VA Health IT Generates $3 Billion Savings

April 9, 2010

BOSTON – A new study by the Center for Information Technology Leadership (CITL), a nonprofit research center at Partners HealthCare System, found that the Department of Veterans Affairs’ (VA) investments in health information technology (IT) were related to improvements in quality of care and potentially produced $3.09 billion in net value over the 10-year period studied. The findings, published in the April 2010 issue of Health Affairs, are the result of a two-year study of the value of the VA investments in health IT.

The net value of $3.09 billion was determined after careful examination of both the total investment made in health IT at the VA ($4.07B) and by projecting the total value of improved patient care and enhanced clinical efficiencies ($7.16B). CITL assessed the potential impact of the Veterans Health Information Systems and Technology Architecture (VistA) in a range of areas, including reducing inappropriate and redundant care and replacing paper-based practices with electronic processes and information exchange. According to CITL’s analysis, these and other impacts were projected to have avoided significant costs and increased efficiency across the VA system.

“While the VA historically has spent a higher proportion of its budget on health IT, it has achieved a very high level of HIT adoption when compared to industry norms,” said Dr. Colene Byrne, CITL Senior Analyst, and Principal Investigator of the study. Dr. Byrne added, “The VHA greatly exceeds industry norms in outpatient electronic health record (EHR) adoption and in selected outpatient quality measures that are reflective of the use of automated clinical reminders. The VA’s quality measures for diabetes care averaged around 16 percentile points higher than private sector benchmarks based on the Medicare population.”

The study reports on two complementary analyses of health IT value: 1) a benchmarking analysis comparing the adoption, cost, and quality-related impacts of health IT across the VA relative to private sector healthcare organizations; and 2) cost-benefit models that estimate the financial value of key components of VistA.

The VA has more recently initiated systematic tracking of VistA costs and impacts, but historical costs and benefit data were not readily available. Thus, CITL calculated retrospective, high-level estimates of annual and cumulative costs and benefits. CITL researchers employed a rigorous, multiphase research process in its analyses, including literature reviews, evidence synthesis, VistA functionality assessment, expert interviews, and simulation model development.

Dr. Byrne explained: “We modeled the costs and impacts of four VistA applications that were nationally adopted and supported by the VA and for which there was strong evidence of benefit, including the VA’s EHR – the Computerized Patient Record System (CPRS) – which includes computerized provider order entry of medications and tests and decision support. CPRS was a major driver of the estimated benefit.” CITL was not able, however, to assess the extent to which the VA actually realized or captured the projected benefits.

CITL’s value modeling analysis represents a major contribution to policymakers and others who seek to quantify the financial value of health IT. “This analysis presents a systematic way to understand the relationships between cost and quality measures and other important factors, such as system adoption, capability, and sophistication”, said Dr. Blackford Middleton, CITL Chairman, and Corporate Director, Clinical Informatics Research and Development, Partners HealthCare System. “Our hope is that this study provides a framework and methods for evaluating health IT and its impact across a system. Public and private-sector policies and programs alike should work towards developing a common set of health IT performance measures.”