The Costs of a National Health Information Network

2 August 2005 | Volume 143 Issue 3 | Pages 165-173

Background: The use of information technology may result in a safer and more efficient health care system. However, consensus does not exist about the structure or costs of a national health information network (NHIN).

Objectives: To describe the potential structure and estimate the costs of an NHIN.

Design: Cost estimates of an NHIN model developed by an expert panel.

Setting: U.S. health care system.

Measurements: An expert panel estimated the existing and the expected prevalence in 5 years of critical information technology functionalities. They then developed a model of an achievable NHIN by defining key providers, functionalities, and interoperability functions. By using these data and published cost estimates, the authors determined the cost of achieving this model NHIN in 5 years given the current state of information technology infrastructure.

Results: To achieve an NHIN would cost $156 billion in capital investment over 5 years and $48 billion in annual operating costs. Approximately two thirds of the capital costs would be required for acquiring functionalities and one third for interoperability. Ongoing costs would be more evenly divided between functionality and interoperability. If the current trajectory continues, the health care system will spend $24 billion on functionalities over the next 5 years or about one quarter of the cost for functionalities of a model NHIN.

Limitations: Because of a lack of primary data, the authors relied on expert estimates.

Conclusions: While an NHIN will be expensive, $156 billion is equivalent to 2% of annual health care spending for 5 years. Assessments such as this one may assist policymakers in determining the level of investment that the United States should make in an NHIN.

Editors' Notes Context The United States needs a national health information network (NHIN). To build one, we need realistic estimates of costs. Contribution An expert panel conceptualized a model NHIN and determined the costs of implementing the model throughout the United States. The model NHIN would require $156 billion in capital investment over 5 years and would incur $48 billion in annual operating costs. Cautions The authors used expert opinion to estimate some costs and assumed fixed prices for hardware and software and no major new technological developments. Implications The United States probably needs to spend more now if we want to implement an NHIN in the next decade. –The Editors

 

Author and Article Information

From Brigham and Women's Hospital, Institute for Health Policy, Massachusetts General Hospital, Partners Healthcare System, Harvard School of Public Health, Harvard Medical School, and Harvard University, Boston, Massachusetts; Cornell Medical School, New York, New York; and Eastern Research Group, Inc., Lexington, Massachusetts.

Acknowledgments: The authors thank the following expert panel members (the listed affiliations may have changed since the time of their participation): David J. Brailer, MD, PhD, Health Technology Center; Janet M. Corrigan, PhD, MBA, Board on Health Care Services, Institute of Medicine; Mark Frisse, MD, MS, MBA, First Consulting Group; Lucian Leape, MD, Harvard School of Public Health; Janet M. Marchibroda, MBA, eHealth Initiative; Eduardo Ortiz, MD, MPH, Clinical Informatics, Agency for Healthcare Research and Quality; Joseph E. Scherger, MD, MPH, University of California, San Diego; Elliot M. Stone, Massachusetts Health Data Consortium, Inc.; William A. Yasnoff, MD, PhD, National Health Information Network, U.S. Department of Health and Human Services; and Barry Zallen, MD, Blue Cross Blue Shield of Massachusetts. The authors also thank the California HealthCare Foundation for their assistance with the SBCDE financial data.

Grant Support: By the Commonwealth Fund and the Harvard Interfaculty Program for Health Systems Improvement.

Potential Financial Conflicts of Interest: Other: J.P. Newhouse (Aetna, National Committee for Quality Assurance).

Requests for Single Reprints: Rainu Kaushal, MD, MPH, Division of General Internal Medicine, Brigham and Women's Hospital, 1620 Tremont Street, Boston, MA 02120; e-mail, rkaushal{at}partners.org.

Current Author Addresses: Drs. Kaushal, Poon, Jha, Middleton, and Bates, and Ms. Christino: Division of General Internal Medicine, Brigham and Women's Hospital, 1620 Tremont Street, Boston, MA 02120.

Dr. Blumenthal: Institute for Health Policy, Massachusetts General Hospital, 50 Staniford Street, 9th Floor, Suite 901, Boston, MA 02114.

Dr. Franz: ERG, 110 Hartwell Avenue, Lexington, MA 02421-3136.

Dr. Glaser: 800 Boylston Street, Suite 1150, Boston, MA 02199.

Dr. Kuperman: New York Presbyterian Hospital, 585 East 68th Street, New York, NY 10021.

Dr. Fernandopulle: Renaissance Health, 61 Massachusetts Avenue, Arlington, MA 02474.

Dr. Newhouse: Division of Health Policy Research and Education, Harvard University, 180 Longwood Avenue, Boston, MA 02115-5899.

Author Contributions: Conception and design: R. Kaushal, D. Blumenthal, E.G. Poon, A.K. Jha, B. Middleton, J. Glaser, R. Fernandopulle, D.W. Bates.

Analysis and interpretation of the data: R. Kaushal, D. Blumenthal, E.G. Poon, A.K. Jha, C. Franz, B. Middleton, J. Glaser, G. Kuperman, M. Christino, R. Fernandopulle, J.P. Newhouse, D.W. Bates.

Drafting of the article: R. Kaushal, D. Blumenthal, C. Franz, M. Christino,

Critical revision of the article for important intellectual content: R. Kaushal, D. Blumenthal, E.G. Poon, B. Middleton, J. Glaser, G. Kuperman, R. Fernandopulle, J.P. Newhouse, D.W. Bates.

Final approval of the article: R. Kaushal, D. Blumenthal, E.G. Poon, J. Glaser, M. Christino, J.P. Newhouse, D.W. Bates.

Provision of study materials or patients: D.W. Bates.

Statistical expertise: R. Kaushal.

Obtaining of funding: R. Kaushal, D. Blumenthal, R. Fernandopulle, J.P. Newhouse, D.W. Bates.

Administrative, technical, or logistic support: R. Kaushal, J. Glaser, M. Christino, D.W. Bates.

Collection and assembly of data: R. Kaushal, E.G. Poon, A.K. Jha, C. Franz, M. Christino, D.W. Bates.

Read all Rapid Responses

A bit too simple

James M Kretz

Annals Online, 12 Aug 2005 [Full text]

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