for 2003 is $71 million (12.5% of total budget)1 

Description of the IT Environment 

• Improved automated claims processing by implementing new technologies 

over the past decade 

• Upgraded claims processing system allows providers to transmit batched 

claims via dial-up networking, frame relay, or a proprietary network through 

its Electronic Medical Claims (EMC) system 

• produces reports to help identify which claims have been accepted or 

need correction, assisting the providers in learning how to send more 

accurate claims 

• Web applications are available to providers for entering claims 

• 90% of hospitals’, 85% of doctors’, and 35% of dental claims are 

submitted electronically 1 Budget year is 7/1/2003 to 6/30/2004 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 1 (Claims Processing) 

Description of the IT Environment (continued) 

• Other system upgrades include: 

• Intelligent character recognition (ICR) system extracts data from claim 

forms and performs online edits to further increase pass rates 

• Claims Imaging Processing System (CIPS) stores images 

electronically, allowing customer service representatives to 

instantaneously retrieve an image of a claim when discussing a filed 

claim with a provider or subscriber 

• replaced the manual processes of batching, counting, and reconciling 

claims, as well as the need for space to store paper 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 1 (Claims Processing) 

Reported Cost and Cost-Related Benefits 

• Estimated $20 million savings in data entry costs (2002) 

• Percentage of “first pass” claims increased from 86 to 90 (projected), 

saving $1.6 million (2001- 2003)1 

• Claim documents rejection rate dropped from 5% using optical character 

recognition (OCR) devices to about 1% using ICR 

• Cost to enter claims data reduced from $.74 using OCR to $.26 using ICR; 

$.48 per claim savings or $100,000 per month 

• Total return on investment in ICR since implementation is estimated to 

have surpassed $3 million 

• Images are, on average, 20% faster to enter data from than hardcopy 

• Keying from images saves an average of 20% cost per claim or about $.15 

per claim in data entry alone—about $3 million savings since inception 

1 First pass rate is measured as the percent of claims that do not require manual intervention to adjudicate after entry 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 1 (Claims Processing) 

Other Reported Benefits 

• Eliminated costly keying, mailings, and other manual interventions 

• Improved provider satisfaction and health care delivery 

• Increased the quality of claim submission 

• Decreased the number of phone calls and inquiries received 

• Increased productivity 

• Delivery of images to PCs reduced approximately 11 auxiliary type positions 

that helped maintain paper (logging, batching, etc.) and other functions, 

which could result in about $4 million in savings 

• Imaging led to outsourcing data entry, which increased savings 

• Document images are generally of a very high quality compared to microfiche 

• Reconciliation became automated based upon an image control number; 

reports are available for images that are not processed or reconciled 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 1 (Claims Processing) 

Lessons Learned 

• Maintain good communications with providers 

• Work directly with vendors and suppliers of EMS software systems 

• Furnish free billing software and installation assistance to providers that do 

not use a commercial software vendor 

• Purchase systems instead of trying to build, if there are products that are 

available that meet the needs of the organization 

• Keep up with customer demands by continuing to make improvements to 

the EMC process 

• Continue enhancing EMC to allow all types of claims and to provide 

products that will reach all providers, while ensuring that processes are 

HIPAA compliant 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 2 (Claims Processing) 

Organizational Overview 

• Blue Cross and Blue Shield of Minnesota has over 2.6 million 

members and processed over 28 million claims in 2002 

• IT budget in 2002 was $76 million (19% of total budget), consisting of 

both claims processing and IT, including 1,500 staff 

Description of the IT Environment 

• Leveraged technology by reengineering claims processing based on the 

concept of “straight-through processing,” resulting in increased system pass 

rates, automated business rules, and prioritized service requests 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 2 (Claims Processing) 

Description of the IT Environment (continued) 

• Implemented new tools to increase and enhance productivity and reduce 

human intervention, such as 

• Super Examiner Workstation: an online application that moved more 

than 8000 examiner paper documents to an online format 

• Super Adjudicator: a claims rules engine that replaced manual 

adjudication with automatic adjudication of claims to absorb growth 

through increasing the pass rate and improving productivity 

• Desktop image deployment: allows viewing of paper claims and 

attachments online, eliminating the need to search for paper documents 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 2 (Claims Processing) 

