How Health Information Technology, EHRs Improve Health Care

Seth Freedman, PhD, assistant professor at Indiana University School of Public and Environmental Affairs and economist who studies innovations in the health care system, discusses trends in health care, including changes in the structure of firms and the utilization and adoption of electronic health records, and he explains how these trends can improve patient health, costs, and efficiency.

Podcast Transcript:

My name is Seth Freedman. I'm an assistant professor at Indiana University School of Public and Environmental Affairs, and I am an economist who studies the health care system and in particular, innovations in the health care system. One of the things I've done some research on is the effect of health information technology and electronic health records in health care.

At the same time that we've been having a lot more presence of electronic health records in health care, we've also had a lot of change in the way the health care provider organizations are structured. There's been a lot more integration of health care providers with hospitals merging with other hospitals or hospitals being bought by hospital chains and physicians' offices being bought by hospitals and hospital chains. These concurrent changes, I think, have impacted adoption and usage of EHR, and at the same time, EHR has facilitated some of these kinds of organizational structure changes as well.

First of all, you might want to think about why hospitals and health systems are using electronic health records more than they used to. I think there are two main reasons. One is just general technological change. This is a new input into health care delivery that might be able to, in theory, improve quality but also improve efficiency. If we can share information more seamlessly, we might expect less redundant tests and better choices of treatments for patients if health care providers have more information at their disposal about the patient, about the patient's history.

There's also been some policy changes that have induced the utilization of electronic health records. The High Tech Act provides financial incentives for hospitals and other health care providers to adopt EHRs. We effectively see this large increase in the usage of EHRs. I think there's a unique place for EHRs in health care systems that are integrating with other health care systems or health care providers that are integrating with other health care providers, mergers, in particular.

If two entities are joining together, they can likely be a lot more efficient if they can share information with each other about their patients. We've actually done some research with two other colleagues at Indiana University about how the level of competition in the hospital market impacts the likelihood that hospitals in that market choose EMRs from the same vendor, and that's important.

It might be important because if I own an EHR or an EMR system that's the same vendor as another hospital, it makes it easier to share information with each other. We can own EMRs from different vendors and use other tools to potentially share information but having that same vendor can facilitate information sharing. We've actually found that when there's more competition in the market, and more competition means less mergers, that hospitals actually are more likely to have similar vendors.

That suggested actually competition might enhance information sharing. The reason is when there's less competition, now hospitals also have the incentive to not share information because they want to compete and keep their patients and not lose their patients to other hospitals. That's sort of in the other direction of what we might've expected but in general, when hospitals are joining together, it might be behoove them to be able to share information to improve their efficiency.

Likewise, if hospitals are already able to share information with each other, it makes merging easier because it might reduce the cost of getting everybody onto the same system and onto the same page. That's the link between information sharing and mergers.

With mergers on the rise -- with mergers here I should say also think about not just two hospitals merging with each other but hospitals and physician practices becoming parts of the same organization -- that might also really induce health care providers to want to use EHRs more as they can integrate the systems between the different levels of care, say, the hospital and the physician practice and the primary care practice and the specialty practice.

If these different organizations can share information with each other, then can more efficiently and potentially treat patients with higher quality as well. With this in mind, it might be worth thinking about what do we know about the effective EHR adoption and utilization on health care utilization, on health care costs, on health care outcomes. Actually, the research in this area is quite mixed.

A lot of research seems to suggest that EHR adoption actually might increase costs, not reduce costs. There is some evidence that say reduces repeated testing, which improves efficiency, but it may also lead to other kinds of behavior that might lead to higher costs, maybe things like up coding. In an EHR system, it can be easier, more quick, to code all the comorbidities of a patient and that leads to maybe a higher reimbursement rate from, say, Medicare because now, we can put this patient into a higher reimbursing diagnosis-related group.

Now, one might say that it's hard to know if that's up coding or right coding. Maybe hospitals weren't able to appropriately code people before because they didn't have enough time and resources to do that all on paper records, and now they're able to more easily do so on the EHR system. That may or may not be a good or a bad thing that this is happening but it does seem to suggest that it might increase cost in some ways while also improving efficiencies in other ways with repeated testing.

It's also hard to say how it's impacted health outcomes. A lot of people have studied the effect of the EHR adoption in hospitals on, say, mortality rates and have not found that it is has much effect one way or the other on things like mortality rates.

We've done some research here at Indiana University on the effect of EHR adoption on patient safety. These are things like preventable infections that happen in the hospital so adverse events that happen within the hospital that should, in theory, be preventable.

We found that EHRs can actually improve these kinds of outcomes, reduce these kinds of preventable adverse events. It seems to only happen for certain types of patients. In particular, we find that it happens for relatively simple patients, patients whose health condition is not super complex.

Our hypothesis there is that what EHR systems do is they often have clinical decision support. They have programs that provide suggestions to the provider of what treatment to prescribe or help them diagnose prescriptions that interact with each other negatively and things like that.

It seems that these decision support technologies might work best when the patient doesn't have a lot of complicated interacting health conditions because when they have all those different interacting conditions, each condition has its own protocol. It's hard for the current state of EMR systems to mesh those together and figure out that given these different protocols for these different health conditions, what treatments should we choose.

For more simple patients where the computer can provide a pretty simple recommendation, it might actually help improve these kinds of health outcomes. With that said, technology is improving with machine learning and artificial intelligence. We may get to a place in the future where these kinds of decision support algorithms can work better in more varied populations. That's the state of the research that's right now.

In conclusion, I think there are these two really important trends right now in health care, the changing in the structure of firms and also the utilization and adoption of electronic health records. They certainly interact with each other and they, in some ways, may reinforce each other. I think it'll be an interesting area to continue trying to understand in the future as how these larger health care organizations can really leverage data, electronic health records, and bring that into treatment decisions to improve patient health and also costs and efficiency.

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