Healthcare spending and use of information technology in OECD countries
This paper compares healthcare spending in 2003 within 30 countries of the Organization for Economic Cooperation and Development (OECD) and additionally compares the current health information technology spending within Australia, Canada, United Kingdom, and Norway.
The authors compared total health spending, average % real annual growth (1993-2003), health spending as % gross domestic product, outpatient, inpatient, drug and other medical goods, and other healthcare costs. In the US, per capita health spending was $5,635 or 2.5 times the median costs of the OECD countries of $2,280. The real annual growth was similar at 3.4% to other major countries. The per capita US expenditures were most out of line with outpatient costs of $2,462 versus a median OECD country health cost of $677.
Suggestions as to the US economic drivers of US health spending include excessive service use, administrative complexity, population aging, threats of malpractice litigation, defensive medicine practices, and the lack of patient waiting lists. In further comparisons with the OECD countries, it appears the US overpays for physician visits, hospital stays, and pharmaceuticals. The solution proposed in the US to alleviate this issue has been to recommend the adoption of a national health information technology with electronic health records (EHR). Proposed savings in this adoption has been projected to save as much as $142 billion in physician office visits, and $371 billion in hospital costs over a 15 year period. This premise has not been validated in the OECD countries where the HIT national adoption movement has been ahead of US efforts from 4-13 years.
The differences are further emphasized in that the US has fewer physicians, nurses, hospital beds and the lowest use of acute care beds of major OECD countries. Furthermore the US is not the top country performing the most sophisticated procedures such as heart transplants and liver transplants in the world.
The US began its national HIT quest in 2004 by President Bush. However, the funding for this endeavor did not occur until 2006. In spite of this effort, the US has the lowest % of physician providers using any EHR compared to Germany, Canada, United Kingdom, and Australia. The US physicians low adoption rate for HIT involve fear of the loss of productivity, lack of financial incentives, and high startup costs of as high as $40,000 per physician EHR adoption. When the national costs of HIT implementation are compared on a national level, the US lags dramatically behind the major OECD countries. The US spends a per capita costs of $ 0.43 compared to a high of $193 in the UK. This difference can be even more dramatic when one compares the German experience which is nearly complete in its national HIT adoption. In 13 years, Germany has spent $1.88 billion. Their per capita cost per year has been $1.63. The US is only 25% of that expenditure so far.
Factors to overcome the greatest barriers of HIT adoption in the OECD has been a simplification of the health insurance contracts payment structures with standard nomenclatures that can be adapted to electronic health records. The major OECD countries also learned that there must be a national adoption of HIT standards as well as a national effort to focus on privacy and confidentiality standards. A national focus also assures better coordination of implementation and provides better strategies for adoptions through public incentives and grants. In the US, the five year costs for an HIT national network have been estimated to be as high as $103 billion in capital and $53 billion in interoperability. US hospital costs for functionality were estimated to $51 billion, skilled nursing facilities would bear $31 billion of costs, and physician offices would bear $18 billion of the costs.
In contrast to the total or a majority outlay of public funds for these costs in Germany, Australia, United Kingdom, and Canada, the US HIT costs are expected to be shared in the private and public sectors. The benefits and cost savings for a national HIT effort have been estimated to pass to patients and insurers and not to the health providers. This is one of the reasons that the major OECD countries have committed their public funds to this HIT effort because this will result in the greater public good.
This article has highlighted the marked differences in the efforts of HIT adoption in the OECD countries compared to the US. The US health costs are excessive in all compared areas but especially in the area of outpatient costs. Although there is US evidence for attempts to push a national HIT policy, the amount of national expenditure, and national coordinated efforts in areas of privacy, confidentiality and establishing national standards, appear to be insufficient so far when compared to the efforts demonstrated in the other major OECD countries. The article suggests that the US may be as much as a dozen years behind the other major OECD countries in national HIT efforts but could catch up if they learn from the efforts of their international OECD neighbors.
Comment: This study added with similar studies comparing the poor quality of healthcare in the US compared with the major OECD countries demonstrates that our delivery of health care has poor economic value and does not deliver comparable quality. The warning that emanates from this article is that the national agenda espoused by the US government in developing a national HIT agenda is not being funded sufficiently. There are also insufficient unified efforts occurring to focus on the major adoption barriers within physician offices, inadequate efforts to address concerns of privacy and confidentiality, and insufficient national policy to achieve common standards to assist HIT national development.