Reported Cost and Cost-Related Benefits 

• Administrative costs remained flat while receipts grew at an average of 

14.5% a year 

• Pass rates have increased by 6% since 2002, nearly 10% over the past 

three years, with 1% improvement in the pass rate translating into 

administrative savings of $400,000 

• Claim processing timeliness improved from 90% to 99% in 30 days (2000-

2002) 

• Inventory levels dropped from 275,000 to 180,000, or from 4.5-5 days workon-hand to 1.3 days work-on hand (2000-2003) 

• 99% claims accuracy rate 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 2 (Claims Processing) 

Other Reported Benefits 

• System down time and response time were reduced 

• Performance results dramatically improved 

• Claim inventory levels dropped significantly 

• Claim cost stabilized 

• Examiner productivity levels increased 

• Member and provider satisfaction improved 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 2 (Claims Processing) 

Lessons Learned 

• Creating the required infrastructure that enables the organization to rapidly 

transform into a more customer-focused entity given the existing legacy 

systems and processes is a challenge 

• Focus on processes 

• Continue to leverage technology to increase capacity 

• Implement risk mitigation strategies 

• Focus on quality 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 3 (Claims Processing) 

Organizational Overview 

• Premera Blue Cross has about 1.5 million members and processes about 

19.2 million claims a year 

• IT budget in 2002 was $68 million (17% of total budget), including about 

400 staff 

Description of the IT Environment 

• Implemented several applications to increase efficiency and accuracy of claims 

• Optical Character Recognition (OCR) and Imaging/Scanning Technology: 

converts 75% of paper claims into electronic documents prior to processing 

• Auto-Adjudication (AA): claim automatically adjudicated based on a series of 

established validations or rules 

• Interactive Voice Response (IVR): intelligent call routing with 24-hour self 

service response to members and providers 

• Automated Call Distributor (ACD): routes calls by selecting the first available 

agent, while tracking call volume and call handling statistics 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 3 (Claims Processing) 

Reported Cost and Cost-Related Benefits 

• About $1 million in savings resulting from OCR implementation (2002) 

• 13% increase in first pass rate with use of Auto-Adjudication, with 70,000 

additional claims auto-adjudicated from January through June 2003 

• Reduced call volumes to live agents, with about 15% of calls handled with 

the IVR 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 3 (Claims Processing) 

Other Reported Benefits 

• ACD technology helps facilitate and enable a more consistent call 

experience, better service, and call tracking 

• Improved FTE efficiency resulting from automating processes (e.g., entry 

rates for OCR are approximately 95 pages/hour, while manual entry ranges 

from 22-45 pages/hour) 

• Increased functionality and system throughput 

• Reduction of administrative costs related to handling electronic versus paper 

claims 

• Improved customer satisfaction as a result of improved claims turn-around 

• Reduction of archive storage expenses and on-site space requirements 

• More efficient production and more accurate data 

• IVR provides continuous automated access to member data by phone 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 3 (Claims Processing) 

Lessons Learned 

• Implementation of a new platform required retraining of all associates 

• Transition to new platform takes time—took over 3 years 

• HIPAA projects increased competition for resources 

• Server and mainframe technologies required complex interfaces 

• Important to gain corporate confidence in the reliability of new system 

• Need to revamp procedures and workflows 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 4 (Customer Service) 

Description of the IT Environment 

• Blue Cross and Blue Shield of Alabama reduced the costs of 

delivering customer service, while increasing customer satisfaction, through 

the implementation of technology 

• Receives about 7 million calls a year or about 30,000 calls per day. 

