Topic:
MEDICAL CARE; COMPUTERS;
Location:
MEDICAL CARE;

OLR Research Report


January 29, 2004

 

2004-R-0125

INFORMATION TECHNOLOGY AND MEDICAL ERROR REDUCTION

By: Saul Spigel, Chief Analyst

You asked for information on how information technology can reduce medical errors and ways the state could help providers pay for it.

SUMMARY

Several information technologies can potentially reduce medical error. Some target medication administration, which are said to account for a high percentage of all medical errors. These include (1) computerized physician order entry (CPOE, a system in which a doctor enters a medication order directly into a software application designed to detect errors) and (2) bar coding medications to ensure that the right hospital patient gets the right dose of the right prescription at the right time.

Other technology applications that may reduce medical errors are (1) comprehensive electronic health records that are available at the point of care and accessible throughout an entire institution, (2) computerized reporting of lab records, (3) computer-based procedure reminder systems, and (4) software that supports diagnosis and treatment decisions with clinical guidelines.

Installing and operating such technologies is expensive. One study found that it cost hospitals $7.9 million to introduce a CPOE system and $1.35 million a year to run it. Another group found that implementation

can cost anywhere from $500,000 to $15 million, depending on a hospital's size and the status of its information technology systems, while annual operating costs can range from $200,000 to $2 million.

Massachusetts appears to be the only state whose legislature has addressed how to help health care providers purchase patient safety technology. Two bills have been introduced; neither has passed. One provides a one-time supplemental Medicaid rate bonus to health care providers that implement a CPOE or other computerized system to identify, track, and prevent medical errors. The other authorizes $100 million in bonds to provide grants and low-interest loans to providers and others for acquiring information technology related to a wide range of health care issues, including patient safety.

A Connecticut Health and Educational Facilities Authority (CHEFA) program allows institutions to obtain medical and information technology equipment through a tax-exempt, lease-purchase arrangement. The program already seems to cover many error reduction technologies. But CHEFA finances only nonprofit entities, which limits its funding to hospitals (with one exception), some clinics and nursing homes, colleges and universities, and government agencies.

The recently enacted Medicare Prescription Drug Improvement and Modernization Act of 2003 (PL 108-173) contains several technology-related provisions. One authorizes $50 million in matching grants to physicians to help defray their cost of acquiring and installing computer equipment and software, upgrading existing computer equipment or software to enable electronic prescribing; and educating and training their staff on using the technology.

INFORMATION TECHNOLOGY AND MEDICAL ERROR REDUCTION

Background

The 1999 Institute of Medicine (IOM) report on medical errors focused nationwide attention on patient safety and quality of care. Subsequent reports by the IOM and others suggest that medical errors are primarily a systemic problem and are not solely attributable to individual negligence. Consequently, efforts to reduce errors and improve patient safety, they say, must be considered in a systems context.

These reports identify two overarching characteristics of comprehensive patient safety systems: a culture of safety and organizational support for safety processes. A culture of safety encourages clinicians, patients, and others to (1) identify actual or potential errors, (2) take appropriate steps to prevent or mitigate harm, and (3) disclose appropriate information on errors in order to learn about and redesign the care process. Organizational support involves an infrastructure that provides clinicians and patients with immediate access to health information, professionals trained in safety, and well-designed error reporting systems.

Both of these patient safety system characteristics rely heavily on the availability and accessibility of information. Implementation of such systems, the IOM says, has been (1) expanding the types of events that are reported to include both adverse events (those that cause bad outcomes) and “near misses” (errors that occur but do not cause a bad outcome); (2) relying more on automated surveillance, as opposed to clinicians and patients, to identify and report cases; and (3) applying knowledge gleaned from reporting systems to redesign care to prevent errors. Information technology, consequently, is seen as a key element in error reduction.

Technology Applications

Several information technologies have been identified as potentially increasing patient safety. Some target medication administration since medication errors are believed to account for a high percentage of all medical errors. Two technologies are often identified in this area: CPOE and medication bar coding (see Attachment 1, OLR report 2004-R-0068 on CPOE)

Other technology applications that may reduce medical error are (1) comprehensive electronic health records that are available at the point of care and accessible throughout an entire institution, (2) computerized reporting of lab records, (3) computer-based procedure reminder systems, and (4) software that supports diagnosis and treatment decisions with clinical guidelines. The New England Healthcare Institute, a nonprofit organization representing regional healthcare institutions and corporations, recently completed a report that discusses seven patient safety technologies (see Advanced Technologies Report).

To date, the emphasis on medical error reduction and technology solutions has focused on hospital inpatients. This focus is probably due to the significant risks associated with hospitalization and the fact that medical error data comes mainly from hospitals and the strategies for improvement are better documented there than in other health care settings. But most patients receive care in other locations such as outpatient clinics, ambulatory surgical centers, and physicians' offices. Technology solutions in these settings include electronic medical records software supported by practice guidelines, pharmaceutical information, procedure reminders, and patient education material; email with patients; and personal digital assistants (PDAs) that allow physicians to access patient records and other medical information and electronically write prescriptions right in the examining room.

