Wednesday, May 21, 2008

Are Potential Savings from Health Care Computerization Overstated?

By Paul Gessing

Each of the candidates (especially-emphatic has been Hillary Clinton) for President have made computerization and greater adoption of information technology top priorities. Of course, with a prominent study from the RAND Corporation estimating savings of ould be around $77 billion a year in all, a smart politician would be wise to demand greater reliance on technology as a means of achieving those substantial cost savings. At the state level, politicians including New Mexico Governor Bill Richardson have also made information technology core components of their reform efforts.

But is it so? Anna Wilde Matthews blogging today in the Wall Street Journal points out that the Congressional Budget Office is not quite as enthusiastic. In fact, the authors of the posting argue that since the adoption of IT may require subsidies at the outset, cost savings are ultimately unlikely. This simple logic explains why most government initiatives wind up costing a lot more than analysts expect at the outset. I share the CBO's skepticism.