• Customer Information System is an Intranet application used by the 

customer service department to allow representatives to quickly access 

information at the same time that calls are received 

• a voice response unit allows members to verify eligibility, check 

claims status, order forms and ID cards, or speak to a 

representative, substantially reducing the length of time to complete 

calls, thereby reducing costs 

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Benefits and Lessons Learned for Insurers 

Example 4 (Customer Service) 

Reported Cost and Cost-Related Benefits 

• Decreased the average length of call from 271 to 218 seconds, resulting in 

a 20% cost savings 

• Decreased the cost of handling annual call volume from about $22 million 

to less than $18 million 

• Decreased customer hold time from 180 seconds to no delay 

Other Reported Benefits 

• Increases availability of services to the customer 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 5 (Customer Service) 

Description of the IT Environment 

• Blue Cross and Blue Shield of Minnesota’s customer relationship 

management (CRM) is provided by a Web-based customer service system 

that lets members manage their health benefits online to 

• select health plans 

• calculate contributions to their coverage 

• research information on prescription drugs and other treatments 

• locate participating physicians 

• obtain explanations of benefits 

• check deductibles and out-of-pocket maximums 

• check the status of their claims 

• Customers can also order prescriptions by mail and estimate the cost of 

prescriptions and medical procedures 

• CRM integrates all preferred communication channels—including phone, 

e-mail, and Web-self-service—blending voice and e-mail interactions and 

directing the member to the appropriate service representative 

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Benefits and Lessons Learned for Insurers 

Example 5 (Customer Service) 

Reported Cost and Cost-Related Benefits 

• Call center staff fielded over 4 million calls in 2002, eliminating more costly 

phone calls 

• New flagship national accounts boosted enrollment by 10% (over 264,000 

new members) in 2002, with customer service staff remaining steady 

Other Reported Benefits 

• Increased membership 

• Customer retention due to service delivery capabilities 

• Controlled or reduced operating costs 

• Critical marketing tool for the acquisition of new accounts 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 5 (Customer Service) 

Lessons Learned 

• CRM is most successful when undertaken within an overall corporate 

strategy and when adopting a small-scale, components-based approach 

• Make sure customers really want Web self-service 

• Conduct Web site usability and usefulness tests 

• Integrate the system with CRM using a centralized architecture 

• Keep the Web site content current 

• Do not focus on buying a mega-CRM solution; implement smaller, tacticaloriented solutions rather than the “one solution does it all” 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 6 (Customer Service) 

Description of the IT Environment 

• Premera Blue Cross has invested heavily in technologies to better 

capture, cleanse, and manage information in order to assist in the facilitation 

of quality care at the most effective cost; these include: 

• InterQual: an online decision support tool of clinical review criteria used by Premera 

to help with care facilitation 

• ELIZA: speech recognition technology that lets a person talk with a computer using 

applications that are developed to anticipate the topic of conversation and possible 

responses; used for health screening reminders and surveys 

• HEDIS® real-time data reporting tool1 : a comprehensive database that stores claims 

data, member demographics, and medical records data; developed to calculate 

performance based on HEDIS 

• ePocrates Handheld Formulary: software for handheld devices that provides 

physicians quick access to drug information 

• Polypharmacy Program: a pharmacy education and safety program that searches for 

members who are using five or more chronic medications, encouraging members to 

bring all medications to next doctor’s appointment to review their drug therapy 1 The Health Plan Employer Data and Information Set (HEDIS) is a standardized set of performance measures designed to allow comparison of 

health plan performance nationally 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 6 (Customer Service) 

Reported Cost and Cost-Related Benefits of ELIZA 

• Lower cost, with per call costs 10-30% of vendor service 

• Calls completed more quickly with up to 500 calls per hour; completing call 

campaigns in 1-2 days that previously took 2-6 weeks 

Reported Cost and Cost-Related Benefits of HEDIS real-time data 

collection 

• 50% decrease in temporary nursing staff required to review medical records 

Other Reported Benefits of ePocrates Handheld Formulary 

• 72% of physicians surveyed were satisfied or very satisfied 

• 56% said it improved provider efficiency by reducing pharmacy callbacks 

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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 6 (Customer Service) 

