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The Keckley Report

Healthcare Clinical Information Technology: Money Pit or Bridge to the Future?

By March 25, 2019March 1st, 2023No Comments

In healthcare delivery circles, no topic sparks more head scratching and second guessing than health information technology (HIT). Among managers in these settings, opinions range from many who think it the key to their long-term sustainability to those who think it’s a money pit long on promise and short on practical value. The contrast of these views, and how regulators, elected officials and key stakeholders respond, is an existential threat to its future.


Information technologies used by hospitals, medical groups and other providers to bill insurers, pay vendors and collect from patients have been used for 50 years. These applications became more sophisticated as the prospective payment system aka “resource based relative value scale” replaced the archaic fee-for-service system in the early ‘80’s requiring providers to be more attentive to their costs. Using HIT to get paid was a no brainer.

Using HIT to deliver better care that results in lower costs at the individual and population levels is quite another matter. Electronic health records, personal health information, clinical data warehousing, interoperability, clinical re-design, professional credentialing, digital connectivity, telehealth, virtual care, meaningful use, error reporting, medication management, physician profiling and others are familiar terms in the lexicon of most provider organizations today. They’re elements in the burgeoning healthcare clinical information technology industry (HCIT).

Matching diagnoses and treatments to the unique signs, symptoms, risk factors, genotypes, preferences, social circumstances and values of individuals and monitoring the safety, efficacy and effectiveness of these efforts across multiple settings is complicated. Expanding these to include alternative health, self-diagnostics, nutritional and lifestyle preferences adds complexity. Aggregating these to total costs of care, avoidable complications, patient experiences and outcomes is necessary so that providers can be paid by payers. So, healthcare clinical information systems (HCIT) capabilities require significant capital investment, operational re-design and technical know-how. Investments by hospitals, medical groups and other provider organizations in HCIT are increasing at 3-5% annually as more is spent on operational functions and less on cap ex spending for hardware and servers.

Clinical HIT has been a focus of U.S. health system policy change for almost 20 years. The Institute of Medicine’s Crossing the Quality Chasm: A New Health System for the 21st Century (2001) drew attention to widespread medication error. President Bush created the Office of the National Coordinator for Healthcare Information Technology in 2004. Under President Obama, Congress passed the American Recovery and Reinvestment Act of 2009 which included $19 billion to modernize health information systems. And the Trump Administration has premised much of its reform strategy around information technology-enabled transparency, interoperability and consumer access.

The winners have been the 700 HCIT vendors who share in the growing $19 billion HCIT market in the U.S., their investors, consultants who have advise providers about system selection and implementation and consumers who increasingly have electronic access to their hospitals and physicians.   

The losers, however, may be the providers themselves who have seen their HCIT costs increase faster than their reimbursement or reduction of paperwork. Recently Kaiser Health NewsFortune interviewed 100 physicians, patients, IT experts and administrators, health policy leaders, attorneys, top government officials and EHR vendors. They drew two conclusions: (1) the promise of a connected electronic ecosystem wherein clinical information is shared effectively has not been fulfilled and (2) health providers are stuck with systems they don’t like or can’t effectively use.  


Buyer remorse among hospitals and medical groups about their clinical health information technology investments is understandable. The industry was strong-armed into HCIT by government policies predicated on the promise that HCIT is key to lower health costs. It’s was not a partisan debate: it was a foregone conclusion. Each of the past three administrations has doubled down on the presumption that HCIT is key to improving care and potentially lowering costs.

Going forward, three considerations will get more attention as HCIT capabilities become more prominent:

Mandates vs. Markets

The adoption of clinical information technologies was mandated. The federal government-imposed mandates for hospitals and physicians to use certified electronic medical records and pursue interoperability remains to this day the major catalyst for HCIT adoption, technical standards, et al. Some say the fed’s attention to HIT was warranted to force the system into the 21st century. Others argue entrepreneurs and forward-thinking hospitals, payers and clinicians would have gotten there faster and better. After all, the government does not mandate IT adoption in personal finance, retailing and other industries where IT is central and competition robust. Because the government plays such a big role as payer (Medicare and Medicaid), it used its heavy hand to impose HCIT adoption and private insurers largely went along. To this day, in most communities, payments by insurers to hospitals and physicians are pegged to Medicare rates, not underlying costs nor payment models that assume specify shared risks for targeted outcomes.
Might HCIT integration in the health system be hampered by government policies? Might private sector solutions deliver value that differentiates providers and equips them to compete more effectively? Might government subsidies to hospitals and physicians have been wasted? Many observers outside the delivery system and a vocal cohort of provider organizations answer in the affirmative.
Consumer Expectation

Most consumers are comfortable with online banking, shopping, e-mail, e-learning and more. It’s the new normal. But consumers have been slower to settle into e-health. Their fears about loss of privacy and the security of their personal health information have been stoked by media attention to high profile breaches. Their use of smart watches to monitor their health has been casual and secure messaging with their doctors and hospitals has been sporadic. Why? Because consumers are conditioned to believe the system’s too complicated for them to navigate on their own—precisely the reason doctors call them patients!