IT COSTS

Installing and operating error reduction technologies is expensive. The Leapfrog Group, a coalition of Fortune 500 companies and other large healthcare purchasers that has been a leader in the patient safety movement, surveyed hospitals that use CPOE. It found that implementation can cost anywhere from $500,000 to $15 million, depending on a hospital's size and the status of its existing information system; annual operating costs can range from $200,000 to $2 million. A study of five hospitals' experiences (including New Haven's St. Raphael's) by First Consulting Group estimated that a 500-bed hospital with 25,000 admissions a year can expect to spend $7.9 million to implement a CPOE system and $1.35 million a year to run the system.

The Leapfrog Group concludes that CPOE could save hospitals between $180,000 and $900,000 annually by reducing medication errors and adverse drug events. But some of the hospitals it surveyed reported achieving annual savings of up to $5 million by also using their CPOE systems to identify medical substitutions, promote clinical efficiencies, and increase use of “clinical pathways” (structured, multidisplinary care plans designed to support the implementation of clinical guidelines and protocols that provide detailed guidance for each stage in the management of a patient with a specific condition).

In addition to high capital and operating costs, limited return on investment may be another barrier to implementing new technologies, particularly in physicians' offices or clinics where the technology's benefits do not readily accrue to the purchaser. Electronic prescription applications, for example, may help reduce payers' and pharmacy benefit managers' drug costs through better formulary management and greater use of generic medications, but the physicians who purchase these systems reap no financial benefit (since they do not see drug formulary savings and are not reimbursed for using these systems). Thus, they have few incentives for purchasing them. Ambulatory CPOE, disease management, physician/patient communication, and other applications have a similar “cost-benefit disconnect.” (Although reducing errors and miscommunication may reduce these providers' risk of malpractice liability.)

STATE AND FEDERAL ASSISTANCE OPTIONS

Massachusetts

Massachusetts appears to be the only state that has addressed the purchase of patient safety technology, according to Kayla Ladenheim, a policy analyst for the National Conference of State Legislatures. Two bills were introduced in 2003 to provide funds to help health care institutions purchase error reduction technology; neither has passed.

One bill provides a one-time supplemental Medicaid rate bonus to hospitals, community and neighborhood health centers, assisted living facilities, and nursing homes that implement a comprehensive computerized medication order entry or other computerized system designed to identify, track, and prevent medical errors (SB 601).

The other authorizes $100 million in bonds to provide grants and low-interest loans for information technology related to a wide range of health care issues, including:

1.  monitoring or implementing patient safety and reduce medical error, including medication errors;

2. providing consumer information related to prevention and health education directly and through health information centers in public libraries, schools, senior centers, and neighborhood health centers; and

3. providing telemedicine and telehealth services to specific consumers (such as homecare clients and assisted living or nursing home residents) primarily to reduce their reliance on emergency room services or improve contact with the health system.

The Massachusetts Health and Educational Facilities Authority would administer the funds. The authority could give or lend funds to state and local government agencies, colleges and universities, health care providers, consumer health organizations, and health plans and insurance companies, which could use them for equipment, access charges, training, and applied research. Funds could also go to nonprofit health information technology corporations, which could use them to set up revolving loan programs (SB 2047).

Connecticut

CHEFA already has a program that allows nonprofit institutions to obtain medical and information technology equipment through a tax-exempt, lease-purchase arrangement (see EasyLease Brochure). Nonprofit health care institutions can already use this program to acquire error reduction technology. But CHEFA assistance is limited to nonprofits; it is not available to for-profit operations like physicians' offices and many ambulatory surgical centers.

Federal

The recently enacted Medicare Prescription Drug Improvement and Modernization Act of 2003 (PL 108-173) contains several technology-related provisions. One requires the Department of Health and Human Services (HHS) to develop standards for electronic prescription systems by April 1, 2008. The standards must address patient safety, quality of care, and efficiencies in care delivery. All doctors, pharmacies, and pharmacists who use electronic prescription technology to serve Medicare beneficiaries covered by the law's new drug benefit must adhere to the standards within one year after they are adopted in final form.

Beginning in FFY 2006-07, the act authorizes HHS to award matching grants to physicians to help defray the cost of:

1. purchasing, leasing, and installing new computer equipment and software, including PDAs;

2. upgrading existing computer equipment or software to enable electronic prescribing; and

3. educating and training doctors' staff on using the technology.

The act authorizes $50 million in grants for FFY 2006-07 and amounts as necessary for FFYs 2007-08 and 2008-09.

Another provision creates a three-year Medicare care management performance demonstration in which physicians use information technologies and evidence-based outcome measures to promote continuity of care, help stabilize medical treatment, prevent or minimize acute episodes of chronic conditions, and reduce adverse outcomes such as drug interactions. Participating physicians must agree to phase in the use of information technology to manage their patients' clinical care and electronically report on quality and outcome measures that HHS establishes.

Other IT provisions provide for recognition of new technologies under Medicare's inpatient hospital prospective payments and for the establishment of a federal Council for Technology and Innovation to coordinate the coverage, coding, and payment processes for new technologies and procedures.

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