Other Reported Benefits of InterQual 

• Provides reviewers with clear set of rules that determine the medical 

necessity at any level of care, as well as a method for capturing and 

reporting the decision, which reduces inconsistent decision making 

Other Reported Benefits of ELIZA 

• Improved clinical care to members from 2000-2002 (e.g., diabetic retinal 

exams increased from 71% to 93% and the rate of adolescents receiving 

full vaccinations increased from 29% to 43%) 

Other Reported Benefits of HEDIS real time data collection 

• Higher staff satisfaction 

• Limited disruption of physician offices and improved data collection 

Other Reported Benefits of Polypharmacy Program 

• 27% of members reported a change in their prescribed medications 

(either a dose change, a medication added, or a medication discontinued) 

Page 107 GAO-04-224 IT for Selected Health Care Functions 
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Appendix 2 

Benefits and Lessons Learned for Insurers 

Example 6 (Customer Service) 

Lessons Learned 

• ePocrates required changing provider behavior to use a handheld device 

• Polypharmacy required developing collaborative relationships with the state 

medical associations (of Washington, Oregon, and Alaska) and the 

Department of Health 

• Still resolving shortage of trained analysts to provide and analyze reports, 

and case managers to manage cases identified for the pilot case 

management and data mining projects 

Page 108 GAO-04-224 IT for Selected Health Care Functions 
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Appendix 3 

Benefits of Community Data Networks 

Example 1 

Organizational Overview 

• The Santa Barbara County Care Data Exchange (SBCCDE) was 

founded in 1998 by leading public and private health care organizations 

throughout Santa Barbara County, with a goal of improving the health status 

of all Santa Barbara residents 

• SBCCDE is piloting a data exchange platform for the rapid and secure 

delivery of patient data to authorized users who have informed consent— 

physicians, health care organizations and consumers 

• Participants include 

• 

• 

• 

• 

• Lompoc Valley Community Healthcare Organizations 

• University of California at Santa Barbara • Veterans Health Administration

Pueblo Radiology • UNILAB Corporation

NDC Health • Santa Barbara Medical Society

Catholic Health Center West Marion Med Center • MidCoast IPA

• Sansum-Santa Barbara Medical Foundation • Cottage Health System

Santa Barbara Regional Health Authority • Santa Barbara Department of Public Health

Page 109 GAO-04-224 IT for Selected Health Care Functions 
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Appendix 3 

Benefits of Community Data Networks 

Example 1 

Description of the IT Environment 

• SBCCDE uses a peer-to-peer network, enabling the participating 

organizations to retain control over their data while permitting access to 

authorized users 

• In the final phase of pilot testing; expected to provide $1 million net 

financial benefit annually to the community 

• The technology components illustrated on the next page include: 

• Central CDE infrastructure—manages security and access, patient 

identification, and keeps a central index of patients and locations of 

clinical data in secure Web-enabled data stores 

• User access—a browser-based interface created for physicians and other 

users to search and retrieve data; users may also “subscribe” to a set of 

patients and then have new information about those patients forwarded to 

them whenever it is released 

• Users include physicians, patients, hospitals, payers, and laboratories 

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Health Care Functions

Page 111 GAO-04-224 IT for Selected Health Care Functions

108

Appendix 3

Benefits of Community Data Networks

Example 1 itals CDE Infrastructure

Diagnostic Services

Payors

Physician

Patient

Information Location Service

• Links to patient clinical records

in participants’ systems

• No clinical records stored at

CDE central site

• Demographic data of all

patients in system

Jon John

Smith ith

?

=

Access & Security Management

• Controls login

• Monitors and records access

requests

• Enables access only to

allowed data

Identity Correlation

• Correlates patient identities from

different sources

• Intelligently matches similar

records (e.g., similar names,

SSNs, addresses)

Patient

demographics

Policyholder

demographics

Patient

demographics

Physician Portal

Clinical Records Access

• Browser-based

• Retrieve records from anywhere

in system

• Manage consent process

Consumer Portal

Personal Information

• Browser-based

• Clinical information access reports

• Medications

• Personal Health Information

Pharmacy records

Radiology

studies

Lab

records

Eligibility and

authorization

Lab

records

Radiology

studies

Hosp

Source: McKinsey, updated by CareScience

Sm
Appendix I


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109 

Appendix 3 

Benefits of Community Data Networks 

Example 1 

Expected Cost and Cost-Related Benefits (annual results) 