Might HCIT solutions designed and customized to consumer needs and wants (individuals & populations) deliver greater value and lower societal health costs in U.S. healthcare than solutions built for providers? If social determinants, lifestyle and personal preferences are responsible for 90% of health costs, how should consumer solutions access these data and integrate these inputs?

Employer Action

More than half the U.S. population access the health system through employer sponsored healthcare benefits. Most employers are small (under 50 employees) and depend on their insurer to organize the benefits provided their employees. Ditto mid-size employers (50-200 employees) who defer these decisions to their human resource managers who interact with health insurers on the company’s behalf. And larger employers opt to be self-funded with stop loss provisions to fend for themselves with the aid of an insurer/third party administrator. Employers small and large share one universal aim: to lower their health costs. They think healthcare is a system run amok that talks a good game about cost controls but acts quite the opposite. Most employers do not engage directly with providers to evaluate the efficacy and efficiency of the care provided. Most do not study the therapeutic options available to their employees and dependents– their underlying costs and outcomes. Most have been vocal about costs but reluctant to impose essential HIT capabilities in their agreements with insurers, hospitals and doctors. In fact, most employers have not studied data about their company’s use of healthcare—inappropriate variation, outcomes and near misses, total costs of care et al– opting instead to let consultants or insurers do the work on their behalf.
Might employers negotiate their agreements with local hospitals and physicians requiring specific HIT capabilities and data sharing? Might employees be required to use HCIT technologies to avoid unnecessary care, select providers with optimal outcomes and lowest total costs of care and optimal accessibility (digitally and physical locations)? Might employers require that their employees use clinical support solutions to measure and monitor their own health status, therapeutic options and associated costs?


Most hospital board members are aware HCIT is an important part of their institution’s future. Most have a general appreciation for its importance and the expanding role it plays. Most think it’ expensive and complicated and defer to their leaders’ judgement in choosing vendors and solutions. They’re tuned in to HCIT generally but unaware of capabilities, risks and opportunities they should consider.

Most practicing physicians acknowledge HCIT is part of their future. They resent the time spent interacting with systems instead of patients and costs that infringe on their compensation. They are frustrated and burned out. They trust their practice manager is on top of HCIT and hope their HCIT costs are manageable.

Each of these is a key internal constituency in healthcare along with them lenders and trading partners. Their views about the usefulness of HCIT and the resources necessary to afford it are important.

But recognition of HCIT capabilities by outsiders—consumers, employers, insurers, alternative health providers, public health agencies and even many policymakers—matters more. They envision healthcare delivery that’s precise, personalized, holistic and affordable—all three empowered through the organization’s HCIT investments. They’re paying attention to how AI, blockchain and other innovations are improving the efficiency and effectiveness of services provided. They’re mapping their relationships to a future wherein provider organizations demonstrate adherence to evidence, avoidance of unnecessary costs and complications and costs are known before services are provided.

HCIT is considered a money pit in many hospitals and medical practices. They think its costs far exceed it value. But outsiders see it as the bridge to healthcare’s future.



Electronic Health Record Adoption: 96% of hospitals and 86% of office-based physicians have adopted EHRs, up from 9% and 41% in 2008. Top three hospital EHR venders: Epic (13%), Cerner (13%), MediTech (12%); top three physician EHR venders: Epic (24%), Allscripts (8%) and NextGen (5%) Computer Economic 2018

Safety: 18,000 EHR-related safety events from 2007 through 2018: 3% resulted in patient harm including seven deaths — a figure that a Quantros director said is “drastically underreported.” Quantros

Medication management systems: systems failed to flag potentially harmful drug orders in 39% of cases in a test simulation—13% of those cases, the mistake was potentially fatal. The Leapfrog Group 2016

Patient Review: 21% patients spotted an error in their electronic medical records. 9% of these noted errors in their medical history and 3% noted errors in their lab results. Kaiser Family Foundation January 2019

Alerts: False alarms account for between 85 and 99% of EHR and medical device alerts: from 2014 to 2018, the commission tallied 170 mostly voluntary reports of patient harm related to alarm management and alert fatigue — the phenomenon in which health workers, so overloaded with unnecessary warnings, ignore the occasional meaningful one. Of those 170 incidents, 101 resulted in patient deaths. Joint Commission

The Pennsylvania Patient Safety Authority, an independent state agency that collects information about adverse events and incidents, counted 775 “laboratory-test problems” related to health IT from January 2016 to December 2017. The Pennsylvania Patient Safety Authority

Medication errors: at three pediatric hospitals from 2012 to 2017, there were that 3,243 attributed in part to EHR usability issues; 1 in 5 of these could have resulted in patient harm Health Affairs, Ratwani

Physician workload: 5.9 hrs. of an average 11.4-hour workday is spent on EHRs entries vs 5.1 hours spent with patients Annals of Family Medicine 2017

Physician opinions: 60% of physicians recognize the value in the technology in improved patient care, 59% think EHRs need a “complete overhaul” to improve their usefulness. Stanford Medicine’s 2018 National Physician Poll