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Information technology and automation have as much potential to transform hospitals and healthcare delivery in the 21st century as ATMs and electronic banking did for financial services in the 20th century. In a paper released today at the Health Information Technology Summit in San Francisco, PricewaterhouseCoopers provided the first comprehensive look at the benefits realized by the growing wave of "digital hospitals" across the country.
Jointly produced by PricewaterhouseCoopers Health Research Institute and PricewaterhouseCoopers Global Technology Centre, the paper, entitled "Reactive to Adaptive: Transforming Hospitals with Digital Technology," finds that technologically advanced hospitals have greater potential to improve processes and outcome in patient care, reduce medical errors, increase productivity and compete for market share against other hospitals.
The true digital hospital relies on technology as an integral and fundamental part of its business strategy. It comprises a completely automated set of health information management capabilities -- including all administrative, financial and clinical capabilities -- that go beyond the scope of advanced clinical systems to include significant integration between information and medical technologies such as patient beds, surgical equipment, nurse call and communications systems, pagers, and medical imaging. The strategy is primarily associated with new specialty hospitals and facilities but can also be applied to existing acute care facilities. Digital hospitals are the first step of what is seen as an opportunity to use technological advances to create an even more extended "Digital Health Community".
PricewaterhouseCoopers has worked closely with The Indiana Heart Hospital, which opened in 2002 as the first all-digital heart hospital in the United States. Metrics compared to previous cardiac facilities in the health system show that in its first year of operation, The Indiana Heart Hospital achieved:
* An 85 percent reduction in medication errors
* A 65 percent reduction in inappropriate denials and delays with respective payers
* A 15 percent increase in market share acquisition in the first fiscal year
* Reduction of "chart management" costs from $15 to $3 per chart.
* A 45 percent reduction in medical transcription and dictation costs
* A 15 percent reduction in coding workload
"The goal is not simply to build a digital hospital. Ultimately, it is to create the Digital Health Community, one in which all processes and stakeholders; payers, providers, labs, pharmacies and others have significant connectivity and integration," said Jim Henry, partner and chairman of PricewaterhouseCoopers Health Industries Group. "Healthcare takes place outside hospitals far more than inside them. The challenge for the industry is to disentangle the misaligned incentives across all health-related sectors that impede progress toward information sharing and connectivity."
To gain insight into the state of the Digital Health Community, PricewaterhouseCoopers teamed with HIMSS Analytics, a leading provider of health information technology market data, to analyze the financial, operational and quality indicators of a group of 36 hospitals considered digitally advanced and chosen based on their reputation for implementing advanced clinical systems. Most of the hospitals analyzed are adding IT systematically, beginning with back office systems and moving along a continuum toward fully integrated, automated clinical systems and electronic medical records.
The paper includes findings of the research and examines the ability of digitally advanced hospitals to provide patient care and compete in the market, identifies barriers that keep hospitals from becoming more digitally advanced and shares lessons that other hospitals can learn from pioneers in the emerging Digital Health Community.
Highlights of the paper include:
* Research revealed differences between digital and national average hospitals, with digitally advanced hospitals seeing a larger drop in average length of stay and larger increase in operating revenues. These hospitals also ranked higher on seven of 10 process measures in the treatment of three sample conditions: heart attack, heart failure and pneumonia. These measures, determined to lead to high quality patient outcomes, are collected in response to the Centers for Medicare and Medicaid Services (CMS) Hospital Quality Initiative.
* When asked what was the most important benefit of increased information technology integration, patient safety ranked highest among hospital executives interviewed. (Approximately one-fifth of medical errors are due to inadequate availability of patient information.)
* Physicians, once barriers to clinical information systems implementations, are becoming supporters of technology, particularly so among younger physicians.
* Deep interconnectedness of technologies is important, but difficult. Migrating toward significant technology implementation requires costly and complex integration of many subsystems and technologies. The burden of implementation among the significantly digital hospitals studied was found to fall not on software vendors and IT departments but on hospitals executives who must drive significant organizational and process change to realize substantial benefits.
* The Digital Health Community will come of age as hospitals respond to outside pressures, such as pay-for-performance, consumerism and government reporting on quality, by better analyzing and reporting their clinical data.
Significant benefits will require more investment in technology than hospitals have typically been making. In 2005, the healthcare community will spend approximately $14 billion on information technology, yet this represents only 2.5 percent of the typical hospital's annual operating budget. According to PricewaterhouseCoopers, digital hospitals spend between 3 and 5 percent of their operating budget on information technology. The cost of increasing average IT spending to this level across the industry would add $5 billion to hospital IT spending in 2005 alone.
Widely criticized for not adopting information technologies as quickly as other industries, the information-intensive healthcare sector remains largely manual and paper-based. Approximately 90 percent of the more than 30 billion healthcare communications that occur in the United States each year are currently by fax, paper, mail or phone, according to the research paper. Though technology solutions are found increasingly in back offices, automation has not played a significant role in the direct support of best-practice clinical care. Numerous other studies have shown that implementing comprehensive clinical information systems, particularly Computer Provider Order Entry, contributes directly to a decrease in medical errors.
"Technology can unleash the potential that remains latent in hospitals for delivering higher quality care in increasingly efficient ways," said James E. Fisher, Director, Healthcare Advisory practice and leader of Digital Health Community services for PricewaterhouseCoopers. Speaking at today's conference, Fisher added, "The time for investing in technology is now, and the potential benefits are clear. But the industry remains skeptical of returns promised by vendors and challenged by technology integration and implementation issues that are unique to the healthcare environment. Fortunately, a handful of pioneers are leading the way toward the broader Digital Health Community, and our research is the first in-depth look at their progress."
A full copy of PricewaterhouseCoopers whitepaper, Reactive to Adaptive: Transforming
Hospitals With Digital Technology is available for download at http://www.pwc.com/digitalhealth.
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