Note: Excludes clinical efficiency benefits 

Source: McKinsey 

Organization Costs 

Stand-alone 

Web 

Enablement 

Regional 

Network 

Total 

Individual 

Benefits 

Number of 

Constituents 

Total 

Costs 

Total 

Benefits 

Hospital $120,000 $180,000 $ 110,000 $290,000 7 $ 840,000 $2,000,000 

Imaging Center $110,000 $44,000 $ (15,000) $29,000 4 $ 440,000 $120,000 

Laboratory $110,000 $70,000 $ 170,000 $240,000 2 $ 220,000 $480,000 

Physician Group $120,000 $90,000 $ 280,000 $370,000 3 $ 360,000 $1,100,000 

Solo Physician $40 $0 $ 2,400 $2,400 1,750 $ 70,000 $3,500,000 

$2,200,000 $7,300,000 

Per Constituent Total for all Constituents 

≈ 

Other Expected Benefits 

• Less staff time spent handling lab and radiology test results 

• Enhanced revenue resulting from proper coding • Avoidance of test duplication

• Fewer admissions to the emergency department • Shortened length of hospital stay

• Less time spent requesting and providing information • Reduction in medical errors

• Savings in laboratory and radiology labor costs • Fewer readmissions

≈ 

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Appendix 4 

Related Health Care IT Studies: The Value of Computerized 

Provider Order Entry in Ambulatory Settings1 

• Computerized provider order entry (CPOE) is a software application that 

supports the ordering of medications, lab tests, radiology studies, nursing 

interventions, and referrals 

• Ambulatory CPOE systems encompass different features and levels of 

functionality, grouped into five classes 

• basic prescription 

• basic prescription and diagnostic orders 

• intermediate prescription 

• intermediate prescription and diagnostic orders 

• advanced prescription and diagnostic orders 

• A key component of ambulatory CPOE is clinical decision support, which 

provides clinicians with a range of diagnostic and treatment-related tools 

1 Center for Information Technology Leadership, The Value of Computerized Provider Order Entry in Ambulatory Settings (March 2003) 

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Appendix 4 

Related Health Care IT Studies: The Value of Computerized 

Provider Order Entry in Ambulatory Settings (continued) 

Benefits 

• Improved patient outcomes 

• Nationwide adoption of advanced ambulatory CPOE systems will 

eliminate more than 2 million adverse drug events and more than 

190,000 hospitalizations per year 

• Projected annual savings of more than $10 billion in radiology, nearly 

$5 billion in laboratory costs, over $2 billion from hospitalizations related 

to avoided adverse drug events 

• Provider revenue enhancement 

• Using advanced ambulatory CPOE, providers can eliminate more than 

$10 in rejected claims per outpatient visit 

Page 114 GAO-04-224 IT for Selected Health Care Functions 
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Appendix 4 

Related Health Care IT Studies: Computerized Physician 

Order Entry in Community Hospitals: Lessons from the Field1 

• About 89% of US hospitals are community hospitals, where most physicians 

who admit patients have independent practices in the community, often 

admitting patients to several hospitals and spending limited time at the 

hospital each day 

• Research based on interviews with key staff in ten community hospitals that 

have made significant progress in implementing CPOE 

• Example of CPOE-related safety and quality improvements at Queen’s 

Medical Center in Hawaii include: 

• 75% reduction in transcription errors 

• 30% reduction in wrong medication or route 

• 75% reduction in inappropriate vancomycin use 

• 60% decrease in time to first dose of antibiotic for community acquired pneumonia 

• 98% compliance with the Joint Commission on Accreditation of Health Care Organizations 

standard for orders for restraints 

• 85% reduction in unsigned orders 

• 40% reduction in turnaround time for STAT22 medication orders 

1 California Healthcare Foundation and First Consulting Group, Computerized Physician Order Entry in Community Hospitals: Lessons from the Field (June 2003) 2 STAT orders are those required for an emergent clinical situation 

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Appendix 4 

Related Health Care IT Studies: Clinical Information 

Systems: Achieving the Vision1 

Anecdotal evidence from the Kaiser Permanente Institute for Health Policy identified the 

value of clinical information systems at various organizations in the following areas: 

1. Improved Quality, Outcomes, and Safety 

• Increase in compliance with preventive health guidelines 

• Use of a health maintenance tracking system significantly improved provider 

compliance with 8 of 11 recommended procedures, at a cost of $.78 per 

patient per year 

• Use of computerized protocols increased the rate of recording blood pressure 

by 34% 

• Improved disease management 

• Kaiser Permanente’s use in Ohio of automated medical records and prompts 

to stratify and treat diabetic patients by risk group was successful at 

increasing preventive care, reducing unnecessary visits for low-risk patients, 

and substantially reducing the number of amputations for high-risk patients 

• Use of computer-generated reminders was found to improve patient 

management of asthma, reducing asthma-related hospitalizations by 60% and 

emergency department visits by 50% 

1 Kaiser Permanente Institute for Health Policy, Clinical Information Systems: Achieving the Vision (February 2002) 

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Appendix 4 

Related Health Care IT Studies: Clinical Information 

Systems: Achieving the Vision1(continued) 

• Improved disease management (continued) 

• Use of computer-generated reminders in an outpatient mental health clinic 

improved adherence to clinical guidelines by 25% and improved 

documentation of problems by over 90% 

• Use of an automated heparin protocol for treating unstable angina reduced 

the average time to reach therapeutic levels from 14% within 24 hours to 96% 

within 24 hours 

• Use of a computer-based decision support system was more effective and 

efficient than standard guidelines tables in applying preventive therapy for 

tuberculosis by 95% for physicians who used the system, compared to 56% 

for those who used paper-based resources 

• Improved drug prescribing and administration 

• Intermountain Health Care’s (IHC) use of an antibiotic information system 

helped physicians select antibiotic regimens, resulting in fewer susceptibility 

mismatches and allergic reactions, reducing adverse drug reactions by over 

70%, reducing the number of days patients received excessive dosage by 2.9 

days, and reducing the overall cost of antibiotic therapy 

Page 117 GAO-04-224 IT for Selected Health Care Functions 
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Appendix 4 

Related Health Care IT Studies: Clinical Information 

Systems: Achieving the Vision1 (continued) 

• Reduction in medical errors 

• Regenstrief Institute’s use of computer-generated reminders in an inpatient 

setting, followed practice guidelines 25% more often 

• Brigham and Women’s Hospital’s use of computerized provider order entry 

eliminated more than 80% of medication errors unrelated to missed dosage 

• Improved medical data capture and display 

• Use of an automated patient data management system eliminated charting 

errors that had previously occurred in 25% of hand-written flow sheets and 

increased the number of progress notes documented 

• Northwestern University’s use of EMRs produced more appropriate clinical 

decisions by physicians when compared with providers who used paper 

medical records 

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Appendix 4 

Related Health Care IT Studies: Clinical Information 

Systems: Achieving the Vision1 (continued) 

2. Improved Efficiency, Productivity and Cost Effectiveness 

• More appropriate utilization of services 

• IHC’s use of a clinical laboratory alerting system increased the likelihood 

that patients in life-threatening situations received appropriate care, 

decreasing length of stay by up to 6 days for some conditions 

• Regenstrief Institute's use of a provider order entry system in an inpatient 

setting lowered patient charges and hospital costs mainly by reducing 

length of stay by 10.5%, reducing test charges by 12.5%, and reducing 

drug costs by 15.3%; total charges per admission were 12.7% less for 

teams that used the order entry system 

• Better use of formulary and generic drugs 

• Duke University’s use of cribing 

charges and patterns encouraged physicians to substitute less costly 

generic alternatives for brand name drugs 30% more often 

• Improved workflow and time savings 

• Duke University’s use of a EMR resulted in an overall time savings of 13% 

for physicians, and it improved physician response to information regarding 

diagnosis and treatment 

monthly computerized feedback of pres

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Appendix 4 

Related Health Care IT Studies: Clinical Information 

Systems: Achieving the Vision1 (continued) 

• Savings related to the storage of medical records 

• Memorial Sloan Kettering Cancer Center’s use of an EMR resulted in space 

savings of 2,000 sq.ft., worth $100,000 annually 

• Kaiser Permanente’s use in Colorado of an EMR resulted in estimated annual 

savings of $400,000 in avoided lease costs 

• Savings related to reduction in chart pulls 

• Beth Israel Deaconess Medical Center’s use of an EMR to reduce the paper 

chart pulls for processing telephone messages saved between $300,000 and 

$500,000 annually 

• Kaiser Permanente’s use in Colorado of an EMR has resulted in annual payroll 

savings of $4 million, while chart availability is almost 100% 

• Improved charge capture and revenue 

• Beth Israel Deaconess Medical Center’s use of an integrated hospital system 

reduced the time to collect unpaid bills from 65 days to 39 days, enabling more 

than 90% of each patient’s charges to be captured 

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Appendix 4 

Related Health Care IT Studies: Clinical Information 

Systems: Achieving the Vision1 (continued) 

3. Improved Service and Satisfaction 

• Improved communication 

• Brigham and Women’s Hospital’s use of an outpatient clinical referral 

system decreased the amount of time needed to complete the referral 

process, improving the communication between physicians 

• Improved satisfaction 

• Palo Alto Medical Foundation’s use of an Internet service giving patients 

access to health care services and their medical records, increased 

patient satisfaction in communicating with the physician and staff and 

promoted the feeling of shared decision making 

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Appendix 4 

Related Health Care IT Studies: Clinical Transformation: 

Cross-Industry Lessons for Health Care1 

• According to Deloitte Research, while health care faces massive challenges 

integrating internal and external IT systems, its most overwhelming 

problems relate to gaining physician and hospital staff cooperation for 

implementation 

• Based on cross-industry analysis, two major common conditions 

required for clinical transformation are: 

1. An effective, competitive market environment that rewards 

organizations’ investments in technologies that raise productivity, 

either by improving product quality, reducing the costs of production, 

or both 

2. An intense focus on the consumer, combined with IT leadership, 

enabling organizations to excel with IT-integrated business 

strategies and ongoing IT innovations developed in response to 

market opportunities and threats 

1 Deloitte Research, Clinical Transformation: Cross-Industry Lessons for Health Care (2003) 

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Appendix 4 

Related Health Care IT Studies: Clinical Transformation: 

Cross-Industry Lessons for Health Care1 (continued) 

Drivers 

Competition and technological advances 

(mainframes, ATMs, telecom, and the 

Internet) 

Industry crisis regarding passenger 

safety, competition, technological 

advances (mainframes, radar, and the 

Internet) 

Source: Deloitte Research 

Challenges Success Factors

Customer 

Focus 

and IT 

Leadership 

Banking Primarily the need to gain internal cooperation for IT 

system integration, implementation, and utilization 

Primarily the need to gain internal cooperation for IT 

system integration, implementation, and utilization, with 

some challenges related to managing external 

relationships (code-sharing alliance and online ticket 

distribution) 

Airlines 

Not much of a challenge in obtaining internal cooperation 

if companies are expanding. More internal challenges 

related to system integration of merging companies, and 

the greatest challenges are related to gaining external 

cooperation from suppliers in order to develop and run 

supply chain and inventory management systems 

Competition (especially Wal-Mart) and 

technological advances (mainframes and 

the Internet) 

Retailing 

Major challenges to obtaining both internal cooperation— 

especially with regard to getting physician buy-in, as well 

as establishing an external framework for IT system data 

sharing, development of industry standards, and systems 

integration 

Industry crisis regarding patient safety 

concerns, technological advances, and 

competition 

Health 

Care 

(310458) Page 123 GAO-04-224 IT for Selected Health Care Functions 
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